Arizona Planned Communities Statute 33-1803(B) and Fines for Violations

Started by TomP2 • 11 replies • 3703 views

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TomP2 (Arizona)
Posts: 28

Posted:

Do the Community Docs need to explicitly allow the Association to impose fines for violations of the CC&Rs or does AZ 33-1803(B) allow the Board to impose fines?

AZ 33-1803(B):
After notice and an opportunity to be heard, the board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules of the association.

Our Declaration merely states:
The covenants, conditions, and restrictions shall be covenants running with the land and the breach of any thereof or the continuance of any such breach may be enjoined or remedied by appropriate proceedings at law or in equity...

And from the Bylaws:
Section 4.09. Powers and Authority of the Board. The Board of Directors shall have all the powers of an Arizona non-profit corporation, subject only to such limitations upon the exercise of such powers as are expressly set forth in the Association's Articles of Incorporation, these By-Laws and the Declaration. The Board shall have the power to do any and all lawful things which may be authorized, required or permitted to be done by the Association under and by virtue of said Articles, These By-Laws and the Declaration, and to do and perform any and all acts which may be necessary or proper for or incidental to the exercise of any of the express powers of the Association. Without in any way limiting the generality of any of the foregoing provisions, the Board shall have the power and authority at any time to do the following:

4.09F. To retain and pay for legal and accounting services necessary of and proper in the operation of the common areas and facilities, enforcement of these By-Laws and the Declaration, or in any of the other duties or rights of the Association.

Section 4.14. Authorized Payments by the Association. The board of Directors shall have the exclusive authority to make payments out of the Association’s funds for the benefit of each Owner; this authority shall include but shall not be limited to the following:

4.14G. All costs of enforcing the provisions of these By-Laws and the Declaration including Attorney's fees and court costs provided that all costs incurred for the enforcement of the provision of these By-Laws and the Declaration against any Owner shall be assessed especially against such Owner.

Our small HOA has been pretty much happy-go-lucky since established. As far as I know no one has ever been cited for a violation, let alone fined. We now have an Owner who is refusing to correct a violation of the restrictions from the Declaration. Can we impose fines?

SusanW1 (Michigan)
Posts: 5,202

Posted:

Yes; but hopefully the board has a written procedure for the steps it goes thru when handing out fines.

JeanneK3 (Maryland)
Posts: 562

Posted:

I agree with Susan. State law always trumps anything in governing documents.
Jeanne

MaryA1 (Arizona)
Posts: 388

Posted:

Tom,

This state statute trumps your assn gov docs because it does not say, "unless otherwise stated in your community documents", or something to that effect.

One thing this statute also is very clear on is that before the assn can impose a penalty the member must have an opportunity to be heard, meaning they have the right to have a meeting with the board to discuss the violation. The best procedure to follow is to state this in the very first notice of violation that is sent out. Many assn's send a "friendly reminder" as the first notice.

To answer your question, "yes" the assn may impose a fine on this member who is in violation. However, as I stated above, the BOD must first send a violation notice that informs this member of his/her right to be heard. If the member ignores this then the next notice may contain a fine. Also, the assn should not impose fines unless they have first informed the members of their intent to do this. The members should be given a copy of the board adopted fine policy which outlines the steps that will be taken to enforce the CCR restrictions and the dollar amount of the fines that will be imposed.

FYI, following is a synopsis of my assn's violation fine policy.

-------------------
Violations are cumulative. An uncorrected violation or a recurrence of the same type of violation within a 6 mo period constitutes a continuation of the violation and would continue your process through the next fine enforcement level.

1) First notice is a friendly reminder giving the member 10 days to cure.
2) Second notice carries a $50 fine if not cured w/i 10 business days.
3) Third notice carries a $100 fine if not cured w/i 10 days after receipt of letter.
4) Final notice advises member that they may be assessed $250 and the account may be turned over for legal action if not cured w/i 7 days.
5) Any architectural change that commences prior to written approval by the A/C committee will generate a penalty up to $1,500. This penalty shall be owed regardless of approval or disapproval after the fact by the A/C committee. Submissions denied require such changes to be removed and returned back to the original state. Any legal costs incurred by the assn that are related to enforcement of the A/C guidelines shall be the direct resp of the member in a noncompliance status.
Procedures:
1) H/o's will be notified by mail of all violations.
2) H/o has a right to a hearing b/4 the BOD and/or a board appointed hearing committee where decisions of the board and/or committee are final.

TomP2 (Arizona)
Posts: 28

Posted:

Thanks Susan, Jeanne and Mary! I spent the past weekend combing through the archives here reading as much as I could dig up about fine schedules and procedures. I found many good suggestions and thought I had a handle on it... then read Tim's post this morning about the HOA in Virgina that had no specific language in their Docs regarding fines and lost a court challenge because of it. I guess VA does not have statutes that specifically allow fines for violations of the CC&Rs.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Tom,

You are correct, VA HOA laws, although very good, do not specify fines like AZ does.

Tim

TomP2 (Arizona)
Posts: 28

Posted:

Quote:

Posted By MaryA1 on 10/20/2010 3:31 PM
Tom,

This state statute trumps your assn gov docs because it does not say, "unless otherwise stated in your community documents", or something to that effect.

One thing this statute also is very clear on is that before the assn can impose a penalty the member must have an opportunity to be heard, meaning they have the right to have a meeting with the board to discuss the violation. The best procedure to follow is to state this in the very first notice of violation that is sent out. Many assn's send a "friendly reminder" as the first notice.

