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Subject: Court Says Association’s Daily Fines for Refusal to Remove Unauthorized Fence Were “Null and Void”
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MaxB4


Posts:1394


09/27/2021 4:04 PM  
This case involved a dispute between a community owners association (“Association”) and homeowners (“Owners”) over Owner’s right to install a 6’ high aluminum fence around the backyard their property that Association had not approved. Owners contended that Association had unreasonably denied approval of the fence and that fines assessed against them by Association for retention of the fence are null and void.

The trial court ruled that Association’s actions in denying approval of the fence requested by Owners were within the scope of its authority and taken in good faith, and that fines imposed by Association against Owners of $20 per day for the retention of the fence were valid and directed Owners to remove the fence. The trial court further awarded Association a monetary judgment against Owners in the amount of $35,059.96, and following a subsequent hearing, the trial court granted a motion by Association to hold Owners in civil contempt for non-compliance. Owners appealed the decision by the lower court.

The appellate court said that, in reviewing the actions of a homeowners association, the court should apply the business judgment rule and limit its inquiry to: (i) a determination of whether the action was authorized; and (ii) whether it was taken in good faith and in furtherance of the legitimate interests of the association.

The appellate court found that Association’s actions in denying approval of the fence were protected by the business judgment rule because its actions in denying the fence requested by Owners were within the scope of its authority and taken in good faith. The appellate court also found that the fines of $20.00 per day imposed on Owners were null and void because they were not properly authorized. The evidence showed that the amendment to Association’s bylaws pursuant to which the daily fines were assessed was passed as a resolution that was never incorporated into an amendment to Association’s declaration which was thereafter recorded in compliance with the provisions of a state statute. The evidence further showed that under the “pre-amendment bylaws,” Association was only authorized to impose a one-time fine of $50.00 for any violation of a rule or regulation adopted by Association’s Board of Directors, or the breach of any bylaw. Accordingly, the appellate court found that the fines of $20.00 per day were null and void.

Supreme Court of New York, Second Department decision (September 22, 2021).

See Case Decision: Ives_v._Fieldpoint_Cmty._Assn
MelissaP1
(Alabama)

Posts:10534


09/27/2021 5:31 PM  
Each state varies, but usually "daily fines" are not enforceable in general. There has to be a cap on them. This isn't just for fences this applies. It is other HOA violations as well.

So yes daily fines are "null and void" for HOA's in general. However, certain accumulative or capped off fines are not. Let's say in accumulative means your fined once for leaving a garbage can out. The third violation is not "daily" but a repetitive violation. Different than "daily".

Former HOA President
MaxB4


Posts:1394


09/27/2021 5:45 PM  
Posted By MelissaP1 on 09/27/2021 5:31 PM
Each state varies, but usually "daily fines" are not enforceable in general. There has to be a cap on them. This isn't just for fences this applies. It is other HOA violations as well.

So yes daily fines are "null and void" for HOA's in general. However, certain accumulative or capped off fines are not. Let's say in accumulative means your fined once for leaving a garbage can out. The third violation is not "daily" but a repetitive violation. Different than "daily".



But why?
SheilaJ1
(South Carolina)

Posts:274


09/27/2021 6:33 PM  
Looks the didn’t amend the documents correctly, pretty straight forward. And as Melissa mentioned, fines are not enforceable, only general assessments are.
BobD4
(up north)

Posts:944


09/27/2021 6:45 PM  

- Posted By MelissaP1 on 09/27/2021 5:31 PM
Each state varies, but usually "daily fines" are not enforceable in general. There has to be a cap on them. This isn't just for fences this applies. It is other HOA violations as well.

So yes daily fines are "null and void" for HOA's in general. However, certain accumulative or capped off fines are not. Let's say in accumulative means your fined once for leaving a garbage can out. The third violation is not "daily" but a repetitive violation. Different than "daily".


- Posted By MaxB4 on 09/27/2021 5:45 PM


But why?




