Fines for violations

Our CC&R's were poorly written in 1986 and the community didn't start growing until 1995 when a new developer took over and used the same documents that were recorded. The CC&R's do not have any fine structure only that your voting rights and use of common area can be taken away(hence it is only a piece of land no pool or tennis courts etc..) The CC&R's also state they can put a lein or foreclose on your home. I have been told that if there is no monetary value then they would not be able to put a lein or foreclose. There are always violations going on but they never get resolved. How can you enforce the covenants with out any type of strong enforcement. Also our HOA does not have an Attorney. the BOD's feels they do not need one.

Keep in mind that most states do NOT allow fines or late fees to be "lienable" or causes for foreclosure. It is illegal to do so. HOA's can lien for 2 reasons ONLY. 1. Non-payment of dues. Late fees can be added to this but can NOT be the basis of a lien. A certain interest rate may be added as well as dictated by law and your documentation. Legal fees are also included in liens/foreclosure amount owed. Liens/foreclosures do cost the HOA money to file in most states. California is the only one I've heard of that doesn't charge for lien placement. Our county charges $300 for a lien. Foreclosures depend more on the attorney charges. We paid $800. That means that the HOA is out that legal money plus the non-payment of dues until the owner pays up. NOTE: Suing an owner for money owed ONLY gets you a legal "judgement" it does NOT guarantee money. The owner can sell and move without paying the lawsuit judgement. With a lien the owner can NOT sell their house until it is paid off. Foreclosures, they lose the home.
2. This is an uncommon (But LEGAL) but there is another way for the HOA to place a lien or foreclose. For example: If a homeowner has violated the rules such as painting their house the WRONG color, they weren't approved to paint Sunset Orange. The board/ACC can vote to PAY a contractor to come in and PAINT an approved color. If the owner, doesn't pay the HOA back the money for the work, the HOA can then lien for the money owed. Certain violations such as NOT repairing a dangerous situation or installing something unapproved are to be done at the OWNER's COST to remove. IF the owner doesn't do it, then the HOA has the authority to do it and charge back the owner. This is different than violations such as No parking, speeding, or uniformity issues. Those types of violations aren't allowed to be liened upon.

Hope this broke things down enough for you. I'd hate to see you try to put in fines in your documentation only to find out that they really weren't enforceable legally. There are reasons why liens and foreclosures are considered as the "punishment" in a HOA and are allowable. They are the best legal instruments for a HOA to implement.

James,

I have read thru most of the posts as you suggested. Also reading the following that happened in NC I am concerned because our CC&R's do not have any wording in them that would alow the formation of a fine structure. Under our By-Laws the Board can create rules and regualtions but would that give them the authority to creatre fines. One Board tried that but at the same time added wording to each of the specific restrictions, which they could not do with out a vote. Example, The restriction for Boats, trailers and travel campers states cannot remain on any lot for no more than 48 hours. They added excemption unless stored behind a fence or in the garage. Also there is nothing that states that court cost can be recouped. So our BOD can send letters after letter to homeowner in violation but without a fine structure is there another way to get there attention.

(The NC Supreme Court struck down amendments made by an association that added common fees where none existed before and also added rental restrictions. The court said that any amendment must be reasonable in light of the orignal contracting parties 'intent'. The NC court said that this requirement is currently being used in Arkansas, Florida, Illinois, North Dakota, Ohio, and Wyoming.

The interesting note here is that all amendments were made following the CCRs and Bylaws, but the court still struck them down because they were not 'reasonable' considering the expectations of an original buyer reading the original declarations.

The court said, "We hold that amendments to a declaration of restrictive covenants must be reasonable. Reasonableness may be ascertained from the language of the declaration, deeds, and plats, together with other objective circumstances surrounding the parties' bargain, including the nature and character of the community. Because we determine that the amendment to the declaration sub judice, which authorizes broad assessments "for the general purposes of promoting the safety, welfare, recreation, health, common benefit, and enjoyment of the residents of Lots in The Ledges as may be more specifically authorized from time to time by the Board," is unreasonable, we conclude that the amendment is invalid and unenforceable)

Jim - Arizona law clearly states: "all payments received on a member's account shall be applied first to any unpaid assessments, for unpaid charges for late payment of those assessments, for reasonable collection fees and for unpaid attorney fees and costs incurred with respect to those assessments, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts." So a homeowner can send in the exact amount of the assessment and all those other charges go unpaid. This was done to prevent HOAs from applying payments received to fines, interest, attorneys, etc. and thus leaving the assessment unpaid which is subject to foreclosure. As long as the homeowner keeps the assessment current, none of those other charges can ever be collected unless we get a court judgment. (This is called the lawyer's full employment act.)
Does your documents or state law really allow you to add fines to the assessment? Harold

Harold:

Good post.
You ask: if our documents or state law "really" allows us to add fines to the assessment?
Yes! fines and legal fees are collectible in accordance with the Maryland Contract lien act.
Per our Rules / Regulations we have always had the legal right to fine homeowners for infractions, but the old Board of Directors had never enforced the ruling.
Under the advice of our "NEW" attorney, and because the rule had not been enforced for over a year (really never) we had to hold a special meeting of the members.
They voted overwhelmingly to begin going after the ones who directly pay no attention to the rules/regs.
I know in our state the homeowners associations are permitted wide lattitudes because we are a private community, and do not receive much from the county or state governments.

So far we have collected several hundred dollars, but they only pay the fine, and are still not paying their assessements.
The fine is then deducted from their assessement account.
Maybe its the threat, but by what ever means, it has begun to work.
If everyone just follows the established guidelines which are for the good of the whole community there would not, or should not be a need to fine anyone.

Jim

My HOA is in the state of Georgia. I have a question about this example: If a homeowner has violated the rules such as painting their house the WRONG color, they weren't approved to paint Sunset Orange.

Can the HOA just put a lien on the house? Would the homeowner be fined daily?

Can the HOA foreclose on the house if the homeowner does not change the color?

Bob:

The NC Planned Community Act was amended January 1, 2006 to change the fines from $150.00 per day to $100.00. From my understanding in your post you are in NC?

If so you would fine in accordance with the Planned Community Act.