Suspension of Parking as a Tool for Collecting Delinquent Assessments

Date: November 23, 2009

The suspension of parking privileges is an attractive self-help tool for community association Boards to include in their association's assessment collection policies. This is true because it can bring quick results with minimal expense.

However, a word of caution is in order. A careful analysis of the association's right to prevent an owner or tenant from parking is essential. Without clearly understanding all of the issues implicated in deciding to use this tool in a particular instance, directors can expose both the association and themselves to liability claims.

The required analysis includes consideration of both state law and the association's documents. You need to understand who owns the parking spaces and whether there are any limits on the association's right and ability to prevent parking in those spaces. The analysis should also consider the impact that fair housing laws could have on the ability to prevent any particular resident from parking within the Community. Issues related to the enforcement of a "no parking" policy also must be studied.

The governing documents may grant outright ownership of parking spaces in the individual owners or, in a condominium, make the parking spaces limited common elements. In these cases, an association may not be entitled to prevent a resident from using his or her parking space, even if the owner is delinquent. Other governing documents may make parking spaces the property of the association or general common elements. Here, the association may have broad power over parking. Even here, however, the ability to prevent parking may be limited by language in the governing documents or by the absence of a clear grant of authority to prevent parking in the governing documents.

State law, both statutory law and case law, must be reviewed. It is common for state laws to prohibit interference with parking if doing so would impair the health or safety of residents. Not infrequently, a state's appellate courts have issued opinions on an association's ability to interfere with resident parking. Similarly, both state and federal fair housing laws may limit an association's ability to impede a disabled resident's parking. Finally, state laws may require that notice and an opportunity for hearing or other due process procedures be followed before parking privileges can be suspended. Unless a board's parking policy is in tune with all of the substantial and procedural mandates (or the policy is not followed), owners whose parking rights have been violated will have a weapon with which to at least offset their delinquency and may even be able to recover damages from the association and from the directors.

With a well-vetted parking policy, a board can more confidently suspend a delinquent owner's parking privileges. Doing so, of course, leads straight to the issue of how to enforce the suspension. Unless the Community is gated, enforcement can be problematic. Towing an impermissibly parked vehicle is the likely means of enforcement. Here, a method of identifying the ownership of a vehicle is necessary. Any state laws on signage, notice and the like must be understood and adhered to.

If towing is the means of enforcement, the association has several means of protecting itself. First, the association can and should purchase "wrongful towing" insurance. Second, it should confirm that its liability insurance will cover any claims of physical damage or loss to towed vehicles or their contents. The association may also want to ask the towing company to agree to indemnify the association, its board and its management from claims related to the towing of any vehicle.

Use of restrictions or prohibitions on parking is a strong and legitimate means of collecting unpaid assessments. Particularly in the current economic environment, there is every reason to consider such restrictions. Like most tools, however, this one can be dangerous, if the board does not understand how the tool may (and may not) be used or if the tool is not used carefully.