Not legal advice. The text of the recent N.Y. appeal decision can be seen at :

Ives v Fieldpoint C.A. Inc. issued Sep 22/21 https://casetext.com/case/ives-v-fieldpoint-cmty-assn

1 - That appeal text indicates the trial or first instance judge had wrongly upheld a fining formula other than what the legislation apparently requires shown appendixed to the Declaration on title. The appeal text specifically cites the requirement of New York's Real Property Law 339-u ( " . . . No ( by-law )modification shall be valid unless set forth in an amendment to the declaration and such amendment is duly recorded" -unquote

2 - But if the issue is whether SMALL DAILY FINES or LARGE LUMP SUMS, the text arguably kicks that down the road.

Respectfully once a litigant is hit by a single huge fine, perhaps there is less compulsion to just "stop the clock" or settle. "Might just as well litigate" ?

3 - One issue in the N.Y. fence litigation might be that the lower in the judicial rung, the less sophisticated the analysis from the bench. Or the less sympathy for what might be junior counsel or even self-represented / pro se scofflaws. Not uncommon . . .

MaxB4


Posts:1394


09/27/2021 6:46 PM  
Actually the importance of this rules, as it can now be used as case law, is that most associations ususally put "daily fines" in their rules. What the ruling is now saying is the authority for dailiy fines speciifcially must be in the Declaration, even if it has to be amended.
TimB4
(Virginia)

Posts:17785


09/28/2021 4:15 AM  
Posted By MaxB4 on 09/27/2021 6:46 PM
Actually the importance of this rules, as it can now be used as case law, is that most associations ususally put "daily fines" in their rules. What the ruling is now saying is the authority for dailiy fines speciifcially must be in the Declaration, even if it has to be amended.





Yep. This is something VA went through in 2013 over a couple of things. A change to the property and a political sign.


See:

Subject: VA Associations, Do you still have the authority to use monetary penalties for violations?

See opinion letter:

pages 1-3
pages 4-6 and court order



Note: The Association had to declare bankruptcy because of this case:

How A Homeowners Association Went Bankrupt Because Of One Obama Yard Sign from The Consumerist

Fairfax homeowners group humbled by court battle with residents The Washington Post

Due Process Changes in Virginia
RogerJ1
(Texas)

Posts:139


09/28/2021 9:45 AM  
Posted By MaxB4 on 09/27/2021 6:46 PM
Actually the importance of this rules, as it can now be used as case law, is that most associations ususally put "daily fines" in their rules. What the ruling is now saying is the authority for dailiy fines speciifcially must be in the Declaration, even if it has to be amended.





How much weight will this case carry in Texas? And would a lower/initial court look at it? Or would it take appellate level before a court would weight case law like this from another state?
MaxB4


Posts:1394


09/28/2021 9:52 AM  
It will most likely change how daily fines are incorporated into the Rules and Regulation, if there is no authority through the CCRs. I know one firm will most likely change their legal opinion based on this ruling.
TimB4
(Virginia)

Posts:17785


09/28/2021 10:15 AM  
Posted By RogerJ1 on 09/28/2021 9:45 AM

How much weight will this case carry in Texas? And would a lower/initial court look at it? Or would it take appellate level before a court would weight case law like this from another state?





Decisions in one (or more) State do not set precedence for any other State. However, they can be used to advise the court on what action to take.

Additionally, they can set the argument for an Attorney in a different State to use.
AugustinD


Posts:1695


09/28/2021 10:23 AM  
Posted By TimB4 on 09/28/2021 10:15 AM
Posted By RogerJ1 on 09/28/2021 9:45 AM

How much weight will this case carry in Texas? And would a lower/initial court look at it? Or would it take appellate level before a court would weight case law like this from another state?


Decisions in one (or more) State do not set precedence for any other State. However, they can be used to advise the court on what action to take.

Additionally, they can set the argument for an Attorney in a different State to use.
TimB4, perfect response. Thank you for setting the record straight.
RogerJ1
(Texas)

Posts:139


09/28/2021 10:34 AM  
Posted By TimB4 on 09/28/2021 10:15 AM
Posted By RogerJ1 on 09/28/2021 9:45 AM

How much weight will this case carry in Texas? And would a lower/initial court look at it? Or would it take appellate level before a court would weight case law like this from another state?





