Question regarding Fining homeowners

Subject: Fining Policy POSTS

So, if I am understanding you correctly, there is no mention in either our governing documents concerning Fining but, our Homeowner Rules and Regulations mentions that they can. IMO, this would be a conflict as our CCR's supercede Homeowner Rules and Regulations? Your thoughts? -ReneeD

Roger,

Yes, our Bylaws do mention that the Board shall have all the powers and duties granted to it or imposed upon it by the Declaration, these By-Laws, and the Illinois General Not-For-Profit Corporation Act one of which says "to adopt rules and regulations as provided in the Declaration." Our Declarations refer to reasonable rules and regulations.

BUT, imo, for the Board to adopt and enforce reasonable rules and regulations, one would think that any new/revision of rules would be presented to the membership for their input or vote which has never happened. In all the years I've lived here, the Board operated under the assumption that if any rules were changed --sometimes after the fact--and, if the BOD did not hear back from any homeowners or if it wasn't challenged, they interpreted it as we had no objections. It has now gotten to a point where a lot of us homeowners are being slapped left to right with fines and we are beginning to think our BOD is doing this to generate a source of added revenue instead of looking into why these violations are occuring in the first place.

On a separate note, the other thing that is messed up about all of this is that we were told by management and certain board members agreed that fines not paid are included on the same list reflecting unpaid late fees. Personally, I don't think that is correct.

-ReneeD

Renee:

If your state allows for fining then your state laws would supercede.

Renee,

A Board of Directors or Management company CANNOT make a Rule or Regulation addressing a non existent subject in your governing documents.

If your governing documents do not address FINES there can be no rule/regulation.

Ask yourself, what good are the governing documents that take a VOTE OF THE PEOPLE to change if the Board at their whim can change anything in them?

Pat

Harold is right about checking how the fines are credited; this is one change of Ohio's law that I do not agree with. However before a BOD can slap a homeowner with a fine they must have a hearing

Application of Assessments The Association shall credit payments made by a Unit Owner in the following order of priority:

(A) First, to interest owed to the Association;

(B) Second, to administrative late fees owed to the Association;

(C) Third, to collection costs, attorney’s fees, and paralegal fees incurred by the Association; and

(D) Fourth, to the principal amounts the Unit Owner owes to the Association for the common expenses or Enforcement Assessments chargeable against the Unit.

To impose reasonable Enforcement Assessments for violations of the Declaration, the By Laws, and the rules of the Association and reasonable Charges for Damage to the Common Elements or other property.

Prior to imposing a Charge for Damages or an Enforcement Assessment pursuant to this Section, the Board of Directors shall give the Unit Owner a written notice that includes all of the follow-ing:

(1) A description of the property damage or violation;

(2) The amount of the proposed Charge or Assessment,

(3) A statement that the Owner has a right to a hearing before the Board of Directors to contest the proposed Charge or Assessment;

(4) A statement setting forth the procedures to request a hearing pursuant to this Section.

To request a hearing, an Owner shall deliver a written notice to the Board of Directors not later than the tenth day after receiving the notice from the Board required by this Section. If the Owner fails to make a timely request for a hearing, the right to that hearing is waived, and the Board may immediately impose a Charge for Damages or an Enforcement Assessment pursuant to this Section.
If a Unit Owner requests a hearing, at least seven days prior to the hearing, the Board of Directors shall provide the Unit Owner with a written notice that includes the date, time, and location of the hearing.

The Board of Directors shall not levy a Charge or Assessment before holding any hearing requested pursuant to this Section.

The Unit Owners, through the Board of Directors, may allow a reasonable time to cure a violation described in this Section before imposing a Charge or Assessment.

Within thirty days following a hearing at which the Board of Directors imposes a Charge or Assessment, the Association shall deliver a written notice of the Charge or Assessment to the Unit Owner.

Any written notice that this Section requires shall be delivered to the Unit Owner or any occupant of the Unit by personal delivery, by certified mail, return receipt requested, or by regular mail.

According to the statutes the board can set up a fining committee of at least three people. Once can set up a hearing before the fining committee. If you are in Florida check out the Statute 720 on fining.

Pat, most CC&Rs provide for establishing Rules and Regulations. And good By-laws will provide for establishing R&Rs by the Board or by the members. So often the Board does have the authority to establish R&Rs as stated by Jadedone. And if the R&Rs are reasonable they will stand up in court. Meanwhile, restrictions in the CC&Rs carry much more weight in court than if they are in the R&Rs.

