One of the most common challenges for homeowners associations is encouraging compliance with governing documents. Letters and reminders may work for some owners, but others may ignore repeated warnings. When that happens, monetary penalties, commonly referred to as fines, can be an effective enforcement tool. However, fines must be reasonable, consistent, and legally defensible to curb noncompliance and avoid disputes.
Before establishing or enforcing fines, the board must confirm that:
- The governing documents authorize fines. Most CC&Rs allow the board to adopt rules, including monetary penalties, but some may have specific procedures for enforcing compliance with the governing documents.
- State law requirements are met. For example, Arizona law requires that an owner be given notice and an opportunity to be heard before fines can be imposed.
Without proper authority, a fine may be unenforceable in court, which is why boards must carefully consider both the legality and purpose of imposing penalties. A fine should never be viewed as a revenue source. Instead, a fine’s true function is to deter noncompliance, reinforce community standards, and encourage homeowners to voluntarily correct violations. Boards that emphasize these goals, both in their written rules and in their communications with homeowners, help ensure that fines are seen as a fair tool to promote compliance rather than as an unfair or arbitrary punishment.
The fine must be high enough to discourage violations, but not so excessive that it appears punitive or unfair. Consider starting with a modest amount depending on the type of violation, and consider escalating the amount of the fines based on the frequency of repeat violations. Escalation shows fairness and expands the timeline for owner compliance. For ongoing violations (like leaving trash cans out or keeping an unauthorized structure), daily fines may be appropriate. For one-time violations (like painting without approval), per-occurrence fines may work better.
Consistency is critical when enforcing fines, as selective enforcement, such as penalizing some owners while ignoring others, can weaken the rule and expose the board to legal challenges. Establishing a written fine policy helps ensure uniform application across the community. However, fines alone may not always resolve violations. Boards should also consider alternative or supplemental enforcement tools, such as suspending privileges like access to the clubhouse, pool, or voting rights (if authorized), using self-help remedies for issues like landscaping maintenance (if appropriate depending on the circumstances), or pursuing injunctions and court action for serious or repeated noncompliance. A fine schedule is most effective when it is paired with these additional enforcement mechanisms.
An effective fine schedule should be reviewed periodically to ensure it is still working as intended. If fines are too low, they may be ignored. If they are too high, they may create resentment or legal risk. Boards should adjust based on community feedback and enforcement outcomes. A reasonable and effective monetary penalty structure is an essential part of HOA governance. By ensuring fines are authorized, fair, and consistently enforced, boards can curb noncompliance while maintaining trust and transparency in the community.
If you have any questions regarding these materials, please reach out to the firm for assistance. Call us toll free at (800) 743-9324 or email moc.w1765760939albdh1765760939c@ofn1765760939i1765760939.
The information contained in this article is not intended to be legal advice and is provided for educational purposes only.
