Covenant Enforcement in Oklahoma

I need assistance from all you experienced Board Members I'm sorry this is so long but I need to make sure we're handling this correctly.

I am the President of our HOA and our BOD has finally decided to enforce out covenants. For years the board has let the CC&R's go without enforcement because we didn't have a set fine listed in the Bylaws so no one was sure how to enforce them.
In our Bylaws as shows below under section (ii) is says we can levy fines: "Abatement and Enjoinment. The violations of any rule or regulation accepted by the Board of Directors, or the Breach of any Bylaws, or the breach of any provision of the Declaration, shall give the Board of Directors or the Managing Agent the right, in addition to any other rights set forth therein, (i) to enter the lot on which, or as to which, such violation or breach exists and to summarily abate and remove, at the expense of the defaulting lot owner, any person, structure, thing or condition that may exist therein contrary to the intent and meaning of the provisions thereof, and the Board of Directors or Managing Agent shall not be deemed guilty in any manner of trespass, and to expel, remove and put out, using such force as may be necessary in so doing, without being liable to prosecution or any damages thereof; (ii) levy fines against the Owner for the enforcement thereof; and (iii) to enjoin, abate, or remedy by appropriate legal proceedings, either at law or in equity, the continuance of any breach. The Association shall be entitled to recover attorneys fees in any lawsuit brought to enforce these Bylaws and the Declarations."
After speaking with another HOA President and our management company we agreed to do the following:
(Since we're new to this and limited on time we've hired a company for 3 months to do daily patrols M-F reporting Covenant Violations until we start getting things under control)
* 1st Violation - Hand delivered or attached to front door by hired company with a Friendly Reminder of the Violation, giving a 1 week deadline to correct issue.
* 2nd Violation - Friendly notice mailed by Management Company to Homeowner reminding them this is the 2nd Violation, 1 week deadline to correct issue and warning that 3rd violation results in fine.
* 3rd Violation - Mailed by management company with a $25 fine and educating them of what violation needs to be corrected and a 2 week deadline.
* 4th Violation - Mailed by Management Company with a $50 fine, education of violation and another 2 week deadline.
We notified homeowners that fines not paid and violations not corrected by deadline can result in lien being filed on their property and after 4th violation that 10% interest will be added to their assessment amount weekly until paid. At $500 will be sent to collections.

We hate to police our neighborhood but it has to be done. I have to fix a couple things on my own property this week because we weren't enforcing things so I got lazy as well.

I received an email this morning from a Homeowner wanting this fixed and that fixed, but I've never seen them at a Homeowner Meeting. He says charging the interest to the amount is Illegal per Oklahoma Real Estate Law, but I don't see this anywhere. Can anyone verify if we are going about this the right way?

Thank you for any help you can offer or insight

Couple of things...

First, you need to check your state statutes and governing documents concerning whether or not you can place a lien on a unit for failure to pay fines. There is a trend across the U.S. to prohibit this practice, and to limit liens to unpaid regular assessments (dues), special assessments, and reimbursement assessments.

Second, your governing documents may (should) spell out exactly the procedure to be used in fining homeowners. Somewhere in there you may need to include setting a hearing date for a meeting with the board to discuss actions the board can take for continuing violations, or for failure to pay the fines.

Third, I would mail every communication with any homeowner concerning fines. I'm skeptical about hiring an outside party to hand-deliver or attach fine notices on their doors. I'd consult an attorney on all of this, prior to getting too much farther along in this.

Rob

Hmm...

It's really important to use the correct terminology when discussing these things. A fine is technically not an assessment. A fine is an arbitrary penalty leveled against a homeowner by an association for violating a rule, regulation or agreement. An assessment is a financial obligation regulated and defined by state statute, or corporate or civil code. The right of an association to levy an assessment is established by law, while the right of an association to levy a specific fine for particular violations of rules, regulations etc. is subject to challenge in court.

When you say that you're all volunteers with full-time jobs, that's pretty standard for all of us here. Your management company may not have a handle on the difference between fines and assessments, by the way. You need a legal opinion on this.

Just my 2 cents.

Rob

Does your covenant say interest can be charged? Your covenant trumps by-laws.

OKLAHOMA INTEREST RATE LAWS
*Interest rates in the state of Oklahoma are dealt with in Title 15, Chapter 6 of Section 266. § 266. Legal and Contract Rates of Interest Pursuant to Section 266, in the absence of any contract concerning the rate of interest, the parties may not exceed a lawful rate of six percent (6 %) interest provided under this Section. Furthermore, the parties may agree to any rate, as authorized by law, in a contract they agree upon. (Your covenant would be your contract. Does your covenant even state that the HOA can charge interest? If so, does it state a percentage? If it specifically says the HOA can charge but yet, does not give an amount the HOA board can charge only 6%, under OK law, no matter what your by-laws state.)

According to Section 3 of Article XIV, Oklahoma Constitution, any person taking, receiving or charging a rate of interest greater than that allowed will forfeit the entire interest. Moreover, any person or his/her legal representative can recover double the amount of usurious interest paid to any person, firm, or corporation.

Further, check to see if your covenant actually allows for “late fees”.

Actually in our HOA, it's filed in County Court that in the event of conflict, the Bylaws trump the Covenants...

You are correct sir, my mistake. The restrictive covenants control. Thank you.

Everyone is aware that this thread started over a year ago.
Was reactivated a little over 6 months ago.
Was reactivated again today.

Even a stopped clock is right twice a day.

Mary,

good information and welcome to the forum.

It's typically best not to reactivate an old thread (over 3 years for this one).