Covenants Enforcement Without Fines?

Steven,

One has to remember that the goal is to bring a member into compliance. Unfortunately, there are a few who won't comply unless there are monetary penalties for lack of compliance. Therefore, it's best to utilize a fine structure with an overall compliance policy rather than simply instituting fines for each violation.

Our Association only assess a monetary penalty after multiple attempts to have a violation brought into compliance. Additionally, even after we impose the penalty we specify that the charges will be waived if the violation is corrected by mm/dd/yyyy.

If you do have to go to court it should be to correct the violation not to collect the charges associated with the violation.

I'd be interested in hearing what other resdients of Az. think about fines in their communities and in regards to their state law.

Here we have come to learn some people respond or change their behavior only when there is a cost to them. In this case $$$. Remving that what would you do?

Seems Steve the new Board member has decided for himself what the policy of his property will be going forward.

And yes here where I live you cannot place a lien for fines. But those chrages can remain on the owners account and at some point might need to be paid.

Then I would have to ask Steve IF successful what option do you propose? Asking them nicely? Once you announce your determination that fines no longer will be used my guess those five bad apples might grow to more. The cat is then out of the bag.

I would suggest Steve sit back tap his brakes a few times slow down and take the time to learn and observe how this fine system works, what would be done if it were discontinued, and what BENEFIT it would provide the other owners of the community.

Steven, based on our experiences over the years of managing numerous HOAs, fines are an effective means of enforcing Covenant compliance without needing to go to Court. It is difficult for me to believe your state laws override Covenants if they allow for fines. Have you checked this out with your Managing Agent or an attorney?

Also, rather than an inexperienced untrained person doing this duty, why isn't your HOA utilizing the Management Company for inspections and enforcement? We always provide owners with copies of all restrictions and the fine schedule for their HOA. And we have established procedures which include providing a Courtesy Notice first, to make the owner aware of their "potential" violation with a deadline for correction prior to issuing a fine. Also, no fine should be given until after the violator has ben given the opportunity to request and, if request, a Hearing held and decision made by a Hearing Committee on the "potential" violation.

While it is dangerous to pick one section out of a law, the document Tim linked to says

"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."

Barring some other overriding document, this seems to say that the only thing Steven needs to do is to replace fine with penalty.

While I don't think fines or penalties are appropriate for trivial violations, especially if they are quickly remedied, it is desirable to have an option that is between a violation letter with no penalty and seeking a legal ruling.

There are still options besides fining. Fines typically can not be the basis for liens or foreclosures in many states. The solution to enforcement is the ability of the HOA to remove a violation and send the owner the bill. If the owner does not pay that bill, then that is indeed lienable. (May not be forecloseable).

That means sending a letter stating that if one does not repaint their house, the HOA will do it at $XX. Which is typically a highest bid amount one can find. If the HOA does not get their money back, then they can lien for that amount. However, most times HOA's do not have it in their budgets to afford large amounts of money to be spent on repairs and liens. This method should only be used in limited use and fair.

Thanks for the replies.

Some clarifications:

- We do currently have a fine policy.
- We do have a management company that performs the inspections, etc.
- We've received legal advice from our attorney that:
1) Due to Arizona HOA laws, it's virtually impossible to collect on fines. There's no law against having fines, but paying them is strictly voluntary on the part of the homeowner.
2) Arizona HOA law technically allows an HOA to obtain a judgment against a homeowner for fines; however, the legal advice is that in actual practice it's almost impossible to get a judge to sign off on a judgment for fines.
- I refuse, as a Board officer, to engage in the scurrilous tactic of fining people anyway and taking money from the ignorant. While it's true that the management company performs these tasks, the Board is still ultimately responsible.

So, what I'm hoping to find are some creative ideas on how to enforce covenants and design guidelines without fines in the mix.

Thanks!

This thread appears to becoming something it never was. I'm NOT against fines, and I agree they're the best way to gain compliance. The problem is that in Arizona they're totally uncollectable. More homeowners in our development have figured this out and now pretty much everyone just ignores the fine letters and does whatever they want.

Furthermore, how can you accuse me of being a "novice" when you don't even know me?

Sheesh.

I agree that you should step down as Compliance Officer and perhaps resign from the board too. One of our jobs as board members is to enforce the governing documents and if you thank that you cannot you may want to step down.

