FINING PROCEDURES FOR COMMUNITY ASSOCIATIONS By: Garry H. Griffin, CMCA, AMS Director of Association Management Bosshardt Property Management, LLC

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1 FINING PROCEDURES FOR COMMUNITY ASSOCIATIONS By: Garry H. Griffin, CMCA, AMS Director of Association Management Bosshardt Property Management, LLC The ability to levy a fine against an owner for a violation of the governing documents is the association s best tool for rules enforcement. However, if the process is not followed properly, it can result in expensive legal exposure that ultimately could invalidate the fine. In fact, if a fine is challenged in court the opposing council will first attack the association s process in their attempt to invalidate the charge. Enforcement of rules and levying fines must be consistent and unilaterally enforced. If it can be proven that a board did not previously and knowingly enforce a rule OR enforced the rules on only some but not all homeowners (called selective enforcement), the association may loose the ability to enforce or fine. There are countless court cases filed each year throughout the country based on selective enforcement or non-enforcement issues. The following information is being provided to your association so that it may properly establish a fines procedure and avoid the possibility of not being able to enforce a violation and/or payment of subsequent legal fees for improper procedures. One of our primary jobs as your property manager is document enforcement. With a proper procedure in place we will be able to better perform our duties and foster a healthier community through consistent and fair enforcement. The procedure for fining a homeowner is mandated by Florida Statue. For condominiums the statute is (3). For homeowners the statute is (2). In both statues the fine is limited to up to $100 per day up to $1,000 for a continuing violation. NOTE: Your governing documents may call for a lesser amount in which case the lower amount prevails. What is most often debated is the definition of a continuing violation. For instance, if a lawn is not mowed and the proper violation procedure is enforced, can you only fine $1,000 even if the lawn is not mowed beyond the time frame which resulted in the maximum fine? The answer is YES if the fine procedure is followed correctly you may begin the fine process over again for the same violation which could result in a substantial amount of money owed (beyond $1,000) for the same violation. The key to this is in making sure the appeal process is followed as outlined below. Previously, the statutes only allowed the ability to fine if the associations governing documents so allowed. This is no longer the case. All associations may now fine even if it does not allow so in their governing documents. Step One: Establish a fining committee. Do not wait until a violation exists to throw together a fine committee. Doing so will create a rush to put a process in place and most likely cause any fine to be improperly levied. Condominium statutes do not mandate the number of committee members but we recommend no less than three. HOA statutes mandate a minimum of three. In both cases you may have more than three members on your committee. A fine committee member may not be a board member or anyone residing with or related to a board member. Step Two: Ensure all homeowners have access to your community documents. The most common argument is I didn t know about this rule. While this does not eliminate the homeowner s responsibility to comply, it does strengthen your case when governing documents are readily available. Our best recommendation is to post them on a community web site. If the board of directors or rule committee establishes a new rule it must be distributed to all homeowners before it can be enforced. You may not levy a fine unless the violation is clearly stated in your documents. In other words if a homeowner does something random that does not sit well with the board of directors but otherwise does not violate any rule, the board can take no action beyond a simple request to discontinue the offense. However, if the board feels the random act will continue and become more of a widespread problem the board may create a rule or amend the governing documents per the process available to the community. Recommendation: Create a resolution outlining your association s fine procedure. A sample is included in this material.

2 FINING PROCEDURES FOR COMMUNITY ASSOCIATIONS By: Garry H. Griffin, CMCA, AMS Director of Association Management Page 2 Noticing Procedure Note: There is no statutory time frame for discovery of a violation. In other words, if a previous board was not aware of a violation and a current board takes steps to correct it, a homeowner has no justification for non-compliance simply because the violation existed for a previous period of time. However, if a homeowner can prove a previous board knew about and allowed the violation to continue it will severely weaken the current board s ability to now enforce the rule (as noted in paragraph two above). Step Three: Notify the homeowner of the violation via a courtesy notice. The notice must contain a description of the violation, the authority in your governing documents to cite the issue as a violation, and a time frame for correction. It is up to the board of directors to establish reasonable time frames for various violations. Our courtesy violation letter includes all these elements and sometimes if needed a picture of the violation. Step Four: If the violation has not been corrected within the required timeframe notify the homeowner in writing via a certified letter (postage charged to homeowner) that the violation still exists and allow a very short (3 day) time frame to comply. The final notice letter should contain all the elements listed above for the first letter plus a warning that a fine will be levied. The letter should contain the amount of the fine and a warning that other expenses for non-compliance may apply. Step Five: If the violation is still not corrected it is time to fine.

