Why change CC&R's when the Bylaws are easier?

Your CCRs gave the Board the power to assess fines - so why was it put into the Bylaws? The Board just gave its power away!!

A Rules and Regulations, or Delinquent Payment Policy could have been written and passed by the BOARD. This is an internal document and the Board should have power over it.

Work to recind (delete) any mention of a particular fee stated in the Bylaws. Keep this a Board document.

Yes, that is exactly what they did, and I believe it was intentional. After a recall, some smart people ammended the Bylaws becasue it was easier. We had a FUNCTIONING Board, but those who think HOA's have too much power and are unhappy with the process, organized and forced them out. They were far more organized than those on the Board and those who supported the Board. Loud and angry people are difficult to deal with and they prevailed in this case. As a result, and after years of mismanagement since, things have finally caught-up with the Board. We have a bunch of new officers trying to bring the order back, and it is difficult with such a limitation.

Do you think the only way to rescind the statement in the Bylaws is by a vote of the membership to amend the Bylaws back? or can we use the statement that allows the CC&R's to supersede the Bylaws to either: ignore the statement in the Bylaws, or allow the Board to pass a resolution or some other action to nullify the change to the Bylaws.

Is there any standard as to what kind of power belongs in which document?

Bill:

IMO it is your boards job to try to organize and change. They can document the condition of yards and call a meeting to try to raise the minimun fine and present a solid case based on evidence. That is their job to do.

An alternative is to look to your local municipality for help, some have stricter laws on yard appearance and upkeep and could help you.

The documents are tricky, good luck!

Bill,

The bylaws generally only address how directors are elected; meetings of the members and the directors; what officers are required, how they're elected and their duties. The topic of fines belongs in the CCRs where the restrictions are outlined. You stated your CCRs give the board the power to assess fines, so all they had to do was adopt a fine policy and set the rate of fines. They did not need to amend any gov. docs. to do this. I would suggest they resind the bylaws provision regarding fines.

No provision of the bylaws can conflict with the articles of inc. or the CCRs. In fact, that should be stated in your bylaws.

Your board members should be made to understand that easier is not always better.

This is another example of poorly drafted governing documents.

The CC&Rs grant the association the authority to fine but don't state any amounts. Courts often require a standard for a provision to the enforceable. On the other hand, owners are certainly notified that the amount of fines is not defined by the recorded CC&Rs. In searching for a standard, a court might search for what is reasonable. There must be some proportionality to the violation.

Consequently, the board can only be certain of prevailing in litigation if the amount of the fine is on the low side of what is reasonable and proportional to the violation. If your association implements fines, I strongly recommend first establishing a fine schedule as related to violations and failure to correct same that would meet the test of reasonable and proportionality. Check the case law in your state for guidance.

In my view, the definition cannot be fixed in the bylaws because the bylaws should deal with governance and are likely authorized by your state's nonprofit corporation act or POA act or equivalent — not part of property law. Further, the CC&Rs run with the land, and are part of property law. The bylaws usually don't run with the land, though there seems to be some variation from state to state.

The protections provided for the owners in the CC&Rs run with the land and can only be amended as specified in the CC&Rs. There may also be a common law requirement in your state of amendment only by a majority or higher percentage of all owners, as there is in Michigan. The protections for owners cannot be eroded by amending a document that doesn't run with the land.

Your best bet for the long term is to do it right. Amend the CC&Rs to include a schedule of fines. A lot of care is needed in crafting the amendment. Fines are often part of abuse by run-away boards. Getting the approval of 2/3 of the members may be difficult, but is clearly part of checks and balances which help to prevent abuses.

First, I totally disagree with putting a fine schedule in the CC&Rs. That schedule is too likely to need adjusted from time to time.