So . . . you're saying that you have no way to suspend privileges or have none to suspend? You ignored that suggestion. And you have no legal way to repair/paint something that is against your rules and bill the owner, as Melissa suggested?

How many homes/units are in you HOA, Steven? How many are ignoring fines (vs. paying them or correction the violations)?

And by the way, there are some extraordinarily rude people on this forum. This will be the last place I'll think of in the future for any sort of feedback or suggestions. Criminy!

Steven,
NEVER CONSIDER SUCH SELF HELP. I believe this would be found by a Court to be TRESPASS. PLUS there is physical danger.

We always recommend getting a Court Order before going onto a property to effect correction of a violation; PLUS at the time of entering the property have a sheriff or police officer present along with the contractor and the managing agent or a Board member. IF a managing agent and a lawyer told you to go onto the property to make repairs prior to getting a court order then I believe your association needs to get a new lawyer and a new managing agent. Plus I doubt any contractor or anyone else would enter a property without permission, i.e.,trespass, because they would be placing themselves in phyical danger. (Homeowners can get very upset and do violent things which they later regret when trespass occurs to correct their violation.)

Hopefully you will learn from the information provided by those trying to help by providing information on the effective methods available to enforce restrictions.

Also, why don't you test the waters? Proceed with legal action against one homeowner over fines. You may be surprised at the result.

As far as maintenance goes, as always, the smartest first step in determining how to proceed with unsightly properties is to check your governing documents... Self-help needs to be authorized by the governing documents before anybody, whether it's a property manager or board member, goes onto a property to cure violations. Without authorization, it's trespass and if property is removed, it's theft. If your governing documents provide authorization, it's still smart and often required that you give owners notice before you enter their property. If there are notice requirements, you need to make sure you follow those as well. Quite often, documents here in Arizona require 14-day notice or state that the board has to meet and make a specific finding that the property needs self-help and then give notice. Some say that self-help can be done and there's no notice requirement. Also be sure that you're going in for a repair that's necessary, not minor issues. You've really need to limit entry to true life, safety, and health issues, not just something that's an annoyance. Overgrown weeds could be a fire danger. Perhaps there's a garage door falling off its hinges and the property appears to be unoccupied. If your documents don't specifically provide authorization, you're probably out of luck. The attorneys we work with indicate you're trespassing and you don't have the right to that cleanup if the document doesn't give you that authority.

One more thing: If you're expecting to be reimbursed for the cost of the work you do, be sure your governing documents not only allow you to enter property but also to get recompensed for the money you spend. "Our governing documents give us a right to maintain the lawns and get reimbursed. But often, other covenants don't provide for that. In other words, you’ll be doing work at your own expense without the ability to recoup the cost.

Another issue to consider before you march onto an owner's property is your association's enforcement history. It seems best when dealing with the potential entry onto a unit owner's limited common elements or property to consult with an attorney and make sure you're not subjecting yourself to an argument of selective enforcement or that your efforts to enforce won't be defeated by a claim of waiver. There may be things you can do to reinforce the validity of those covenants before you intercede. In other words, if you've been inconsistent in enforcing rules in the past, you may trigger cries of discrimination if you begin enforcing rules now. But you can avoid such claims with smart planning. If there's been a pattern of a lack of enforcement or inconsistency, consider whether there's an update or a reason there's been a lack of enforcement. Perhaps your rules are too harsh or aren't tailored to the conditions people are finding. Then decide if there's a way to update them to create a new culture of enforcement. By updating your rules and the governing documents and then circulating them, you're letting people know that from here on out, things are going to be run more along the plan. If there's not an opportunity to amend or you don't want to spend that kind of time or money, at a minimum, send a notice to all owners with a copy of at least the operative documents- whatever you're going to enforce more strictly and say, 'We want to make sure everybody has these. We've noticed there's been a falloff in compliance, and the board is starting a new, more considered approach in applying these rules, and violations will be pursued.' Try to create a break from the past if there's a history that you're trying to separate yourself from. If you don't have a problem with a lack of enforcement, make sure what you're doing now is consistent with what you have done and that you've taken adequate enforcement steps against those other violators so when you do there's not an allegation of selective enforcement or discrimination.

Here's a few tips for keeping the peace that will help you avoid problems with owners and ensure the safety of those entering the property.

