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Subject: Do Fines Work?
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AnnE3
(Texas)

Posts:5


10/20/2019 10:14 AM  
Our board has the authority to issue fines of $25 a month until a non-compliant condition is cured.

We've never done that, but we have a couple of new homeowners who have been advised (nicely)
what the rules are for a new roof, etc but have chosen not to comply.

Our CCRs allow us to file a lien once a fine reaches $200.

Do fines work? Or, will be filing liens that take years to get paid.

TimB4
(Virginia)

Posts:16542


10/20/2019 10:24 AM  
Unless you are willing to foreclose, liens are simply a waiting game.
When, if, they sell, you will get your money.


We have used the threat of monetary penalties successfully.
Typically the board will say the penalty is $x per day until fixed but the board will waive all penalties if fixed by mm/dd/yyyy. This tends to work.


You issue is different.
To be realistic, if the roof is already on, it's doubtful that any homeowner will spend that type of money again simply to appease the HOA. If you can't work it out, it will likely take a court action to remedy.

you would do better with a compromise.
We actually had something similar and settled out of court with a written agreement that when the item needed replaced or if the home was sold (which ever came sooner) the owner would comply. Such a written agreement would carry more weight if we had to repeat taking legal action.
BillH10
(Texas)

Posts:410


10/20/2019 11:17 AM  
Ann, I agree with Tim's advice and have been down the exact same road.

This type of situation can be misconstrued in Texas due to a provision in the property code. I recommend you consult with your attorney lest someone think the roof issue is of an "Uncurable Nature" as defined in the Texas Property Code section 209.006(b)(2)(A). The code is quite clear as to what type of restrictive covenant violation is "uncurable" (shooting fireworks, holding an estate sale if doing so is prohibited, single event noise violation, etc.) The roof issue is likely curable, but at great expense.

Another option would be to modify the architectural guidelines if it makes sense to do so. Following a storm event a few years ago, a client found expanding the list of acceptable shingle colors made sense as the original list was 20 years old and owners were complaining that styles, colors, and tastes had changed.
NpS
(Pennsylvania)

Posts:3865


10/20/2019 12:42 PM  
Posted By TimB4 on 10/20/2019 10:24 AM
We actually had something similar and settled out of court with a written agreement that when the item needed replaced or if the home was sold (which ever came sooner) the owner would comply. Such a written agreement would carry more weight if we had to repeat taking legal action.


Tim
Was this a situation where a lawsuit was actually filed and it was settled out of court? Or were you able to avoid the filing stage by just coming to an agreement? Do you have an Internal Dispute Resolution process that would minimize the likelihood of going to court?
Thx.

Sikubali jukumu. Read all posts at your own risk.
SamE2
(New Jersey)

Posts:181


10/20/2019 2:19 PM  
How long has the new owner owned the property and did the problem/issue exist before they bought the property?
GenoS
(Florida)

Posts:3328


10/20/2019 4:14 PM  
It's always the newcomers who try to push the envelope.
TimB4
(Virginia)

Posts:16542


10/20/2019 4:32 PM  
Posted By NpS on 10/20/2019 12:42 PM
Posted By TimB4 on 10/20/2019 10:24 AM
We actually had something similar and settled out of court with a written agreement that when the item needed replaced or if the home was sold (which ever came sooner) the owner would comply. Such a written agreement would carry more weight if we had to repeat taking legal action.


Tim
Was this a situation where a lawsuit was actually filed and it was settled out of court? Or were you able to avoid the filing stage by just coming to an agreement? Do you have an Internal Dispute Resolution process that would minimize the likelihood of going to court?
Thx.




I only saw the agreement in our records.
Lawyers were involved.
Knowing who was on the board at the time, I suspect a lawsuit was actually filed but am not positive.
NpS
(Pennsylvania)

Posts:3865


10/20/2019 5:34 PM  
Posted By TimB4 on 10/20/2019 4:32 PM
Posted By NpS on 10/20/2019 12:42 PM
Posted By TimB4 on 10/20/2019 10:24 AM
We actually had something similar and settled out of court with a written agreement that when the item needed replaced or if the home was sold (which ever came sooner) the owner would comply. Such a written agreement would carry more weight if we had to repeat taking legal action.