To answer your question, "yes" the assn may impose a fine on this member who is in violation. However, as I stated above, the BOD must first send a violation notice that informs this member of his/her right to be heard. If the member ignores this then the next notice may contain a fine. Also, the assn should not impose fines unless they have first informed the members of their intent to do this. The members should be given a copy of the board adopted fine policy which outlines the steps that will be taken to enforce the CCR restrictions and the dollar amount of the fines that will be imposed.

FYI, following is a synopsis of my assn's violation fine policy.

-------------------
Violations are cumulative. An uncorrected violation or a recurrence of the same type of violation within a 6 mo period constitutes a continuation of the violation and would continue your process through the next fine enforcement level.

1) First notice is a friendly reminder giving the member 10 days to cure.
2) Second notice carries a $50 fine if not cured w/i 10 business days.
3) Third notice carries a $100 fine if not cured w/i 10 days after receipt of letter.
4) Final notice advises member that they may be assessed $250 and the account may be turned over for legal action if not cured w/i 7 days.
5) Any architectural change that commences prior to written approval by the A/C committee will generate a penalty up to $1,500. This penalty shall be owed regardless of approval or disapproval after the fact by the A/C committee. Submissions denied require such changes to be removed and returned back to the original state. Any legal costs incurred by the assn that are related to enforcement of the A/C guidelines shall be the direct resp of the member in a noncompliance status.
Procedures:
1) H/o's will be notified by mail of all violations.
2) H/o has a right to a hearing b/4 the BOD and/or a board appointed hearing committee where decisions of the board and/or committee are final.

I've been thinking and reading about this some more and wonder how you handle continuing vrs repeat violations. What got my attention was this page at the Adams Kessler (Davis-Sterling.com) website:
http://www.davis-stirling.com/MainIndex/RepeatvsContinuingViolations/tabid/2453/Default.aspx

Does anyone use daily fines for a continuing type violation? How far does that go before you turn it over to the Assn attorney?

Thanks!

TomP2 (Arizona)
Posts: 28

Posted:

I have another question (sorry - trying to learn from you good folks) regarding AZ 33-1803. This is about the last sentence of 33-1803(E):

At any time before or after completion of the exchange of information pursuant to this section, the member may petition for a hearing pursuant to section 41-2198.01 if the dispute is within the jurisdiction of the department of fire, building and life safety as prescribed in section 41-2198.01, subsection B.

How have you worked that requirement into your violation policies in Arizona? What kind of violations are they talking about in 33-1803(E) anyway? If you read 41-2198.01(B) it says the owner OR association may file a petition. Whereas in 33-1803(E) it seems to indicate only the member can petition for a hearing. So this whole clause now has me very confused.

Thanks again!

MaryA1 (Arizona)
Posts: 388

Posted:

Tom,

First of all,the OAH is no longer adjudicating HOA complaints, therefore ARS41-2198 no longer applies.

With regard to sub-section D of ARS33-1803 the type violations are violations of the CCR restrictions. If the member sends a certified letter to the BOD in dispute of the violation notice the board has 10 days business days to respond with the info outlined in the statute. I've heard that some assn's will indicate that the prop mgr noticed the violation because even if a member informs the assn of a perceived violation, the PM must first check it out b/4 a violation notice is sent out. I don't believe our assn has ever received a certified letter from a member disputing the violation notice. Occasionally we've had a member come to a board meeting to discuss a violation notice but they are not concerned with "who" informed the board of the violation; mostly they are only concerned with having the penalty waived and letting the board know why they are in violation.

A little background info on this particular subsection of ARS33-1803. A group of HOA advocates were successful in getting the legislature to amend the statute because they thought members should know who is turning them in, regarding CCR violations. Frankly, I think it's a terrible requirement which serves no other purpose but to pit member against member and cause turmoil in the community. Even the city will not give out this info if you receive a city code violation notice.

TomP2 (Arizona)
Posts: 28

Posted:

Thanks Mary!

Regarding repeat violations, I take that it is acceptable to call a second occurance of the same violation a repeat if it occurs within some defined time of the first occurance, say 6 months. Otherwise the violator could correct the violation after the first friendly reminder and then repeat the violation with impunity. This could repeat over and over with due process requiring no more than a friendly reminder each time. So some language in the violation policy that states upfront that a second violation of the same CC&R restriction within 6 months of the first violation will be treated as a continuation of the first violation and the fine level will be increased accordingly (clumsy language I know - just off the top of my head). Etc, etc, with each occurance of the same violation occuring w/i 6 month of the previous occurance bring on an escalation of the fine level. I know this has been discussed here before but I can't find anything that contains good solid language on how to spell that concept out. I would love to see some suggestions on how that could be worded.

MaryA1 (Arizona)
Posts: 388

Posted:

Tom,

FYI, this is what my assn's fine policy says about repeat occurrences:

"Violations are cumulative. An uncorrected violation or a recurrence of the same type of violation within a 6 mo period constitutes a continuation of the violation and would continue your process through the next fine enforcement level." For ex: A "friendly reminder" is sent for a parking violation in Sep then in Oct the same parking violation is noticed so a "second violation notice" is sent accompanied by the appropriate fine. The member would have been advised of their right to be heard in the "friendly reminder" so the fine is legal.

As long as the members are informed of what the exact policy is there is no room for complaint!

TomP2 (Arizona)
Posts: 28

Posted:

Hi Mary,

I'd like to ask you to review a draft violation notice letter offline. If that is something you can do please send me an email to rrgone at gmail dot com. I'm not looking for legal advice, just want to know if I have touched all the bases required in AZ 33-1803.

Thanks.
Tom

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