* If your documents don't authorize entry (or even if they do) think about whether it's best to let another entity do your dirty work. If the property is in a municipality where there's a property maintenance code, sometimes the municipality will take care of the problem. Especially in rural areas, people aren't very comfortable with the local government exercising a lot of power over property owners and sometimes even when associations aren't reluctant to call them, local governments are reluctant to get involved.
* The notice needs to be very specific on when you intend to enter instead of leaving it open-ended by saying you have the right to enter. Many associations make the mistake of saying, 'We may enter the property in 10 days.' You need to say, "We're entering on the 11th day" and then enter that day!
* Take photos of what the property looks like before you do the work so you have documentary evidence to show that the work was necessary. Also take photos after, to show the work that was done and KEEP COPIES OF ALL THOSE INVOICES!
* Get a court order. A lot of municipalities don't care if the governing documents authorize self-help. If called, the police will come and stop the self-help from occurring. That's a municipality by municipality thing. So even though your documents may authorize self-help, you shouldn't do it unless you have a court order stating that you can. I've seen situations when our association brought a copy of the court order, and owners have come out and started yelling and called the police. There was no imminent danger, but the risk is there. You don't know if the owners are going to go in the house and get a gun, a taser, or pepper spray. The police will keep the peace. They'll tell the homeowners that they have a court order and to go back in the house. Without a court order, be very careful, especially disposing of or destroying an owner's property. If you're asked to leave, LEAVE- Even when the documents allow self-help.

* Even with authorization, some attorneys think self-help is a bad idea because you may be setting a precedent. It looks real attractive at the time, but will this become an ongoing maintenance issue? You can do it once, but are you opening up yourself to doing every yard in this condition and can you afford to do it?

- Just helping you exercise some thoughts

Crystal,

I disagree. If assessing monetary penalties for violations have been determined unenforceable unless the CC&Rs explicitly allows such penalties, then knowingly assessing said penalties would not be due diligence. It would be an issue of exceeding the Boards authority (what the courts call Ultra vires.

Due diligence, in my opinion, would be drafting and proposing an amendment to the governing documents to allow for monetary penalties as a method of enforcement.

From an AZ attorney's recap of HOA law re fines (not sure if I should link to an attorney's page, so I didn't):

Fines for Violation of a Homeowner Association Rule

If you violate a rule of the HOA, your HOA may threaten to fine you. Unlike assessments, fines may no longer form the basis of a foreclosure action. The only way the HOA can collect fines from you is if you voluntarily pay them, or if the HOA files a lawsuit against you to collect them.
Under Arizona law, an HOA may not issue a fine until it first offers you a hearing before the board of directors. If the HOA fails to provide you an opportunity for a hearing before the fine is imposed, the fine is illegal and not enforceable.

So if this is accurate, then fines in AZ can be enforced against the individual, but not against the property.

Fining would therefore not be off limits for the board. The method of enforcement would.

We're on the same page as you are John.

The only fine balance we currently have outstanding on the books is against a non-resident owner who decided to turn a re-siding job into a DIY project. The project has been in process for around 3 years. We stopped adding charges when the balance got into the thousands. The board is debating whether we should waive the fines when the work is completed - which is what we usually do when exterior work drags. This one situation is a bit different - But from the looks of things, we might not have to make that decision for a couple of years.

The only new fine that we have instituted in the last few years is a hefty one for leaving a vehicle on the streets during snow/ice clearing/salting. We make a lot of noise about it, and we hope we never have to enforce it. We haven't mentioned a threat of fining in any HO letter in over a year.

NPS

Melissa is right under our docs. They say:

...the Association or its duly authorized agent shall have the power to enter upon any Lot of any other portion of the Community to abate or remove, using such force as may be reasonably necessary, any structure, thing, or condition which violates the Declaration.......the BOD shall give the Lot owner ten days notice on its intent....

I would say a 3 year long bad looking and potentially dangerous patch work vinyl siding job would qualify.

Now in keeping with the theme of be nice we would try to mediate the situation but I say we have the recourse to "clean it up" and bill the owner.

As I have said many times. The power in SC resides with the business/corporations versus others. While I may not always agree, it pretty well gives the corporation (an HOA) the power to run its business as its BOD see fit to do.

Our docs are also very clear on how to replace the BOD.....LOL

I'm reading the AZ law the same way you are Tim.

IMO, the HOA couldn't foreclose on the real estate, but could possibly foreclose on the homeowner's vehicle. It appears that only real property is shielded against HOA fine enforcement.