Decisions in one (or more) State do not set precedence for any other State. However, they can be used to advise the court on what action to take.

Additionally, they can set the argument for an Attorney in a different State to use.




In layperson's terms would that mean a court is likely to give weight to an argument based on cases like the one cited in this thread? Or would they be no different than a theoretical, none case law argument?
RogerJ1
(Texas)

Posts:139


09/28/2021 10:36 AM  
Posted By RogerJ1 on 09/28/2021 10:34 AM
Posted By TimB4 on 09/28/2021 10:15 AM
Posted By RogerJ1 on 09/28/2021 9:45 AM

How much weight will this case carry in Texas? And would a lower/initial court look at it? Or would it take appellate level before a court would weight case law like this from another state?





Decisions in one (or more) State do not set precedence for any other State. However, they can be used to advise the court on what action to take.

Additionally, they can set the argument for an Attorney in a different State to use.




In layperson's terms would that mean a court is likely to give weight to an argument based on cases like the one cited in this thread? Or would they be no different than a theoretical, none case law argument?




Note I am asking in the situation where another State's case law is argued (e.g. New York case law argued in Texas.)
MaxB4


Posts:1394


09/28/2021 10:46 AM  
In reagrds to case law, this might be a little off topic, but it shows how it can effect future decisions, right or wrong.

Where I lived, we had a high delinquency of water bills owned by some homeowners. We were sub metered from the very beginning, but mteters had to be read by us and we were responsible to bill and collect each month. We were part of a cost sharing agreement between ABC1, a sister assocition and ABC2, us. Our water supplier was LADWP and our monthly bills between the two sometimes exceeded $100K. Over time, our association had delinquenices over $150K, just for water and sewer. The cost sharing agreement stated metered could be removed and water stopped if owner was delinquent. ABC1 utilized that method and had delinquencies of less than %$500.00 over the same period. When I was first on the board, I tried to get the board to follow the example of the sister association, but legal counsel said no, and cited FRANCES T. v. VILLAGE GREEN OWNERS ASS'N.
(1986) 42 Cal.3d 490.

What legal counsel argued was under landlord-tenant law, landlords may not willfully cause, "directly or indirectly," the interruption or termination of utility service to a tenant's residence with the intent to terminate occupancy. It was the owner's own electrician that cut the power, not the association, and it was to comply with the CCRs and not terminate occupancy.

To the average joe, the court case will never see their light of day, but if it went to a higher court and with attroneys involved, it might be used to argue their point. I write rules for associations and then get them blessed by attorneys. I would now think twice before putting any daily fines clause into rules knowing full well that i have never seen daily fines mentioned in CCRs, only the ability to fine.
JohnC46
(South Carolina)

Posts:11539


09/28/2021 12:04 PM  
Max

So what happened to the fence?
MaxB4


Posts:1394


09/28/2021 12:55 PM  
Posted By JohnC46 on 09/28/2021 12:04 PM
Max

So what happened to the fence?



Have no clue
AugustinD


Posts:1695


09/28/2021 1:28 PM  
Posted By JohnC46 on 09/28/2021 12:04 PM
So what happened to the fence?
The trial court and appeals court both agreed the Board was within its authority to deny approval of the fence. Which means the fence comes down.
AugustinD


Posts:1695


09/28/2021 1:41 PM  
Posted By MaxB4 on 09/27/2021 6:46 PM
Actually the importance of this rules, as it can now be used as case law, is that most associations ususally put "daily fines" in their rules. What the ruling is now saying is the authority for dailiy fines speciifcially must be in the Declaration, even if it has to be amended.
I think the ruling is nowhere near as sweeping as this. The appeals court had two objections to the fines:

1.
The fines were imposed via a "resolution." But the appeals court observed that New York Statute
Real Property Law Section 339-U - By-laws states:

"The operation of the property shall be governed by by-laws, a true copy of which shall be annexed to the declaration. No modification of or amendment to the by-laws shall be valid unless set forth in an amendment to the declaration and such amendment is duly recorded."

The HOA failed to follow the procedure given in 339-U.

