Avoid Liability When Suspending Member’s Privileges

January 25, 2018
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Association fees are an integral part of keeping a planned community or condominium building running smoothly. They’re key to paying bills for routine services and amenities and, in some communities, can contribute to additional bonuses for members, like social events. But when members don’t pay their association fees it can very negatively affect the community. Even if a few members don’t pay their assessments on time, an association can face serious financial problems. Reserves can become depleted, and the community might have to make trade-offs about which bills to pay and which services to forgo.

The manager and board of an association aren’t helpless when it comes to late or delinquent dues. Suspending a member’s privileges is one remedy. But it’s critical to handle such a situation in a way that doesn’t make the association vulnerable to legal issues and liability. One way to do this is to give adequate notice and follow local laws.

Many states have laws protecting members’ property rights, and an association must follow those laws before taking any punitive or disciplinary actions against a member. Some states have “due process” requirements. Due process is procedural fairness in the board’s decision-making process. It requires giving the member notice and an opportunity to be heard before taking adverse action against him.

Other jurisdictions might not use the phrase “due process” but have other ways to ensure that a member is not unjustly punished. For example, a state could require that before an association takes enforcement or punitive action against a member, it makes alternative dispute resolution available.

When an association seeks to enforce the provisions of its governing documents on one of its members, the association should be able to show a court that it has followed both its own standards and procedures as well as any local law requirements prior to pursuing a remedy. If a decision to suspend a member’s privileges is challenged, courts will scrutinize whether the association’s procedures were fair and reasonable and that decisions were made in good faith.

For more suspension factors to take into account, see “Motivate Member to Pay Delinquent Association Fees,” available to subscribers here