Tim
Was this a situation where a lawsuit was actually filed and it was settled out of court? Or were you able to avoid the filing stage by just coming to an agreement? Do you have an Internal Dispute Resolution process that would minimize the likelihood of going to court?
Thx.




I only saw the agreement in our records.
Lawyers were involved.
Knowing who was on the board at the time, I suspect a lawsuit was actually filed but am not positive.




Thanks Tim.
I like the idea of having an agreement in writing, but it can be costly using lawyers. That's why I asked about internal dispute resolution.

In PA, and probably in VA too, the HOA must provide a resale certificate which identifies all the deficiencies related to the property. If we had a letter like yours, we would make it an attachment to the resale certificate.

And that's where the S might hit the fan. Some homeowners might be willing to sign an agreement, but then get bent out of shape when the HOA makes that agreement part of the resale certificate. (Pre-sale, most owners don't even know about resale certificate requirements.)

We had a situation where the selling homeowner threatened to sue the HOA because he thought the letter might make it impossible for him to sell the property.

Any thoughts?

Sikubali jukumu. Read all posts at your own risk.
MelissaP1
(Alabama)

Posts:8711


10/20/2019 5:57 PM  
I don't think fines can be used for the basis of liens/foreclosure per state laws. So doesn't matter what your documents say. May want to verify that as each state varies. That being said, there are some ways that HOA's can fiddle with the books to apply dues payment to fines. Thus it looks like non-payment of dues has occurred THEN a lien can be file for the unpaid dues. I find this underhanded and do not agree with that practice. However, straight out fines do not necessarily translate into lien.

Former HOA President
NpS
(Pennsylvania)

Posts:3865


10/21/2019 12:39 AM  
Posted By MelissaP1 on 10/20/2019 5:57 PM
I don't think fines can be used for the basis of liens/foreclosure per state laws. So doesn't matter what your documents say. May want to verify that as each state varies. That being said, there are some ways that HOA's can fiddle with the books to apply dues payment to fines. Thus it looks like non-payment of dues has occurred THEN a lien can be file for the unpaid dues. I find this underhanded and do not agree with that practice. However, straight out fines do not necessarily translate into lien.


In a state that requires a resale certificate, it doesn't matter so much if a lien can't be filed. Any debt identified in the resale certification gets transferred from Seller to Buyer. Buyers won't want to take one that additional cost. They'll demand that the Seller clear the debt.

Re comments about fiddling with the books, I assume that you are talking about applying a payment to the oldest debt - so if the fine is older than the dues, the payment will be applied to the lien first. It's common practice in many businesses. HOAs are no exception. I remember seeing case law where a homeowner wrote on the check that the payment was to be applied only to the dues, but the HOA applied it to the oldest debt. The homeowner sued for not following the directions on the check. Homeowner lost the case.

Sikubali jukumu. Read all posts at your own risk.
LetA
(Nevada)

Posts:818


10/21/2019 2:05 AM  
Our largest fine is $1000.00 and it is levied against violators that threaten the health and welfare of our community. In the two times the fine was levied it achieved a 100% result in fixing the problem.
BarbaraT1
(Texas)

Posts:240


10/21/2019 7:18 AM  
Posted By MelissaP1 on 10/20/2019 5:57 PM
I don't think fines can be used for the basis of liens/foreclosure per state laws. So doesn't matter what your documents say. May want to verify that as each state varies. That being said, there are some ways that HOA's can fiddle with the books to apply dues payment to fines. Thus it looks like non-payment of dues has occurred THEN a lien can be file for the unpaid dues. I find this underhanded and do not agree with that practice. However, straight out fines do not necessarily translate into lien.




The OP is in Texas where this is not an option. State property code requires an HOA to apply any payments to assessments first. HOAs in Texas cannot foreclose for fines/fees alone, only delinquent assessments.

