Real Estate & Property Law

The Saga on Fines in HOAs and Condos Continues ...

It's time for more on fines. I receive a lot of inquiries and questions. Here's one ... (or two) ....

"I have read your recent blog regarding fine hearings for "continuing violations" and whether hearings are required. I have a related question for which I would love to see a response on your blog. I have heard that many condo associations simply send out fine letters and have a sentence in the fine letter letting the violater know that they can challenge or appeal the fine at the next board meeting. ... Do you believe this practice is proper?"

And

"As a follow up, it has also been suggested to me that as a practical matter, there are no real consequences to the Association in engaging in this practice. This is because if a homeowner goes to an attorney to complain that due process has been violated and the attorney sends the Association a threatening letter, the Association can just rescind the fine and there will be no damages. The idea is that what attorney will want to waste his time over a $50.00 or $100.00 fine. So my question is: is there any real risk to the Association in engaging in this practice? "

These are valid questions. First of all, I do believe that sending fine notices out without offering owners a hearing, at least on the first "go-round" for a violation (perhaps you have seen my blog on repeat violators), is in direct contradiction with California Civil Code Section 1363(h) which says:

" (h) When the board of directors is to meet to consider or impose discipline upon a member, the board shall notify the member in writing, by either personal delivery or first-class mail, at least 10 days prior to the meeting. The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined, and a statement that the member has a right to attend and may address the board at the meeting. The board of directors of the association shall meet in executive session if requested by the member being disciplined.

If the board imposes discipline on a member, the board shall provide the member a written notification of the disciplinary action, by either personal delivery or first-class mail, within 15 days following the action. A disciplinary action shall not be effective against a member unless the board fulfills the requirements of this subdivision."

So when a board is going to consider imposing disciplinary action upon an owner, the Board must provide the owner with at least 10 days notice of the meeting (so that the owner can attend if he or she wants to do so, and present their "side" or "defense" to the proposed charges against them. There is more to the point, which is that the law is intended to provide an owner fair notice of the charges, the proposed discipline (including fines), the chance to defend, and, at and/or after the hearing, the decision of the Board. (See below for reference material that is available.)

So, I believe the practice that you describe is contrary to California law, which I believe is the least that is required. Some documents may require more steps, more or earlier notice, or tougher requirements than the law, in which case my position would be that the Board should honor the documents.

As for challenging fines that are imposed, an owner does have options including paying an attorney to write a letter, and yes, if that choice is made, it may cost more than the fine itself. Additionally, an owner could pay the fine under protest and then challenge it in small claims. In fact, I believe that if an owner does pay an attorney and the fine is dropped, he or she could still challenge the fine in small claims court, and ask for reimbursement for the attorneys fee that was paid in place of asking for reimbursement of the fine. It would seem that if the Board did not follow proper protocol and the owner was forced to hire an attorney or pay the fine under protest as the only options, the owner might have a good chance of getting a judgment to cover the attorney's fees. Small claims is not a venue that welcomes (or even allows) attorney representation; however, in a scenario like this it would be possible that a small claims officer could find the price paid for the attorney constitutes fair compensation. Small claims court is a court of equity, and California law allows recovery of attorneys fees if the HOA or Condo Associaiton, or any owner, has to resort to court to enforce the CC&Rs, and this is a "reciprocal" type of right/situation which would apply.

It is best to consult with a lawyer if you want legal advice of course. But if you want information on the laws, the California website is one place to look. The other is my website at www.californiacondoguru.com where you can fine among the the FYIs the July 2003 publication about this law when it was new, or a series of Enforcement Primers that provide comprehensive information about enforcement for beginers, immediate-level boards, managers or owners.

Full post as published by California Condo & HOA Law on July 18, 2009 (boomark / email).