By Jonathan H. Katz, Esq.

The real-life case described below is a cautionary tale of what can go wrong when an association seeks to enforce rules and restrictions that may be vague, ambiguous or unclear.

When the Hampton Condominium Association’s board learned that a unit owner was allowing someone whom the board assumed was a tenant to reside in his unit in contravention of the governing documents, the board imposed a fine and recorded a lien against the property. The unit owner disputed the board’s actions, denying that the unit’s occupant was a tenant, and initiated an action to compel rescission of the fine and discharge of the lien.

After a bench trial, the court issued a written decision that, under the specific facts of this case, determined the occupant was no more than a “guest.” Militating in favor of the court’s determination were the absence of a written lease and the fact that the occupant was an employee of the unit owner who was only permitted to stay in the unit for a short period of time to effectuate certain repairs. The court held that the mere fact that a unit is occupied with the acquiescence of the owner does not by law or by implication create a tenancy.

The court also noted that if the association wanted to prohibit this type of occupancy, it must do so by amending its governing documents to specifically exclude such conduct. Accordingly, the court found that the tenancy had not been established and overturned the board’s imposition of a fine. And, perhaps more importantly, the court denied the association’s ancillary claim for the significant counsel fees it sought reimbursement for from the unit owner.

The court’s decision in Sabbagh v. Hampton Condominium Association, Inc., decided November 21, 2011, can be found here.

If you have a question about rental restrictions, fines or any other issue concerning your community association, please contact one of our Community Associations attorneys.