Fines, gyms, and parking spots help boards keep co-op/condo owners in line
Seeking a faster and cheaper alternative to court, more co-op and condo boards are taking to a DIY stance toward rule-breaking residents, levying fines from $25 to $1,000 for offenses ranging from late payments to unauthorized washer-dryers and sublets. They’re also denying access to amenities like gyms and parking.
It's smart, cheap, and very effective.
Here’s the deal:
What to fine--and how much
There are three types of fines pegged to different types of activity:
- Late payments: When maintenance fees or common charges are 10-15 days late, many buildings charge a penalty ranging from $25 to $150. Imposing and enforcing late fees has been shown to reduce maintenance arrears as it inflicts actual cost on those cooperators who perpetually run one or two months late, i.e. behind but not enough to commence litigation. In the Mitchell-Lama co-ops I represent, similar fines are levied on residents who are late in filing proof of income that is required by the city and state every year.
- Pet policy violation: With dog bans virtually impossible to enforce these days, the wiser course of action is to allow some dogs, and enact restrictions on their size, number and behavior. Buildings are backing these policies up with fines that start at $25 for a first offense and go up to several hundred dollars for repeat offenses such as allowing the dog to relieve itself in the elevator or walk unleashed in public areas of the building.
- Social policy infractions: Smoking or noise in common areas, improper recycling and improper disposal of trash are all increasingly fine-worthy offenses, starting at around $25 to $50 and going up to several hundred dollars for repeat offenders. Residents who install a washing machine without permission are often fined $25 or more per month, retroactive to the date of installment (not discovery). Similarly, the penalty levied on illegal sublets can be as high as $1,000, retroactive to the beginning of the sublet period.
When a fine is not fine
Fines should never be set with the goal of raising money for the building: The amount must be reasonable in relation to the offense, and it can't be so unreasonable as to be deemed "profiteering."
Late fees, for example, are intended to cover the additional administrative cost of late payments, so a late fee of a thousand of dollars would not be considered reasonable. Similarly, registration fees for owning a dog and annual fees on dogs can’t be so high as to make it economically impossible to own a dog.
Loss of privileges
Taking away services—such as gym access and parking privileges--can be the most effective motivation enhancer of all. In co-ops where parking is provided at steep discounts, for instance, residents threatened with the loss of parking many times immediately correct their defaults.
Dean M. Roberts is a co-op and condo attorney at Norris McLaughlin & Marcus, which represents over 100 co-op and condo boards in New York City.
More from Dean Roberts:
End of an era: Why co-ops should allow dogs
Beyond the board interview: 5 good reasons to visit prospective buyers at home
6 rules for dealing with unstable co-op owners