2.
The owners established that the under by-laws, the HOA was only authorized to impose "a one-time fine of fifty ($50.00) dollars for any violation of any rule or regulation adopted by the Board of Directors, or the breach of any By-Law."


In my opinion the problem is that the HOA's bylaws were very limiting about what fines could be imposed.

By contrast, what seems more common is for Declarations either to be silent about fines or to grant broad authority to impose "reasonable fines." The "reasonable" part gives a board a fair amount of leeway.

BobD4
(up north)

Posts:944


09/28/2021 5:34 PM  
Posted By MaxB4 :. . . Actually the importance of this rules, as it can now be used as case law, is that most associations usually put "daily fines" in their rules. What the ruling is now saying is the authority for daily fines specifically must be in the Declaration, even if it has to be amended.

. . . I would now think twice before putting any daily fines clause into rules knowing full well that i have never seen daily fines mentioned in CCRs, only the ability to fine.





1 - Faced with the universe apparently being notified of a by-lawed, specific small lump sum fine weapon im the land registry, how could the appeal panel support a voodoo specific formula to the contrary ( day by day fines ).

( One would hope the panel made sure that New York law supports & requires fines to be legitimized by properly registered by-laws. )

2 - This argument MUST have been raised earlier at trial by the scofflaw fence-builders.

So gotta wonder then why such appears to have been blissfully ignored by the owners association. And next by the trial or first instance judge . . .

3 - But a similar thing happened to an urban lawyer-homeowner in my jurisdiction when an 1880's owners association ( lacking jurisdiction ) had its its voodoo fees upheld in 3 out of 4 judicial outings.

But fortunately in 2016 our Court of Appeal wiped the floor with the voodoo association ( and also castigated an intermediate judge who had outrageously overturned the correct decision at first instance ) . . . .
MaxB4


Posts:1394


09/28/2021 5:48 PM  
Posted By BobD4 on 09/28/2021 5:34 PM
Posted By MaxB4 :. . . Actually the importance of this rules, as it can now be used as case law, is that most associations usually put "daily fines" in their rules. What the ruling is now saying is the authority for daily fines specifically must be in the Declaration, even if it has to be amended.

. . . I would now think twice before putting any daily fines clause into rules knowing full well that i have never seen daily fines mentioned in CCRs, only the ability to fine.





1 - Faced with the universe apparently being notified of a by-lawed, specific small lump sum fine weapon im the land registry, how could the appeal panel support a voodoo specific formula to the contrary ( day by day fines ).

( One would hope the panel made sure that New York law supports & requires fines to be legitimized by properly registered by-laws. )

2 - This argument MUST have been raised earlier at trial by the scofflaw fence-builders.

So gotta wonder then why such appears to have been blissfully ignored by the owners association. And next by the trial or first instance judge . . .

3 - But a similar thing happened to an urban lawyer-homeowner in my jurisdiction when an 1880's owners association ( lacking jurisdiction ) had its its voodoo fees upheld in 3 out of 4 judicial outings.

But fortunately in 2016 our Court of Appeal wiped the floor with the voodoo association ( and also castigated an intermediate judge who had outrageously overturned the correct decision at first instance ) . . . .



Haven't got a clue to what you just said.
BobD4
(up north)

Posts:944


09/28/2021 6:12 PM  
Backing up the tractor : there can be justifiable concern when a ( private ) civil litigant pulls out a weapon - like fines - without being some level of government .

Or if the weapon is vague or contradictory. Is this what a buyer consents to ?

Aside from whether or not that's the appeal panel's thinking, there's also one more cautionary note for anyone who is thinking about challenging an owners association :

At the lower judicial levels there may - may - be less sophistication. Or degrees of hostility to anyone appearing to rock the boat . . .

What you concluded about generalizing fines appears to be exactly right on the button ( where a legislature thinks owners associations should dare be trusted with fining power )


JohnC46
(South Carolina)

Posts:11539


10/01/2021 11:53 AM  
One thing our lawyer warned us about was making our fining schedule to harsh like fining daily versus weekly or monthly. When we drew the fining schedule up, the only one we fined for more frequently then a month was trash barrels left out over night after collection as trash is collected weekly. And between us girls, we do not even enforce it on a weekly basis.

