Violation Letter Administrative Charge

Started by JackB8 • 16 replies • 799 views

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JackB8 (Virginia)
Posts: 141

Posted:

In my community the charges for letters to violators of community standards has never been assessed to the violator and frankly fines are seldom assessed by the board during executive session. The cost for thde management company preparing and mailing these initial ($12) and followup letters (followup are $27 and are sent certified mail) is charged to the HOA. As a result the hard core violators view the enforcement program as pretty much a joke because there is little incentive to comply. The attorney says it is illegal to charge violators for these letters. It is supposedly viewed by the law as a cost of doing HOA business. Does anyone have advice on this issue?

CathyA3 (Ohio)
Posts: 6,299

Posted:

Take a close look at your governing docs and see what they say about fines and other assessments. You may have to read through everything because relevant language may be in unexpected places (we have something about assessments in our bylaws).

Letters may be a cost of doing business, especially since the first notice often results in people complying and no fines. But it sounds like people's attitude and mounting mailing expenses is the result of lax enforcement, and that's past boards' fault for not doing their jobs. You'll always have a few stubborn folks, but a change in the community culture may make the majority get with the program.

The board should decide to enforce fairly and across the board, publicize the change and spend time educating the community, then get busy. Time spent on educating people about the rules - many are totally uninformed - and convincing the community that following the rules is good for everyone will pay off big time and make the board's job easier.

SheliaH (Indiana)
Posts: 6,964

Posted:

If you have a fine schedule, perhaps you can fold the administrative expense into the fine.
Ask your attorney about that.

It would also appear you have an issue with your board If it doesn't seem interested in enforcing the rules, which would include assessing a fine, if appropriate. That's something the homeopathic will have to fix, either by insisting on enforcement of voting them out and replacing them with people who will.

Or perhaps it's time to look at the rules and determine what needs to be changed, tossed, or even added. Rules are useless if they're not enforced and you may have some that no longer serve their purpose. Neighborhoods change and rules may need to change as well.

You won't be able to address every issue in HOA land, nor should you. Some things may be more of a disputes between neighbors, which usually the board should stay out of, unless the common areas are being misused or damaged, or several neighbors are affected.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

SheliaH (Indiana)
Posts: 6,964

Posted:

Tablet thumbs - I meant homeowners need to change the board of they don't like how it enforces the rules - or not.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

ND (PA)
Posts: 792

Posted:

My overall advice would be to work violation coordination (letters, tracking, etc.) into your management contract as fixed-cost service that is provided when needed versus a separate, variable cost to the HOA when it is performed.

The way it is currently set up actually incentivizes the Management Company to send more letters and continue the escalation of the process with follow-up letters (as they are more costly to the HOA for some reason . . . sending certified should add no more than $5 to a letter). Each letter sent is money in the MC's pocket. This sort of arrangement will surely result in discord within the HOA as there is likely constant churn of identified violations (especially petty ones), violation letters, lawyer involvement, etc. This situation is good for the MC (keeping them busy and necessary) and bad for the HOA, Board, and Homeowners. This is my experience.

While this is likely what you've agreed to within you management contract, you are seeing the result of it. In my opinion, this is clearly a money-grab by the management company. Again, agreed that it's probably part of the contract, so kudos to the MC for having it in there, but the Board should work to remove it.

While sending the letters takes time, in reality I give it about 10min/letter . . . it should take no more time than adjusting small pieces of an already-created form letter, printing the letter, and stuffing in an addressed/stamped envelope. For follow-up letter, the only difference is added cost to send certified.

If contract provides this stuff as a fixed-cost part of the contract, then the cost of it would shared equally by all homeowners as part of the assessment portion that pays the cost of the management contract.

If contract provides for the variable cost, then I suggest reading your documents a bit more closely. In my experience, there certainly should be provisions in there that costs incurred specifically by action of individual homeowners are chargeable directly to those individual homeowners. So while I'm not an attorney, I somewhat question your attorney's input. But I also haven't read your docs and/or state HOA laws, so I could be totally off base.

JohnC77 (California)
Posts: 562

Posted:

Having worked for a few management companies, the way it will generally work is you charge the homeowner, but it is expensed to the HOA. IF and when the homeowner pays, as then it becomes a wash.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Jack,

Your attorney is correct.

Due to the 2013 Samir Farran et al. v. Olde Belhaven Towne Owners Association legal case, which you may have heard actually put the HOA into bankruptcy, the Virginia Courts ruled that unless the covenants specify that the Association has the authority to impose monetary penalties for violations, then the Association can not impose such charges. To do so would be exceeding their authority.

Therefore, the MC contract might specify the MC is paid $xx per letter, that charge can not be recouped.
Personally, I would caution having such specifics in a contract with an MC as an unscrupulous company can use the process as an additional revenue stream.

For more info on the case, see: https://century21nachman.com/fairfax-hoa-bankrupted-by-lawsuit/

The following thread on this site has the ruling:

Subject: VA Associations, Do you still have the authority to use monetary penalties for violations? A copy of the ruling is attached to posts near the bottom of the thread (as the links to the case are broken).

