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HOA Fines and the Concept of Reasonableness

Association managers are often asked, “What should we fine for this violation of the rules and regulations?” Or, “what do other HOA boards fine for this violation?” Notwithstanding state statutes that may limit fines and regulate a fine process, this is not always a cut and dry issue. This is where a board embraces the Concept of Reasonableness.


This Concept of Reasonableness, in short, is the use of diligence, prudence, and reasonable care in community operations and governance. The Concept should be bounded by fairness, consistency and the avoidance of appearing arbitrary or excessive.


A good rule of thumb when considering the Concept of Reasonableness is to imagine being in court in front of a judge; will this judge feel the board’s decision/action regarding a violation of the governing documents was reasonable?


To this end, if an enforcement matter proceeds to the court system, judges look first to whether the board had authority to enforce. The judge will do this by reviewing the community’s governing documents and, if any apply, the state statutes. The judge will then look for reasonableness of enforcement. This could involve the court looking for consistency of prior enforcement. The judge may also look at the community’s internal due process requirements as provided for in the community’s governing documents. Another, and more common, point that a judge may consider is how long had the particular issue been in place before the board commenced with enforcement.


The bad news is that reasonableness can be and usually is decided by the court on a case-by-case basis. So when it comes to reasonableness, a board should go to the extreme in being reasonable when a member violates the governing documents. For example, allow a member who must make a repair to his home 30 days, rather than 5 days.


However, when violations have occurred and fines are determined to be appropriate by the board, the board should remember a fine is to obtain compliance with the governing documents not to punish a violator. A $5 fine for failing to roll in a trash can would generally not be considered unreasonable, however a $100 fine for failing to pickup after a dog maybe deemed unreasonable.


Another point to consider is that the fine must be effective to work. A $5 fine per month for an unapproved storage building may be cheaper to pay than to obtain offsite storage. And once a board rules on a violation, the board may have difficulty in going back and adjusting this same violation ruling.


The Concept of Reasonableness should be the basis for how any association board uses their elected authority. In closing, the board should always ask; is the action to be taken reasonably related to the community purposes? Also, if the action is taken, will enforcement be required thereafter, and can that action be appropriately and reasonably enforced? WDPM


Copyright – William Douglas Management, Inc. 2016


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