In these tough economic times, Board Members are trying to do whatever they can to save money. While this mindset is obviously necessary, Boards need to be careful about being "penny wise and pound foolish." Clients often call us and ask what they can do to stop owners from violating the association's rules and regulations. This question is normally followed with an explanation that the Board cannot spend a lot of money on legal fees to enforce the rules. In other words, the Board asks that we get these people to comply with our rules but to do it cheaply. This brings up the fining process.
Imposing fines may be an inexpensive alternative to filing lawsuits or arbitration petitions, but does it actually help in unit owners correcting violations or deterring owners from violating the association's rules and regulations?
First, the association cannot even consider this option unless the authority to impose fines is found within the governing documents (usually it is), if you are not sure, ask your property manager. If the board indeed has the power to impose fines, it must establish a separate committee (usually known as a fining committee or enforcement committee). The committee must consist of at least 3 owners who are not board members, not related to board members and do not live in the same household as a board member (the law was recently amended). Then, before any fine may be imposed, the Board must provide the offending owner with reasonable advance notice (i.e. 14 days) of the date, time and location for the owner to appear before the committee. The offending owner must be given the opportunity to explain to the committee why a fine should not be levied. If the fining committee determines not to impose a fine, no fine may be imposed and the Board cannot overrule the fining committee and levy a fine where the committee voted not to impose a fine. Even if the committee votes to fine an offending owner, the fine cannot exceed $100.00 per day for a continuing violation and no fine in a condominium may exceed $1,000.00 for any single violation. Homeowners Associations may have the ability to levy fines in excess of $1,000.00.
So, do fines REALLY work? In both Condominiums and Homeowners Associations, no fine (if unpaid) may become a lien against the owner's unit. Therefore, if a unit owner fails to pay a fine, the association would need to file a claim for damages in small claims court. Also, the imposition and payment of fines does not necessarily mean compliance. A fine does not force the owner to comply. As you can imagine, many owners would gladly pay a $1,000.00 fine in order to keep their dog or continue with that unapproved tenant in their home. Therefore, while imposing fines may seem like an attractive and cost-effective solution, it does not guaranty an owner's compliance with the association's governing documents. If an owner refuses to abide by the rules, the Board's only realistic option may be to file a lawsuit and seek an injunction against the non-complying unit owner. If successful, the association is entitled to an award of its reasonable attorney's fees and costs. Then, if the owner still fails to comply, the judge may levy sanctions, hold the owner in contempt of court or ultimately issue a bench warrant for the owner's arrest.
Based on our experience, it is our recommendation that the Board always try issuing fines first. Then, if the non-complying unit owner fails to pay the fine and continues to be in violation, we recommend the Board seek legal action, at which point the associations' attorney will not only seek an injunction against the unit owner, but will also seek payment of all fines. Typically, this type of legal action usually takes at least 90 days.
So what do you think, does fining always REALLY work?
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