These two laws have taken the bite out of fining. Unfortunately, they were created to address years of abuse by associations that used fines to generate income and did just as you describe.
JohnC46
(South Carolina)

Posts:8827


10/21/2019 9:35 AM  
In SC we can lien based on fines. Lawyers here argue if one can foreclose based on fines owed. One lawyer told our BOD he would not take on a foreclosure that involved ines. Another lawyer told us he would. I myself would never recommend foreclosure based on fines. Unpaid fines are not "lost income" as unpaid dues are. Big difference.

I say fines mean little to most people especially those that believe they are in the right. An HOA can write all the threatening letters they want but until the threatening letter comes Certified Mail from an attorney, few pay attention.

AnnE3
(Texas)

Posts:5


10/26/2019 8:36 AM  
Thanks for all the replies. BTW, newcomer has been there maybe six months and put on a new roof without approval. He knew better because one of our board members lives next door and had informed of the proper procedures.

It appears people think there are no consequences to ignoring the HOA rules so we need to be more assertive and use occasional fine.
BenA2
(Texas)

Posts:538


10/27/2019 7:12 AM  
Posted By MelissaP1 on 10/20/2019 5:57 PM
I don't think fines can be used for the basis of liens/foreclosure per state laws. So doesn't matter what your documents say. May want to verify that as each state varies. That being said, there are some ways that HOA's can fiddle with the books to apply dues payment to fines. Thus it looks like non-payment of dues has occurred THEN a lien can be file for the unpaid dues. I find this underhanded and do not agree with that practice. However, straight out fines do not necessarily translate into lien.




In Texas, fines can be used to apply a lien but HOAs cannot foreclose based solely on fines. We also have a law that dictates the priority of payments so HOAs cannot apply payments to fines before dues.
BenA2
(Texas)

Posts:538


10/27/2019 7:31 AM  
Does the roof violate your CC&Rs or is it in compliance but they just didn't get approval first? If the roof is not compliant, then fines (or any other legal action) might be appropriate so as not to set a precedent. With something as visible as a roof, you would be hard pressed to disallow another member from putting on the same roof if you don't take action against this one.

If the only violation is not submitting the proper paperwork, a fine might be appropriate every month until they submit the paperwork, but you have to ask if it is worth the trouble.
MelissaP1
(Alabama)

Posts:8711


10/27/2019 8:19 AM  
Fines to me are like issuing speeding tickets. Does it really slow anyone down, change behavior, or make anyone a profit? They are punitive charges. Not sure how much weight they really have in a HOA overall. It depends on the HOA and the laws. We never fined in our HOA. We could have but we would had to develop a "fining schedule". Which without one of those in place, the argument for fines how much/what for would never be enforceable.

Former HOA President
JohnC46
(South Carolina)

Posts:8827


10/27/2019 9:58 AM  
Ann

Did the owner out on a non-conforming roof or is it conforming and he just did not ask permission?
GenoS
(Florida)

Posts:3328


10/27/2019 1:49 PM  
Posted By AnnE3 on 10/26/2019 8:36 AM
Thanks for all the replies. BTW, newcomer has been there maybe six months and put on a new roof without approval. He knew better because one of our board members lives next door and had informed of the proper procedures.

It appears people think there are no consequences to ignoring the HOA rules so we need to be more assertive and use occasional fine.

A lot of it comes down to your board. Two years ago we had a new owner move in and proceded to take down a tree in the back of his house which is in direct violation of our governing documents. The board decided a simple "don't do that again" was good enough.

That same year a different new homeowner brought in pickup truck loads of gravel and drove them repeatedly over common property to the rear of his house. The weight of the truck broke 2 underground irrigation pipes. Our CC&Rs explicitly state that a homeowner who causes damage to any of the common property will be held responsible for the cost of fixing the damage he caused. That president and her husband (also on the board because our documents don't forbid it) decided not to make the new owners pay for the repairs to the irrigation system. The new owners didn't know anyone here, but they flew a pennant evey Sunday for their favorite NFL team (also a violation of our rules) and the president and her husband were also die-hard fans of that same team. They, too, broke the rules repeatedly putting out their own team flag every week.

