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QUESTION/ANSWER BY: JOHN H. GETTINGER, ESQ.

Question:

In a Cooperative the Proprietary Lease allows the Board of Directors to adopt House Rules. If there is no reference to fines or any other monetary issues regarding same may the Board institute a range of fines for House Rules that shareholders have not corrected after warning letter. What about if in By-laws?

Answer:

Unless the proprietary lease or bylaws authorize the board of directors to levy fines upon shareholders for violations of the house rules, then the board has no authority to levy fines under such circumstances. The Board also does not have the authority to adopt a rule which gives it the authority to impose fines. Instead, the board will need to seek an amendment of the co-op's by-laws adding a provision authorizing the board to impose fines upon shareholders who fail to comply with the house rules. Typically, this requires a vote of 66 2/3 of the shareholders.

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