Sidney, I recommend that when Rules and Regulations are established (and changed) that written notice be mailed to every member well in advance of initiating the Rule. This includes exactly how the fine process works. I have previously provided examples which you can view by using the "search" shown above.

I tried to keep out of this discussion. However, the point seems to be missed that fines are NOT allowed to be part of liens or foreclosures in MOST states. Which means that a member can gather lot's of fines but ultimately NOT have to pay any of them. Their dues money can't be applied to paying the fines either. Fines would have to stay in a separate account/balance. My opinion why charge fines if you can't legally enforce them and make pay up? Paying fines comes down to the member agreeing to pay those fines and coming into conformance but they technically don't have to pay up.

I am EXTREMELY hesitant in realeasing this information. I don't like letting people know that paying fines can be an option and not a requirement. NOT saying that some states or HOA rules don't make it mandatory to pay fines, but if the issue went to court, the HOA may NOT be the stronger party. An angry homeowner who's received an anormous amount of fines isn't going to pay up without a fight. If your HOA is in a state or has no fine enforcement allowances, you may want to heed this advice below. Otherwise, the other posters do have good advice and suggestions.

IF your HOA is in a state where fines can NOT be used as the basis of liens or foreclosures, you do have other options. (This option is available to most other HOA's as well). Let's say you have a resident who painted their house "Purple". The HOA requires BOD approval before painting and ONLY pre-approved colors. This owner failed to do both. The HOA should send the owner a letter of notification of the violation and request a meeting. This letter should also include the options the member has. 1. The owner could repaint the house after going through the proper approval process. (This is the peaceful resolution). 2. (Instead of fining) The HOA could hire a painting contractor of their choice and rate, to paint the house the right color and send the owner the bill. If the owner doesn't pay this bill, that then can be used for the basis of a lien.

Basically, a HOA needs to use it's "teeth". Fines are not typically the "Teeth" of a HOA. It is liens/foreclosures that are. If someone is in violation of the rules that cost money to fix it, then it has to be turned into a "lienable" situation instead. That's because liens are much stronger and more enforceable. Fines just make people mad and rarely pay them without leaving. If a owner who's been fined alot decides to sell and move, the HOA can't assign the fines to the new purchaser. The HOA also can't chase the person down and force them to pay the fines. They can if they have a judgement or a lien, but NOT if it's just an additional charge.

Keep in mind that damages are different than fines. If someone damages HOA property, you don't fine them for the violation. You send them a BILL for the repair. That repair bill is lienable. A fine out of punishment isn't. For example you can't fine someone for $25 for entering the pool area without approval and make it stick. You can charge them for any damages they have done while in the pool area unapproved.

Enforcing rules on owners in a HOA is tricky and not easy. It's usually a battle that no one wants to be part of but wants all the action in the world done about it. Fines sound good and are simple solutions to simple situations. However, when has there ever been a simple problem in a HOA?

Brad, your putting the horse before the cart here. You mention "judgements" are lienable. You don't get a "judgement" until you go to court. A lien is also considered a "Judgement". They dont' require the court appearance and applications that a small claims has.

How are damages lienable and fines not? Damages are that, damages. If the HOA has to pay for an item to be repaired or replaced back to the original condition, that is a cost the HOA would never had to incur IF the item had never been lost or damaged. There is proof of damages by receipts. A fine is NOT the same. A fine pertains to if a person does NOT comply to such and such rule or clean up, they will receive a punishment of $25 (?) a day or some other punitive cost. There are no real "damages" to the HOA as they did NOT pay to correct any situation. They just charged an ammount above the normal dues collection to correct a situation.

The court looks at cases involving fines and/or damages along the same lines. The court can ONLY make the HOA "Whole". The judgement stays around the cost of replacement and court costs if the situation never had occurred. Fines are more "Punitive" damages than real damages. Fines are more income while damages is a loss of income.

If the HOA really wanted to enforce the fines, they may have to go to court to get the judgement required for the lien or income garnishment. However, the HOA may lose the case. It's a bit more riskier case. If I were a HOA, I would make sure my case was strong and I could win. Having receipts and making the fine into damages instead is a much much stronger case that it could win.

The point is, if the Covenants say that you can be fined and you are fined then you have to pay or face legal action. Even though the fines are a civil court matter, every homeowner, at least in our community, signs a statement at the closing table that they have received, read and agree to the MANDATORY Covenant. If a resident who is in violation wants to fight it, it's only a matter of the HOA reminding the court that the homeowner AGREED to abide by the Covenant or pay the fine. If residents don't like the CC&R's than they shouldn't have decided to live in a place where they would have to obey rules. There's always farm land to buy where they can do what they want and not have to worry about fines.

