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ReneeD
(Illinois)

Posts:192

08/30/2007 7:38 AM
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

RogerB
(Colorado)

Posts:4686

08/30/2007 8:41 AM
Renee, do your CC&Rs provide for establishing Rules and Regulations? If so, then make sure the R&Rs are reasonable.

ReneeD
(Illinois)

Posts:192

08/30/2007 11:00 AM
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

HaroldS1
(Arizona)

Posts:314

08/30/2007 2:29 PM
If you have unpaid contested fines, and you make assessment payments, be sure the payment is applied against the assessment and not against fines, interest, late charges, etc. If your assessment goes unpaid as a result, they can foreclose on your property. Some states (like Arizona) have laws requiring any payment received be first applied to outstanding assessments, and, if any, remaining payment can be applied to other charges in a descending order. This is very important. Harold

GloriaM
(North Carolina)

Posts:829

08/30/2007 2:37 PM
Renee: If your state allows for fining then your state laws would supercede.

PaulM
(Pennsylvania)

Posts:1347

08/30/2007 3:10 PM
ReneeD: You do state that your community has Homeowner Rules and Regulations and that your Bylaws do allow the Board to 'adopt rules and regulations...'. It appears that in the past, an Exec. Board did just that. It is not necessary for the Board to adopt R&R based on member vote unless your documents state this is the process which must be followed. It is common practice for an Exec. Board to adopt R&R without member vote; however, the R&R are provided to clarify, expand, or make clear what the CC&Rs already state. You also express concern over "...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..." In order for the ARC Committee or Exec.Board to fine anyone, there must be proof that a violation has occurred which is against the documents (CC&R, R&R); however, the fining process should be followed as it's stated in your CC&R. Further, your concern with "...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." Again, you must refer to your documents for the procedure on fining; usually a fine is levied after proof, at a hearing, that a violation has occurred and has not been righted within a certain time period. So, if it has been proven that a fine is warranted, and it has not been paid, it would be considered in arrears and treated accordingly. Why do you think there are so many fines being issued? Are your documents not clear on restrictions?

PatH4
(Arizona)

Posts:17

09/02/2007 10:53 AM
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

Jadedone4
(Virginia)

Posts:495

09/02/2007 11:00 AM
PatH4, I disagree with your statement that a board cannot promulgate rules and regulations on subjects which the governing documents do not mention specifically. Most (not saying all) governing documents incorporate specific powers of the board to issues rules and regulations, with regards to the community. Also there are certain structures/guidelines which the board must adhere to when doing so. If the governing documents are silent on "fines" a resolution can be drafted, voted and approved by the board, so as long as it does not violate federal, state, local, (and since they are silent).. governing documents. I do not believe that governing documents are drafted to be "omnipotent" with regards to every power as prescribed to a board, or every rule/regulation for the community - there is usually a healthy balance between what can be done, and (important) "how" it should be accomplished (board resolution, majority votes, etc).

GlenL
(Ohio)

Posts:3621

09/02/2007 1:59 PM
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.

Your board meeting is not held in the Situation Room of the White House. It's not life or death. Let people in, keep it positive, then go home and get a good night's sleep. If you hold off drinking until after the meeting, instead of before or during, you're probably doing OK. JosephW

DavidH4

Posts:0

09/03/2007 10:07 AM
In our Association, the BOD has to approve the fine before the Management Company issues the notice. The owner has the right to appeal the fine to the Covenants Committee who has the final word whether to approve or disapprove the fine.

SheilaM2
(Florida)

Posts:10

09/03/2007 3:03 PM
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.

PatH4
(Arizona)

Posts:17

09/03/2007 11:20 PM
Jadedone4, You can disagree if you like but if a Board is making Rules and Regulations that do not require approval and vote of the homeowners and the subject issue is not addressed in the Governing Documents then the Board CANNOT do that. And just for good measure, the rules and regulations if used against a homeowner would not stand up in court. Pat

RogerB
(Colorado)

Posts:4686

09/04/2007 7:54 AM
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.

SidneyP
(Florida)

Posts:299

09/04/2007 8:38 AM
It appears from most post that the BOD's can establish "rules and regulations" w/o the approval of it's members. That they can also place fines. What I would like to know is, doesn't the BOD's at least have to inform it's members about the fines and what the fine will be and how they are imposed? Our CC&R's do say the BOD's can fine but that's all it says....I feel we should be told exactly how the fine process works. Right or wrong?

RogerB
(Colorado)

Posts:4686

09/04/2007 8:46 AM
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.

StephanieB3
(Georgia)

Posts:29

09/05/2007 6:57 AM
It seems that the only people that would be complaining about fines are thoses that are in violation. The BOD's only agenda is to maintain a level of standard that will ultimately keep property values high. If you are in violation, then apparently you are doing something that is not for the good of the whole community. What you do with the exterior of your property affects your neighbors. So, what is it that you are being fined for?

MelissaP1
(Alabama)

Posts:2207

09/05/2007 7:29 AM
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?

Former HOA President

BradP
(Kansas)

Posts:2491

09/05/2007 7:36 AM
Melissa: You said fines are not enforceable or lienable in most states? Which ones are those? To the best of my knowledge in most states judgements are lienable. So fines are teeth that is needed. How is damages lienable? You can't do that without a court judgement, that is all they would need to do with fines is get a court judgement.

MelissaP1
(Alabama)

Posts:2207

09/05/2007 8:15 AM
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.

