HOA Bylaw violation Lien

This isn't how liens work. You can't lien for a violation. You can lien for unpaid dues. However, there is a process of placing a lien for the HOA fixing a violation. Let's say someone has painted their house the wrong color. The HOA can request they repaint it the correct color or the HOA will do it for them. If the HOA does paint it, it will be at the HOA's expense and will send the owner the painting bill. IF the owner does not pay the paint bill, THEN the HOA can lien for the amount of the paint bill. It should be noted this can't be basis for a foreclosure. Foreclosures are based on UNPAID DUES.

So if you are wanting to place a lien for someone leaving the garbage can out that is against the HOA rules, then that is more along the lines of issue FINES. Which are the process of corrective actions. However, your HOA needs to have a FINING Schedule in place AND the right to fine. The fining schedule is the list of violation equals this amount of fine. It has to be distributed to ALL members.

So you will not find a form to file a lien for a HOA violation. You find them for unpaid dues. Some states require a lawyer to file. Which that expense is part of the lien of the money that will be owed. Don't assume an individual or HOA can just file the paperwork. It is a legal process.

The best thing a new trustee can do is to learn the legal limits of what they can and can't do, or they'll get themselves into a world of hurt.

The legal limits will be found in your CC&Rs, your bylaws, and in state laws governing communities associations (or corporations if your state does not have specific laws for HOAs or COAs. As John noted, laws vary by state and by community. Boards have significant limitations on what they can lawfully do.

The normal process for violations of your CC&rRs is to impose fines or other consequences. In order to do so, your CC&Rs must allow this, and the association must have a published fining schedule. It's also common for associations to send out one or two warning letters before imposing any kind of fine or other consequence.

This is often referred to as "due process" - and failure to do things by the book can result in an owner successfully challenging whatever the board has done about the violation. No shortcuts!!

I have never heard of any state that allows for liens other than for unpaid dues or corrective actions the HOA took. Fines can not be the basis of liens unless you do some "fancy" accounting. Meaning the HOA applies your dues collection money to pay off the fines. Which then of course makes it "appear" as unpaid dues on the records. That is how HOA may do the lien process you suggest.

Otherwise this HOA isn't going about things the proper way or using the right tool. Which is a fining schedule, ability to fine, and choosing how they want to apply the paying off of those fines.

Note: Fines can not be the basis of any foreclosure. They are punitive in nature. Liens/foreclosures are not based on punitive cost/expenses. They are based on unpaid debt that is part of their income. Fines are never ever income.

In my state and my community, fines are classified as assessments, meaning that we can lien and foreclose based on fines.

I think it would be hard to foreclose based on fines alone because fines are generally so small compared to assessments. You'd need to have some other charges in there - such as legal fees or repair costs assessed to the owner if they did some serious damage to a clubhouse or something.

Judges can be reluctant to agree to a foreclosure, so our attorneys told us to be sure to make the case as slam dunk as possible. The board needs to follow procedures to the letter, and it needs to be clear that the owner has no intention of living up to their obligations. (We actually foreclosed successfully last summer, for a combination of unpaid assessments, late fees and legal costs.)

Let me put this in perspective. Let's say you sell your car to someone. You agree to a payment plan. They stop paying. Your choices are to lien them or take it back (foreclosure). However, if the new owner decides to paint it "purple" and a giant neon sign on it, you can't lien them if they are still making the payments. You can instead make them pay for the restoration of the car back to original condition. If they do not, then may fine them.

This is an example of what consitutes what is lien/foreclosure and what is just a violation and what is payment due.

It was under $7000. The owner had pretty much stopped paying a couple years earlier. The property was auctioned, and the minimum bid was set at the initial amount of the mortgage. We actually netted much more than that.

Personal opinion: the buyer overpaid. I'm grateful that the buyer did so, but I think that's pretty unusual. Why I think it happened in this case: this is a desirable, well maintained community in a popular area, at an attractive price point, and listed homes sell in one to ten days.

Kerry, we do not have any R&R, just Bylaws. Would it be unorthodoxed to add fines/penalties to our Bylaws since we don't have R&R or CCR?

Kerry, we are known as Lake Timber Ridge Land Owners Association and we only have Bylaws outlining assessments, road maintenance, electing trustees, etc.. However, we are not registered nor incorporated in Missouri. The head trustee of 20 years passed away in 2020 so we're all trying to pick up the pieces. Unfortunately, we lost all our records that he had b c the other trustees at the time did not attempt to get the records before the heirs had thrown them away and his computer.