Now obviously you have a problem with the current schedule of fines. I would start by talking with as many people as possible about the issue. Openly discuss the fact that some people prepay their fines. I would assume the majority of people keep their property looking good and would like to see the problem properties reigned in. If this is not the case, then realize that the only reason to keep the HOA is as a common fund to mount a legal battle should something too obnoxious happen. (Remember that fines are not the only means of enforcement. You can file a suit, though that gets ugly and expensive fast.)

As you drum up support, then put the issue on the table next meeting. And the BOD should have gone out getting votes on the issue. I would go so far as to have a proxy statement that allows for direction on the issue. Corporate proxies regularly have a few items that allow for a directed proxy and leave the rest up to the holder. Basically all it takes is a statement at the bottom:

In the matter of BOD proposition 1 amending the bylaws... ...I direct my vote to be cast as:

Then have checks for yes, no, abstain. And be sure to understand the effect of abstaining. If the wording is "a majority of the votes cast" then abstain has no effect. If the wording "a majority of votes present" then the abstention has the effect of a no. (It is not a no, but doesn't reduce the number of yes votes needed.)

Our ability to fine is in the CC&Rs. The statement on procedure is in the ByLaws with the reference to Florida Statutes which grants us those rightsand sets the limits. The fining committee and exact procedure is in the Rules and Regs as per our attorney stateing that all members MUST have knowledge of how it works, fine schedules and concequences. Rules and Regs can be changed without any ado from the membership so when things need altering, the Board has the ability to just enact those changes.

I appreciate all your added comments. This is turning into an interesting subject for our Board, and it looks like it will take us some time to incorporate all your suggestions and come up with a good working plan to get back on track.

Don, your explaination of the CC&R's vs. the Bylaws, and how they are bound was very insightful Thank you for the explaination.

This is a great outline; it looks like a good standard for us to work towards. Thanks for the response.

Three hundred dollars a year is nothing to sneeze at. What kind of violations are we talking about? If it's parking maybe you can tow. If it's landscaping maybe you can have it done and charge 'em...etc, etc. There must be a creative work around.

Mary,

To bring this discussion back full circle, your observation (that the $25/mo fine is way to low) is exactly what Bill is frustrated about.

The previous board changed the by-laws to set the fine at $25 "and no more" -- implying, I think, that they knew this would hamstring the incoming board and frustrate their enforcement and compliance.

In fact, this is his exact issue:

"My question is: how do we best go about fixing this? Our Board wants the flexability to fix higher fines for the 2nd, and 3rd violations, but we have this Bylaw statement to consider that limits our power, or so it appears.

We could ask the Owners to change the Bylaws, but that is not a popular topic and we have not had enough buy-in to get that done. Our HOA is in terrible shape; we have Owners who actually prepay their $25 fine each month just so they can do what they want."

Everybody is telling him what he already knows, that the $25 flat amount is too low, that the by-laws need to be changed, that the amount should never have been set in the bylaws, etc etc.

His issues are that the residents may not have the stomach for such a change (basically, he feels, I THINK, that the board would be asking them something akin to "taxing themselves") and possibly that the board may not have the stomach for working up a reasonable fine schedule to deal with it.

I do think Kirk is giving him some wonderful advice and I'd be very interested to see how his board responds to the recommendations.

The "prepayers" are a few people; really a minority overall, but they are there and a problem. One, for example is for parking; they have a large family and 3 more cars than can fit in the driveway; they will park in the grass and on the street. Another is also for parking, but he has an RV; he can either pay a storage place or he can pay us...we must be cheaper. A few others are for above-ground pools during the summer months; our CC&Rs do not allow for them, but they put them up anyway and pay the fines for a couple months. It must be cheaper than joining a community center for a pool membership, and we have seen the number of these cases increasing a little each year. I think we have 6 or 7 pools that we can see from the street; our Architectural Review guys don't peek over fences...so there are more I'm sure that we aren't addressing even.

For the pools, as an example; the Board and Architectural review board are not opposed to changing the CC&Rs, I think we can do pretty easily with some guidelines.

