In the recent Massachusetts case Trustees of the 10 Porter Street Condominium Trust v. Elizabeth R. Cerda (and a consolidated companion case), Case No. 22- P-605, Appeals Court of Massachusetts, there are a variety of procedural and substantive issues that can be deduced such as lawful application of assessments/fines, late fees, interpretation of governing documents and law related to whether nuisance violations occurred, allowance of cameras in common areas/within units, attorney’s fees, and consolidation of matters.
On top of these numerous issues, the Court also addressed a hot button topic that property managers and boards must consider on a routine basis: the reasonableness of fines. To that end, we have all heard the old adage “the punishment should match the crime,” and handing out reasonable fines, as far as amount of the fine, is a lot easier in theory than in actual practice.
In the Cerda appeals decision, two condominium unit owners were assessed penalties and fines of fifty dollars per day for installing unauthorized surveillance cameras in common areas, which the Trustees of the 10 Porter Street Condominium Trust believed constituted a nuisance and interfered with occupants’ peaceful possession in violation of the condominium documents. The unit owners assert the cameras were lawfully placed within their units and balconies and were necessary to defend themselves against the harassing and intimidating conduct of the other unit owners and trustees and that they did not violate the condominium master deed or declaration of trust (condominium documents).
The Judge ultimately concluded the condominium documents did not prohibit cameras within the unit owners’ respective units and, thus, only one camera, violated the condominium documents. As it relates to reasonableness of fines, the Court concluded that the $50 per day fine assessed by the Trustees of the 10 Porter Street Condominium Trust was not reasonable, as required by G.L. c. 183A, § 10(b)(5), and that a reasonable fine would be $10 per day. The Judge adjudged that the amount of late fees assessed against the unit owner was unreasonable as a matter of law.
As part of their appeal, the Trustees of the 10 Porter Street Condominium Trust argue that the Judge abused his discretion in opining as to the amount of fines because the word “reasonable” in § 10(b)(5) refers only to whether the imposition of a fine was reasonable, not to whether the amount of the fine was reasonable.[1] The Judge disagreed and concludes that the reasonableness requirement in § 10(b)(5) applies to both imposition of the fine and its amount and “[t]o hold otherwise would mean that the Legislature intended to grant condominium trustees unfettered authority to impose any amount of fine.”
In setting the $10 per day amount of the fine, the judge’s memorandum of decision makes clear that he considered, among other factors, the conduct and what amount would serve as a “significant deterrent” to unit owners to refrain from violating the condominium rules.
So what is a reasonable fine and how do Trustees ensure they levy appropriate amounts against violative unit owners? The factors utilized by the judge in the Cerda matter, considering the conduct and whether the amount would serve as a “significant deterrent” against the unit owners, serve as a sound starting point.
Other factors and considerations should include proportionality of amount to the violative act, the legal framework (condominium documents and statute), economic impact, comparative analysis (consistency of fines), any mitigating factors by unit owners (and whether their was appropriate notice and a due process hearing, if applicable), repeat offenses, and the public interest at large.
Overall, however, an appropriate fine structure is very contingent on the type of Association you are dealing with (i.e. size, number of unit owners, number of buildings, common areas access, etc.) as every fine is extremely case-by-case. Even further, generally, a fine may not be imposed unless there is written notice. Sometimes this may include a due process hearing on top of the warning letter.
If the offender remains non-compliant after notice is given, fines can serve as an effective way to discourage violations of the governing documents. In some instances, alternatives to fines could be appropriate. For example, associations may suspend unit owner’s rights to common elements or facilities for reasonable amount of time for failure to comply with the governing documents. This alternative may especially be useful if someone is violating rules or governing documents as it pertains to common areas (i.e. noise disturbance in the pool area, parking privilege abuses, etc.).
Bottom line is that trustees must ensure they remain in line with statute and the condominium documents. Outside of that, and Cerda can serve as a cautionary tale for trustees, determining a reasonable valuation for fines is more an art than a science and should be done carefully, while also adapting to a multitude of factors.
For a copy of the Decision [click here].
[1] M.G.L. c. 183A, § 10 (b) (5) reads, “[t]o impose charges … for the late payment of common expense assessments or other charges, and to levy reasonable fines for violations of the master deed, trust, by-laws, restrictions, rules or regulations of the organization of unit owners.”
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