![]() Two Factors to Consider When Determing Fine AmountĮconomic status of the community comprising the association is the first factor to consider when figuring out how much to fine. However, that's not very helpful for deciding how much the fines to be included in a schedule of monetary penalties should be. Like all restrictions, a fine cannot be arbitrary or discriminatory and must be imposed in good faith with the best interests of the association as a whole in mind. Like all provisions of an association's governing documents, fines must be "reasonable." No statute or case law defines when the amount of a fine is, or is not, reasonable. This will help to assure fairness and consistency in enforcement, and it will avoid claims that an individual is being singled out for discipline while other member violations are ignored. A board may chose simply to adopt a schedule of monetary penalties, but an enforcement policy would provide guidance to the members and future boards as to the steps that will be followed for enforcement of the governing documents. Such a policy should set out the steps to be followed in enforcing the governing documents, such as the use of courtesy warning letters for first violations and the use of alternate dispute resolution. It is recommended (but not required) that the schedule of monetary penalties be included as part of a general enforcement policy adopted by the board. Sections 4340 - 4370, which require (among other things) that a proposed rule be distributed to the members for comment at least thirty days before adoption. Operating rule and must therefore be adopted in accordance with the provisions of Civil Code ![]() Civil Code Section 5855(a), part of the Davis-Stirling Common Interest Development Act, requires that such a schedule be distributed before any fines are imposed by an association. The authority must be exercised by the board through a schedule of monetary penalties properly adopted and distributed to the members. ![]() Just having the authority to impose fines is not enough. If no such authority is given in an association's governing documents, those documents will have to be amended to provide such authority before monetary penalties may be imposed on the association members. Most CC&Rs or bylaws do give the board such authority, either directly or through the power to adopt rules relating to the management of the development. It can only do so if such authority is provided in the association's governing documents. There is no inherent authority vested in an association to impose fines on its members for violations of the governing documents. Obviously, fines will have no effect on such violations, but if an association finds that a particular violation is occurring repeatedly for this reason, the restriction needs to be re-written and/or the owners need to be educated about its existence and the penalty for violating it. Of course, some violations occur because owners are not aware of the particular restriction or do not understand the scope of the restriction. The financial impact of a fine is usually not significant for most owners, but the embarrassment of being fined by the association may prove to be an incentive against future violations. The imposition of a fine on an owner who has violated the governing documents helps to fulfill the board's enforcement duty.įines discourage future violations by owners in the development. ![]() The board has a fiduciary duty to enforce the governing documents and can be sued by a member of the association for failing to do so. Without a system of monetary penalties, the only way to deal with owners who violate the governing documents (other than a polite warning letter) would be an expensive and time-consuming legal action (or arbitration/mediation if the owner agrees). Monetary penalties serve two purposes: enforcement and deterrence.įines empower a board to carry out its duty to enforce the governing documents. This article is intended to help boards to develop or revise a policy on monetary penalties (fines) and to apply that policy in the day-to-day management of the association. ![]() Few boards have actually considered the role fines do or should play in the management of the association's affairs. Some associations use them extensively, others only rarely. POLICIES FOR ASSESSING FINES AND PENALTIES FOR HOMEOWNER ASSOCIATION VIOLATIONSĪlmost all associations use fines to curb violations of their governing documents. ![]()
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