Former HOA President

DavidH4

Posts:0

09/05/2007 8:20 AM
Melissa, I'm not real sure what you are talking about. If a Board or Association issues fines, and they go unpaid, it can be taken to court and a judgement issued against the property. They may not pay the fines, but they will not be able to sell the property until the judgement is settled, ie; liens paid.

StephanieB3
(Georgia)

Posts:29

09/05/2007 11:59 AM
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.

StephanieB3
(Georgia)

Posts:29

09/05/2007 12:08 PM
By the way, you will receive a lien on your property if (a) you don't respond to the court within 45 days or (b) you do respond and have the court rule against you. When you decide that the fines are "can't be enforced" and you don't respond to the court, then after 45 days, the court automatically rules in the HOAs favor and against the defendent. After the ruling then the HOA has to file for a FIFA and get a levy against the property. Once you have that you can foreclose on the lien, garnish the wages of the owner, or have the sheriff to come and sell the residents property to cover what they owe.

MikeS1

Posts:0

09/05/2007 12:11 PM
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.

MelissaP1
(Alabama)

Posts:2207

09/05/2007 12:38 PM
Oh contraire! You can face fines about anywhere. I live outside a HOA and I can get fined for high grass by the city. The city next to us will even impound an abandon vehicle if it is in view and not moved. Fines aren't exclusive to a HOA. Sorry to disapoint but the grass isn't "greener" on the other side of the HOA fence! My point seems to be missed or not wanting to be swallowed. Fines in HOA's are not necessarily enforceable. I didn't want to bring this up so much as I knew many here wouldn't agree or understand. Plus it may provide a bit of ammo to those who are currently receiving fines. Yes, fines can work like "tickets" in some HOA's. You can get a fine for parking on the street. You can get fined for not putting your garbage out on the right day. You can get fined for not fixing a fence or other structure. You can get fined for not removing a variety of items or failing to obey certain rules. These types of fines are used to make sure proper adherence to the rules are obeyed. It's a TOOL for the HOA to use for enforcement/compliance. I am NOT saying it's a wrong thing to do or even illegal to fine. IF the CC&R's/By-laws are written to allow fines and the Members have agreed to the fining rate and terms, then they can most likely be enforced. It has to be documented that the fining system exists and was approved by the majority of HOA members. Plus the state must allow for fines to be collected. However, it's been my experience that alot of HOA's don't have a fines system in existence. They are always wanting to create one. Basically on a case by case situation. Something pops up they don't like so now they turn to the board to do something about it. Well, the board/HOA never established a fine system and thus have no real power to levy one. If the HOA did decide to implement a fine system, it takes ALOT of work and approval. The system would also have to be part of their documentation which takes time and money to change. So the HOA is now faced with getting a majority vote of the owners to levy fines, and then have to agree to the rates, max rates, and areas to levy fines. After that they have again have a vote to update the CC&R's and by-laws. That can costs thousands of dollars in legal fees and copies alone. Then of course after all this is said and done, there is someone who violates a rule that's not part of the original draft. Plus the HOA may find out they aren't allowed to place fines according to state laws. You may run into the issue that the homeowners realize that THEY may be subject to fines themselves if they vote for the fine system. There goes the majority vote! Can you tell I've been here before? I am not discouraging the idea of fines. It's just an Owner needs to do a bit more research in the actual applicability of a fine. It's NOT a surface fix. Fines are a double-edged sword. An out of control HOA placing fines on certain members can cause those member to sue the HOA. Fines also make homeowners compliant to the rules. Consider fines like fences they make good neighbors but they block the view!

Former HOA President

ReneeD
(Illinois)

Posts:192

09/09/2007 11:08 PM
We are an Illinois HOA.

JC3

Posts:290

11/16/2007 12:24 PM
What does your association DO with the fines and the fees and interest on them? How is it used? Operating budget, reserves, emergency savings, social, or some other way?

JC3

Posts:290

11/16/2007 12:25 PM
I mean various associations, not just the original poster's--who gets the money, how is it used?

PatH4
(Arizona)

Posts:17

11/17/2007 6:29 PM
Here is the bottom line.... When you purchased your house you agreed to the Governing documents, CC&Rs, Bylaws, Articles and Rules and Regs. It is called a CONTRACT but this is an ADHESION CONTRACT. FINES are NOT ALLOWED in contract law unless it says you will be charged $100 for leaving your garbage can out past the bewitching hour. And I doubt you will find such language. So again, FINES ARE ILLEGAL IN YOUR CONTRACT. In order for your HOA to collect FINES they must file in a real Court of Law for DAMAGES. So the HOA must prove to a Judge HOW YOU "DAMAGED" THE HOA BY LEAVING YOUR GARBAGE CAN OUT PAST THE BEWITCHING. (I would love to hear that). Just remember this fact, just because the HOA says so doesn't make it so. How often have you heard, "but you signed". Yeah, well you can sign a contract to sell your child but IT'S NOT A LEGAL CONTRACT. Pat www.CHORE.us

JeanS1
(California)

Posts:23

11/18/2007 1:31 AM
I read your comment re fines. Very very interesting. However, I am wondering if the law is the same in California. Jean Strauber

JeanS1
(California)

Posts:23

11/18/2007 1:31 AM
I read your comment re fines. Very very interesting. However, I am wondering if the law is the same in California. Jean Strauber

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