Bylaws attached and recorded. We have a $3M insurance coverage plan for trustees and landowners in the event someone drowns or whatever.

The bottom line on a foreclosure is will we make money and/or pay off what is owed us? Personally I would want a very big financial cushion for my HOA to even consider a foreclosure. Chance are those in trouble owe more then just their HOA dues.

Value of $200K, $150K mortgage, foreclosure would be on the financial edge for me.
Value of $200K, $100K mortgage, foreclosure should be looked at.
Value of $200K, $50K Mortgage, how could any one be this stupid?

That helps. The bylaws in this case combine what are often separate documents, so they contain use restrictions (which are referred to as "restrictions" and "covenants" in the document) as well as provisions for an annual meeting, etc. Very bare bones, though, compared to the typical CC&Rs, bylaws, etc. of many HOAs.

I did find the following:

"The trustees shall have the authority to commence a legal action to enforce any provision contained herein. The trustees may defer any action until the specific matter is raised at a meeting of owners. If suit is required against an owner to enforce these restrictions, the owner shall be required to pay the trustees' attorney fees and the cost of such action if the suit is successful. If costs are assessed against the trustees or the subdivision the trustees may pay such items out of subdivision funds."

I didn't see anything about fines except in the case of delinquent assessments. So the question is, do fines constitute "legal action"? If so, it's OK to fine for violations.

I sort of disagree with John about it being OK if it's not prohibited. I think that if it's not spelling out in the bylaws, which are a contract, then it's not allowed. But we're not lawyers, and I think court cases have come down on both sides of the question.

Long story short, I think you need a competent legal opinion.

Does anyone have a sample Arbitration clause that they can share? This is a draft of what I'm trying to put in place with our Bylaw amendments:

9. "THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." all claims must be enforced under the Federal Arbitration Act, 9 U.S.C. and/or the Missouri Arbitration Act, section 435.350 RSMo In the event a dispute shall arise between the parties to this HOA, By-laws, Policies, Rules and Regulations, etc., it is hereby agreed that the dispute shall be referred to Arbitration and Mediation. The arbitrator’s decision shall be final and binding and judgment may be entered thereon. In the event a party fails to proceed with arbitration, unsuccessfully challenges the arbitrator’s award, or fails to comply with arbitrator’s award, the other party is entitled of costs of suit including a reasonable attorney’s fee for having to compel arbitration or defend or enforce the award. Any controversy or claim arising out of or relating to this Agreement, the relationship resulting in or from this Agreement or breach of any duties hereunder will be settled by Arbitration in accordance with the Arbitration Rules. All hearings will be held in Gasconade County, Missouri before an Arbitrator who is a licensed attorney with at least 10 years of experience. A judgment upon the award rendered by the Arbitrator shall be entered in a Court with competent jurisdiction. The Federal Arbitration Act (Title 9 U.S. Code Section 1 et. seq.) shall govern all arbitration and confirmation proceedings. As a condition precedent to the filing of an arbitration claim, the parties agree to first mediate any claims between them. Any party refusing to mediate shall not prevent the other party or parties from pursuing their claims in arbitration. The parties will share the cost of mediation equally. Nothing herein will be construed to prevent any party’s use of injunction, and/or any other prejudgment or provisional action or remedy. Any such action or remedy will not waive the moving party’s right to compel arbitration of any dispute. The parties agree to also meet and negotiate in good faith in order to resolve any disputes which may arise between them. For each arbitration claim and counterclaim, HOA charges a filing fee of $900 for a typical two party case. For each additional party, an additional $450 fee will be due. Parties are defined as those needing separate legal counsel and/or a separate insurance company representative. Each Party shall bear all of its own costs (including the fees of its attorney or other representative) incurred after the Termination of Mediation and shall share equally in the costs of conducting any voluntary arbitration proceeding (collectively "Post Mediation Costs"), except as otherwise provided in this Declaration; provided, however, if the Claim is litigated in whole or in part, the prevailing party shall be entitled to receive an award of attorney's fees and court costs as deemed appropriate by a court of competent jurisdiction.

No. It's a proposed bylam amendment for members to approve, but goal is to save $$ if litigation is required.

Question. When talking about liens and foreclosures shouldn't the mortgage status be included? I know we have an owner who habitually doesn't pay dues. We have liened and sued and won a judgement. Before we began foreclosure the bank holding the mortgage paid off the judgement.

We are currently at the beginning of the process again. The Board contacted the bank holding the mortgage and asked what they wanted to do and they said they would let us know after we filed the lien.

I totally agree it is not a DIY project.