Maybe I missed it, but in reading this posting, I don't see where Renee indicates the state where she resides. Renee - can you update this posting with that info? Thanks.

We are an Illinois HOA.

I mean various associations, not just the original poster's--who gets the money, how is it used?

I read your comment re fines. Very very interesting.
However, I am wondering if the law is the same in California.

Jean Strauber

PatH4,

I sense a considerable amount of frustration in your post. I would certainly be doubtful of “ITS” legal weight also!

Your association is unquestionable run differently than the “typical HOA”. However, the fining procedure should be one that is very descriptive in its process prior to actually FINING a Lot owner for such violation(s), IF indeed it is clearly stated as a violation, in which YOU “did sign”, so they say!

It sounds as though you are being fined, without an opportunity to comply to the said violation? If, so (If I were you) I would read (very thoroughly) my governing documents, CCR&E, By-laws and RR’s or what have you, before making such a broad claim merely based upon YOUR personal encounter with the board of directors that govern your association.

Attached is our covenant regarding the fining process of which we (the BOD) have the ability to FINE any person or persons not found to comply in the declared number of days (governing documents)

I’m the Vice President in our sub-division for the pass two years and I KNOW our governing documents specifically confirms the fining procedure we have followed. In which the board has exhausted every effort to maintain property values for all our residence.

Remember that the majority of HOA communities fine in order to obtain compliance while there is SOME BOD that only wants to “fatten” their pockets with additional cash from their residents.

Chuck W.

JC3 -That is a very good question that I will bring up at the next meeting. But what I do know is that fines or late fees are lumped together on a Delinquent Report until paid and then I would think it is reported as income in our Operating Budget.

The money we collect from fines and such is used for the operating budget.

Stephanie be careful about what you do with the fines. If they are budgeted then it gives the impression that you have a quota you are trying to fill.

Dave, you might want to read Florida Statute 720. There are several things you have said which are either in the gray area or incorrect. The final word on fines is decided by a group of homeowners that are not on the board or related to the board. If your committee has a board member or relative of a board member on it then that is not the final say. You also can not lien purely based on fines; there has to be a dues problem first.

Jean,

I can't answer for CA but if I had the time the best place to look is on the CA Legislative Website.

As to the CONTRACT....contract law is contract law and is the same across the United States.

Pat
www.CHORE.us

Not true DavidH4!!

PatH4

I apologize, for insinuating such a ridiculous notion. I ASS-U-MED you were speaking on behalf of your HOA, thus YOUR fining procedure (or lack thereof), otherwise you shouldn’t have provided the “legal advice” that you had.

I HAVE NO “LEGAL QUALIFICATION”. I wasn’t providing you (anyone else) with LEGAL ADVICE. You’ll need to hire an HOA attorney to provide you with that type of advice. I was doubtful as too your interpretation of the governing documents.

First of all, I DON’T NEED TO BE HOA ATTORNEY TO GIVE MY INTERPRETATION OF YOUR GOVERNING DOCUMENTS!

Your philosophy about “Compliance Day” is great in theory, however like many GREAT ideas; it certainly wouldn’t be very practical.

I don’t believe any board should have to “hold their hand” to achieve compliance. Abiding by the governing documents, CCR&E, By-laws and R/R are what govern our community as they have the “LEGAL WEIGHT” of which I speak of.

So basically you’re saying you can break the rules as (or until Tuesday?) long as you don’t get caught?! HMMMMM, I don’t think that would be in the best interest of my community. I will stick to the fining processes that the builder had chosen in a means to achieve compliance within our community.

Thanks anyway for your suggestion.
Best of luck.

Chuck W.

Kudos to you Chuck W.!!!

Oh, I have read it

PatH4

I apologize. Apparently, I’ve misinterpreted your post. I really don’t know the difference between the two, I guess.

I personally don’t have a problem with x-mas lights.
The decorations themselves don’t immediately affect the HOA however the decoration when displayed during inappropriate times of the year do affect property values for all the lot/unit owners.

For example if Christmas lights and/or decorations were displaying in the middle of June, while the house just down the road was attempting to sell there house it certainly would make a HUGE difference (financially) for the person purchasing as well as the seller.

The HOA has these R/R, By-laws and CC&R to maintain property values for all its residents.

Please remember that many board members reside within the association also, and they too have to abide by the governing documents, and they also my think its rather ridiculous, but they realize it may potentially increase their property values also.

Chuck W.