Our Association, when I was on the board, would inform the member that the Board will impose monetary penalties until the issue is resolved but would waive those charges if the issue was resolved by mm/dd/yyyy. The Board knew we couldn't impose the charges, but the members did not. Hence, the issue would be resolved by the date and the board would send a letter thanking the member and inform them charges were waived. Fortunately, nobody called the boards bluff.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You also have to understand the relationship with the MC and the HOA. The MC is a PAID company of which the HOA is paying for this service. Because it is a paid service then the HOA bears the brunt of the expense. It isn't a case of borrowing from Peter to pay Paul. They are paying Peter for them to go after Paul.

Former HOA President

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Melissa,

That may be a bit broad - again, states have various structures allowing an HOA to recoup some expenses - I suspect some states allow the HOA to shift the burden to the owners being fined.

JackB8 (Virginia)
Posts: 141

Posted:

Melissa. I can be think headed at times. Can you put your reply in a different way please? I really don't understand it. Do you think the violator who committed the violation or all residents who are not at fault should pay? .

TimB4 (Tennessee)
Posts: 21,059

Posted:

Jack,

It doesn't matter if one believes the Association (all members) should share the cost of violation notices (i.e. cost of doing business) or if one believes the violator should be burden with the cost of informing them of the violation. Per Virginia statutes, unless the covenants specify one may impose such monetary penalties, then it is simply the cost of doing business.

If your covenants don't currently have such wording, I wish you luck in amending the document to include it.

Personally, I think it's the cost of doing business until certified mail is involved.
Once it reaches that level, I think it would be fair to include the cost of the certified letter as part of the penalty.

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By ND on 01/13/2021 11:11 AM
My overall advice would be to work violation coordination (letters, tracking, etc.) into your management contract as fixed-cost service that is provided when needed versus a separate, variable cost to the HOA when it is performed.

The way it is currently set up actually incentivizes the Management Company to send more letters and continue the escalation of the process with follow-up letters (as they are more costly to the HOA for some reason . . . sending certified should add no more than $5 to a letter). Each letter sent is money in the MC's pocket. This sort of arrangement will surely result in discord within the HOA as there is likely constant churn of identified violations (especially petty ones), violation letters, lawyer involvement, etc. This situation is good for the MC (keeping them busy and necessary) and bad for the HOA, Board, and Homeowners. This is my experience.

While this is likely what you've agreed to within you management contract, you are seeing the result of it. In my opinion, this is clearly a money-grab by the management company. Again, agreed that it's probably part of the contract, so kudos to the MC for having it in there, but the Board should work to remove it.

While sending the letters takes time, in reality I give it about 10min/letter . . . it should take no more time than adjusting small pieces of an already-created form letter, printing the letter, and stuffing in an addressed/stamped envelope. For follow-up letter, the only difference is added cost to send certified.

If contract provides this stuff as a fixed-cost part of the contract, then the cost of it would shared equally by all homeowners as part of the assessment portion that pays the cost of the management contract.

If contract provides for the variable cost, then I suggest reading your documents a bit more closely. In my experience, there certainly should be provisions in there that costs incurred specifically by action of individual homeowners are chargeable directly to those individual homeowners. So while I'm not an attorney, I somewhat question your attorney's input. But I also haven't read your docs and/or state HOA laws, so I could be totally off base.

In California, it is not unreasonable for a non-partner attorney to charge $360 an hour for their service. So 10 minutes would equate to $60 to produce that letter.

As I mentioned, we would charge the homeowner the cost to produce the notice and expense to the HOA. When the homeowner pays, the HOA is made whole and the HOA bears no cost.

JackB8 (Virginia)
Posts: 141

Posted:

Outstanding help from everyone and I truly appreciate it. This is an exceptional response. In my opinion this issue is way too simple to spend so much time on but my board is going on two years now trying to work thinbs out. most of that time spent arguing with or ignoring me. I do not give up easily. When ther door is finally closed on this issue, I will post the result.. Please keep your experienced thoughts coming.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Our MC does not charge us for violation letter but also, we send very few. I say either build the cost of such into the fine or add it to the fine. I say building it in makes it neater and cleaner.

In the case of liens or cost to pursue delinquents, we use a lawyer and his charges are above and beyond what is owed the association and they are billed to the owner. We had one very delinquent owner who owed the association $2.5K in past dues. The additional costs (interest, expenses, legal costs, etc.) had driven the amount owed to over $5K.

ND (PA)
Posts: 792

Posted:

Quote:

Posted By JohnC77 on 01/14/2021 11:34 AM

In my experience, a relatively straightforward and simple "violation courtesy" letter and even a follow-up letter does not necessitate a lawyer's involvement. Maybe CA is different though and all part of the HOA business empire.

JohnC77 (California)
Posts: 562

Posted:

I wasn't saying it had to be written by an attorney, just time costs money. Each association I manage has appropriately 144 violation letters in different stages as required by California statues. If professionally done and tracked, it is not as simply as just a 10 minute letter.

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