Our other issues, that put us in the 'terrible shape' that I mentioned, are people who have more dirt and weeds than they do lawn. Or those who have poorly constructed fences, or chain link that are also against our CC&Rs. In some many cases, the Board and Architecture Review Board, from years ago (and in one case the Developer), gave some homes exceptions to put up chain link fences, despite the phrase "No chain link fences" in the CC&Rs. It is tough to enforce a rule when the previous board(s) granted exceptions...

Overall, I think we can deal with the landscaping, and we just may have to put up with the 'approved' chain link fences that are installed I suppose. The Board does not want to seed someone's yard, or lay sod... The Owner probably won't take care of that either; it could financially ruin them if we charged them for that, and legal fees to collect. But at the same time it is hard to explain to a guy trying to sell his house, which his neighbors just don't care and all we can do is fine them $25. Previous Board members have been afraid to address the fine issues, and also to enter a property to remove a violation; like an aboveground pool, or to replace a lawn. We probably have 8 or so homes that need a new front lawn; they are beyond simple watering and fertilizing.

To complicate things a little further, our community is not a fancy place. We have modestly priced homes; we are almost a starter home community, so we attract the types of people who are not financially capable of putting in an inground pool with an expensive privacy fence.

Have you all had to enter a property to remove something...like a fence or a pool? Can you really file a lawsuit for a violation of the CC&R's, even if there is no financial balance because the Owner pays his fines promptly? Our thoughts were that there had to be money owed before we could file a lien and start the process to foreclose? But if we can file a lien for a violation, or start some legal process for a violation, that could help produce some results and we could work with the cap on our current fines until it is changed.

Bill - is fining your only option? In our HOA, we don't have the ability to fine at all, so our procedure for violations is:
* when the violation is first noticed, a "Courtesy" letter is sent to the homeowner requesting that they correct the problem.
* after 15 days if the problem still exists, a certified "Demand" letter is sent requiring that the problem be corrected. The management company charges us $20 for this letter and this fee is passed on to the homeowner.
* if another 15 days pass and the problem still exists, the issue is turned over to the attorney who will send his own Demand letter. This one has a $200 attorney fee.
* if the problem still does not get corrected, the attorney will file suit to get a judgment requiring compliance. This can really gets expensive.

Note that while there are costs associated with this, none of them are "fines". They are just "Limited Assessments" against a particular homeowner and his property equal to the cost incurred by the Association for corrective action. The HOA initially pays the costs for the letters and the attorney, and we are just recovering our expenses.

In my area $25 dollars a month might be enough to store a popup type trailer. But certainly not something much bigger. And once you factor in convenience it becomes a heck of a deal.

As for a pool, I would certainly pay $25 a month to put one up for the summer. I would rather not have to pay, but certainly would.

You indicated that the vast majority of people are not the problem. And you should appeal to that very fact. You can bet that some don't appreciate the people who flaunt the rules. But you really should look further in your rules. Ours allow the association to enter property and "cure" the violation at owner expense if they fail to. I doubt the rules about the fines stop the ability to other cures.

Perhaps the real solution is to look there. And from what you describe getting a lawyer to ensure that you can is a good deal. If you were to have one offending car towed off at owner expense it would be a wake up call. After you do that inform all others that they are next. Tell the RV owner that you will effect a cure should he not move his RV. And then do so. As for the pool owners, darin the pools and remove them.

Yes, you certainly can send compliance letters to all the offenders (which you have probably already done). This would more or less "cover" you that you are not selectively enforcing, as you will have begun a compliance process with all of the violators.

It goes without saying that there is some sort of continuum, and that the worst offender gets the short straw, so to speak, and therefore becomes the first to receive the escalation of enforcement.

If you KNOW that some members get all activist and try to remove legitimate boards when enforcement gets going, then beat them to the punch.

DO your own "activism" and get more proxies to prevent them from dislodging you.

And continue with the process to bring your community back into shape.