3 FINING PROCEDURES FOR COMMUNITY ASSOCIATIONS By: Garry H. Griffin, CMCA, AMS Director of Association Management Page 3 Fine Procedure This is the most important step and the step that most boards and some management companies get wrong. The statutes afford the homeowner an appeals process and if that process is not properly adhered to the fine is not legal. Furthermore, if a fine process is handled incorrectly and the community gets wind of it (and most will) the entire process and committee will loose credibility and in turn could foster complacency among the residents. Step Six: Notify the homeowner of your intent to recommend that the fine committee levy a fine, state the reason/violation and the amount of the fine. Notify the fine committee and schedule a hearing remembering to give no less than 14 days notice. You may state in your letter to the homeowner that an alternate time may be scheduled if not convenient with the homeowner. Step Seven: If the homeowner responds and requests a hearing within the 14 days the hearing is scheduled with the committee. If the homeowner is present the manager will present the case first and the homeowner will follow with their case for appeal. A question and answer session by the committee usually follows. After all parties have sufficiently presented their case and answered all questions the manager and homeowner should leave and allow the committee to discuss and make their decision. After the decision is made the committee chair should immediately notify the manager who will in turn notify the homeowner. If the homeowner does not respond and/or does not request a hearing the fine is automatically applied to the account. Collecting a Fine After a fine is ratified by the committee the manager will send the homeowner the response and invoice. What happens if the homeowner does not pay the fine (which is usually the case)? In Condos the fine may not become a lien against the unit. In HOA s the statute does not allow a fine of less than $1,000 to become a lien against the unit. You may however seek a money judgment in court small claims court with the prevailing party entitled to receive compensation for legal fees and court costs. How can a fine exceed $1,000 for the same violation? Remember, the statutes say that you may fine up to a maximum of $1,000 per occurrence and you can t lien unless the fine exceeds $1,000 (HOA s only). This language confuses most people. If a violation is properly noticed and a hearing properly held and assuming that the fine was ratified by the committee, the case is essentially closed. Now, assuming that the homeowner still has not complied and new violation letter process will begin as in step three. The process starts all over again ending with the committee making another decision (and another fine).

4 FINING PROCEDURES FOR COMMUNITY ASSOCIATIONS By: Garry H. Griffin, CMCA, AMS Director of Association Management Page 4 Final Thoughts Only a fine committee may levy a fine. Management companies and boards often get this very first step wrong. Management and/or the board may only recommend a fine to the committee. The committee or management should provide a report of their actions to the board of directors. Fining is a tool for generating compliance not punishment. If the homeowner complies, even though it may have taken several notices, a fine is usually not recommended. You cannot fine retroactively for a previous violation where the owner was not fined but has subsequently resolved the violation. If the board of directors and management follows these procedures consistently and applies the rules uniformly your instances of non-compliance should drop dramatically. Do not threaten a fine and not follow through. Your homeowners will learn this behavior and pay no attention to your future pleas for compliance. If all else fails the board of directors has the option to file a petition in court to force the homeowner to comply. This is usually a last step but should be given consideration if the violation is serious enough.

5 SAMPLE COURTESY NOTICE Your Property Owner s Association, Inc. c/o Bosshardt Property Management, LLC SW 20 th Place - Ocala, Fl (352) VIA REGULAR MAIL COURTESY NOTICE January 1, 2010 Owner Name Address City, State Zip RE: Property Address Dear Owner Name: The Your Property Owner s Association, Inc was established to maintain the common property and enforce the governing documents to preserve and protect property values. In keeping with this responsibility, the Board of Directors and management routinely reviews the use and condition of properties to ensure compliance, which affects the community as a whole. It has been observed that your yard is not in compliance with the rules and regulations. Specifically, your lawn has excessive dead spots which need to be repaired and weeds that need to be removed. Section #39 of the Rules and Regulations states: Section 39. Grassed Areas and Yards: All Lots shall upon completion of a Dwelling Unit and prior to any person occupying the Dwelling Unit, be fully landscaped and grassed in accordance with plans submitted to and approved by the ARB. The Front and Back Yard shall be sodded grass approved by the ARB. The Owner shall maintain all shrubbery, grass, trees and other landscaping installed on their Lot in a neat, clean, orderly and healthy condition.. Please accept this letter as a friendly reminder to bring your lawn into compliance with in 15 days from the date of this letter. Please note that failure to comply could result in fines being levied against your account. Sincerely, Manager Name Bosshardt Property Management, LLC