That decision cost the other homeowners a couple of thousand dollars to pay for repairing damage that should have, by all rights, been paid for by the owner who caused the damage.

In both instances there were no consequences for either owner. People lose respect for the board when stuff like that happens. Ultimately it's up to the homeowners to make sure that doesn't happen by voting in responsible directors and voting out bad ones. But when you come right down to it, if not enough people care then there's not a lot you can do.
FayeE
(New York)

Posts:11


10/27/2019 3:33 PM  
TIMJ84
This is good one
We are thinking about fines. Well I am pushing for them after years of talk. After nice letter, after nice letter, after a threatening letter of a fine then nothing. That is the teeth of this Board. Homeowners know that so why obey the Rules I read fines do not work BUT do you think like our Court system does is make one that we actually do fine heavily and follow through as much as we can without high costs to the homeowners? Then others see that and think gee they will fine us, and we better think twice about not complying with the Rules. The Board members response to me asking we do fines has been well very negative. They think we need more talk. I said we have been talking and talking about fines have you not been listening? 2 members want fine according to the incident. I said there are a $25 for speeding. We have a 5-mph speed limit. The members said how can we tell if they are speeding. OMG I can tell a 5 mph from a 10 or 30... Then they said how do we know who was speeding. Hmmm we keep records of their plates and make of car for each condo. Well who is watching to see of cars speed. We are not around to sit and watch I said NO we make our eyes every condo owner. A few condo owners have noticed speeders and asked me what are we going to do? I said well we can fine. Boy was I wrong ..No we will do nothing. NOW what happens next sickens me. Our Newsletter had to delivered to our 84 units. I asked if anyone can help me deliver the newsletter that I put together every month and they sit back and criticize every letter. I am not kidding. So, when I cave into their way, the management company usually prints them. Then gives them to us to deliver. Well after the fine talk that they did not like what happened--- Management notified us they need more time to print out the newsletter. Please tell me how hard is to print out 84 copies? Place thumb drive in pick file and click the number of copies. Well it takes them maybe a week or more? I did ask how much time she needs... crickets ... never got back to me. So I have a backup that I can print color back and front 84 copies for $12.. Management company charges us a lot more. I printed the newsletter went back to my main after at least a day later to see who can help. LOL No one even said they cannot do nor that they can. I got the silence treatment meaning they are talking behind by back. No one would help me. I am disabled! I physically cannot do many steps and I cannot walk for long. Yes, they all know this. Each Building has 3 steps in, 3 steps up to the first-floor condo and 9 steps up to the second-floor condo. I tried doing one building and I came shakily close to falling twice. I was shaking. I decided to put the second-floor newsletter in the banister for them to get. When they did it before they had 3 people helping and did it less than 30 minutes when I did it Sat 10.26 it took me 2 1/2 hrs. sit down for this one... I was sitting in my car after the last unit to gain strength to drive and ... who do I see leave their home. The President and another member were home too. But the President drove right past me on his way out. I wrote an email thanking them for all the help. I thought we were adults that can have discussions, view their opinion then mine, but I guess we are not past grade school. If they think I will shut up while we have issues at hand that will not happen. I realize that I cannot stop who I am and my passion to save money and use it on our decaying buildings. As for buildings they rather wait till someone gets hurt or they are falling but heck we need those flowers and more shrubs. I heard one board member complain and complain about her dead bush for months I finally decided to see this dead bush. There is a little deadness on the bottom but to heck with actual dead bushes, she will get hers. President wanted his deck ceiling stained (they have never been stained(Built 1991) There is no need too) spending over $5000 + to stain his deck ceiling then of course that meant staining them all and only the first-floor condos are benefiting from it. I am stopping I am so sorry. But one thing leads into another. Screaming in NY. Faye, I know it sounds like bellying acting I have been told before, but these are issues facing our Homeowners. Board that acts like children, make up their own reasoning when it comes to serious issues and spends money foolishly. Thanks for getting this far.
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