Our fines are typically $25 per month, doubling each month. We do not want the money. We want the violation cleaned up.
MelissaP1
(Alabama)

Posts:10534


10/01/2021 2:40 PM  
You have to keep in mind what Fines are for like John said. They are PUNITIVE charges for correcting. They are NOT for profit or income for the HOA. That means there are going to laws and limitations on fining. It falls more under "Loan sharking" type of laws in your state.

Daily fines typically are a time period of 5 - 7 days. (Depending if count weekends/holidays). After that, then it becomes more of a weekly/monthly/flat rate arena. It also means looking more into your state laws on limitations of what can fine. Can get in big trouble for charging more.

So not surprised by the nulling and voiding of the daily fines ruling. It would be expected more than shocking.

Former HOA President
BenA2
(Texas)

Posts:1040


10/01/2021 7:52 PM  
Posted By RogerJ1 on 09/28/2021 10:36 AM
Posted By RogerJ1 on 09/28/2021 10:34 AM
Posted By TimB4 on 09/28/2021 10:15 AM
Posted By RogerJ1 on 09/28/2021 9:45 AM

How much weight will this case carry in Texas? And would a lower/initial court look at it? Or would it take appellate level before a court would weight case law like this from another state?





Decisions in one (or more) State do not set precedence for any other State. However, they can be used to advise the court on what action to take.

Additionally, they can set the argument for an Attorney in a different State to use.




In layperson's terms would that mean a court is likely to give weight to an argument based on cases like the one cited in this thread? Or would they be no different than a theoretical, none case law argument?




Note I am asking in the situation where another State's case law is argued (e.g. New York case law argued in Texas.)



The NY case would carry weight in other states because appellate courts generally do a lot of research and cite multiple cases in their decisions, as opposed to one judge just giving his or her opinion. Whether or not it would be applied in Texas would depend partly on similarities in the laws of the two states.

For this case, it would not matter because it is already established law in Texas that you cannot issue fines that are not authorized by the CC&Rs. I think that is the case in most states.
MaxB4


Posts:1394


10/01/2021 8:17 PM  
Ben

It would actually be an attorney arguing a case that would include that case in their brief in front of the court.
BobD4
(up north)

Posts:944


10/02/2021 9:58 AM  
Posted By BenA2

The NY case would carry weight in other states because appellate courts generally do a lot of research and cite multiple cases in their decisions, as opposed to one judge just giving his or her opinion. Whether or not it would be applied in Texas would depend partly on similarities in the laws of the two states.

For this case, it would not matter because it is already established law in Texas that you cannot issue fines that are not authorized by the CC&Rs. I think that is the case in most states.

Posted By MaxB4 Ben : It would actually be an attorney arguing a case that would include that case in their brief in front of the court




Here a lower NY court gets caught tolerating a rate of fining ( contrary to state law & documents on title ) or just being ignorant of the issues. The value of the judicial reasoning from New York, could reasonate in other jurisdictions.

But respectfully it's likelier in "emergent" legal issues where a jurisdiction's legislature hasn't directly ( or directly enough yet ) addressed a critical issue .

Or in the absence of legislation there have been no clear guidance from previous judicial outcomes, or such have been overtaken by conflicting principles from later outcomes. Or someone's prior expressed dissent now looks more persuasive.

Nowadays one might think of stuff like internet harassment torts by disputants, or privacy amidst common element surveillance. Or how to handle the sometimes dubious outcomes from tribunals set up to reduce court congestion amidst disputes involving owners or stakeholders.

Historically it might have been discriminatory deed covenants after municipal segregation to enforce it was struck down.

In 1913 a brilliant judge in my own jurisdiction looked to judicial thinking from outcomes in New Jersey, Australia & England/Wales to help justify deciding what actually is “commons’ or common element. ( That’s where conveyances were silent as to “what was” if any ).
There can be an ongoing evolution.

Another jurisdiction has produced its own laws & so much litigation that it now has a body of its own ( reassuring ) precedent to no longer – it apparently thinks - need to import judicial reasoning. Does that miss some important stuff ?
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