6 SAMPLE FINAL NOTICE Via: Regular and Certified Mail January 15, 2010 Owner Name Address City, State Zip Your Property Owner s Association, Inc. c/o Bosshardt Property Management, LLC 2123 SW 20 th Place - Ocala, Fl (352) FINAL NOTICE RE: Property Address Dear Owner Name: I have previously written you regarding the condition of your lawn. To date, the yard appears in the same state and no work has been performed. Specifically, the yard needs new sod and the shrubs and beds need work. As a reminder the rules state: Section 39. Grassed Areas and Yards: All Lots shall upon completion of a Dwelling Unit and prior to any person occupying the Dwelling Unit, be fully landscaped and grassed in accordance with plans submitted to and approved by the ARB. The Front and Back Yard shall be sodded grass approved by the ARB. The Owner shall maintain all shrubbery, grass, trees and other landscaping installed on their Lot in a neat, clean, orderly and healthy condition.. This shall serve as final notice of a violation of the provisions of the governing documents referenced above. The Board of Directors requires that the violation be corrected on or before January 20, If work has not been performed by this date the following actions will take place: a hearing before the fine committee will be scheduled on February 15, If you cannot make this meeting time and need to reschedule please call our office within 2 business days. A fine of $100 per day up to a maximum of $1,000 per occurrence will be recommended to the committee. If you dispute the violation and fine you must attend this hearing or a default decision against you may be made in your absence. In addition any fine that is ratified by the committee must be paid within 30 days to avoid additional collection and legal consequences. Sincerely, Manager Name Bosshardt Property Management, LLC SAMPLE NOTIFICATION OF DECISION

7 Your Property Owner s Association, Inc. c/o Bosshardt Property Management, LLC 2123 SW 20 th Place - Ocala, Fl (352) FINE NOTICE Via: Regular and Certified Mail January 15, 2010 Owner Name Address City, State Zip RE: Property Address Dear Owner Name: At the hearing held on your case was presented for appeal of the fine and/or dispute of the alleged violation. It is the decision of the committee that a fine of $1,000 be charged against your account. Accordingly, a statement is attached herein. Your payment is due within 30 days. In addition, failure to pay the fine within Ninety (90) days may result in the suspension of your right to use common facilities until paid and may result in additional legal and collection actions being taken against you. FOR CONDOS: Failure to pay the fine within Ninety (90) days may result in the suspension of your right to use the common facilities and vote on association matters until paid and may result in additional legal and collection actions being taken against you. Please send immediate payment to. Sincerely, Manager Name Bosshardt Property Management, LLC

8 SAMPLE FINE PROCEDURE RESOLUTION Your Property Owner s Association, Inc. c/o Bosshardt Property Management, LLC 2123 SW 20 th Place - Ocala, Fl (352) RESOLUTION REGARDING THE FINE PROCESS FOR NON_COMPLIANCE OF THE GOVERNING DOCUMENS I certify that I am the Secretary, and the keeper of the records and minutes of meetings of the Your Property Owner s Association, Inc., a Florida non-profit corporation (the Corporation), and that pursuant to a meeting held by a majority of the Board of Directors of the Corporation on January 1, 2011, the following resolution was duly and legally adopted and has not been revoked, altered or amended: Resolved, that the Board of Directors for Your Property Owner s Association has the authority under the governing documents of the association to make certain rules, regulations and procedures regarding association matters. Further that, pursuant to a meeting held by a majority of the Board of Directors of the Corporation on January 1, 2011, the following procedure regarding the enforcement of violations of the governing documents and subsequent fine and appeal process is hereby adopted: 1. Upon discovery of a violation the homeowner will be sent a courtesy notice detailing the nature of the violation and time frame for completion. 2. Homeowner will receive a second and final notice for non-compliance after the initial time frame for compliances lapses. 3. Homeowner will receive a notice of hearing before the fine committee to be scheduled not less than 14 days in advance to be given an opportunity to dispute or appeal the fine. 4. Any ratified fine will be due and payable within 30 days or additional collection and/or legal action will be commenced. IN WITNESS WHEREOF, I have set my hand as Secretary of Corporation, this 5th day of January Name