Skye Bridge

A fine is a penalty that is applied by the Board of Directors. Fines are applied to Homeowners who are not following the Rules and Regulations. They have broken a rule, been advised of such, and are refusing to comply with the remedy action needed to resolve the violation.

The amount of a fine can come from a few different sources:

• Local, State, or Federal Laws. You should consult with your Association’s attorney about a fining policy, to ensure that you are not accidentally breaking any local, state and Federal Laws.
• Governing Documents. Governing Documents, such as the Declaration, CC&R’s or Master Deed, may already include what the fining policy and structure is. Before creating a new fine, the Governing Documents should be reviewed in detail.
• Rules and Regulations. The Rules and Regulations of the Association may contain a fining policy. Before a new policy or fine is instilled, the Rules and Regulations of the Association should be reviewed.
• Policies, Procedures, and Resolutions: Policies, Procedures, and Resolutions are all Rules and Regulations, but may have a different name such as “Administrative Policy” or “Administrative Procedure”. Rules should be created and adopted in a Resolution format that is easy to read and follow in addition to being published in a document called “Rules and Regulations”. All of these documents need to be reviewed before issuing a new fining policy.
• What are Other Communities Doing? One of many benefits of having a management company, is that your Community Manager can tap into the knowledge base of other managers to find out what their policies and procedures are. Board and Committee members can do the same, by asking neighboring HOA’s and Condominiums.
• What is Recommended by the Association’s Legal Counsel? If your Community has an Association Attorney, they are going to have SEVERAL Community Association clients. They too have a wealth of knowledge at their finger tips, with multiple examples and resources. Additionally, they will ensure that your fining policy is legal in accordance with local, state, and federal laws.

How Much should a Fine Be?

If you can’t find your answer already written in the above places, or if you want to change the fine* in one of the above documents, think about the fine as rational as possible so that you can make a great business decision for your Association. Remember that fines should not be a source of income for your Community Association. They are supposed to deter Homeowners from breaking the Rules and Regulations, but not be a planned source of income.

• Is it High Enough? A fine of $10 may be too little for some Associations. The fine should be a deterrent and large enough that it catches the attention of the Homeowner. It will depend on the demographics of your Community as to what level the fine may be “eye catching” to Homeowners.
• Is it Fair? A fine should be reasonable and fair to all Homeowners. It should not be so astronomical that it could never be enforced in court. Judges are not often fair of Associations trying to collect fines on delinquent accounts.
• Does the Fine Match the Violation? For example, if it is going to cost $500 to have a home power washed, the fine should not exceed that amount. Otherwise, the Association could (most likely) under the power of the Governing Documents, hire a contractor to do the work and bill the cost back to the homeowner. A large fine in relation to this type of violation, just places more financial strain on the homeowner who is breaking the violation (what if they didn’t have the money to power wash now, and now their fine is the same amount)? And, inflated fines being charged to your Homeowners can skew the financials of the Association – looking like you are collecting a lot in fine income, that may not be able to be collected.
• Is it Consistent with other Communities? This is a great time to tap into your Community Manager’s extension of the management company they work for, or your Association’s legal counsel. Board or Committee members could also contact other communities and ask what their policies are for fining. The Attorneys go to court for HOA’s and Condominiums on a regular basis, and know what the courts see as “reasonable” for enforcement.

What are some example fines?

These are examples that have been viewed from prior communities. However, all fines should first be reviewed by your Association’s attorney to ensure that they comply with your Community’s local, state, and Federal guidelines as well as your Governing Documents.

Recycling and Trash Can Fine: Warning, then 1st fine and each additional occurrence in a 6 month period receives a $15 per occurrence fine, after the cure period has expired.

Snow and Ice Removal: 12 hour warning, and then fine occurs of $25 each day until snow and/or ice is removed.

Failure to Submit an Architectural Request prior to making an exterior change: $100 per occurrence, Board may waive if the Architectural Request is received on the first fine, but each additional fine will not be waived.

Grass Cutting: 3 days to cure, then a contractor is hired to cut the grass at the expense of the homeowner, in addition to a $25 fine.

Other Rule Violations: Warning, with 15 days to cure, 10 days to appeal. If appeal is not received and violation is not cured, issue fine of $100 at 15 days. If violation still occurs at next inspection, $200 fine. If violation still occurs at next inspection: $300 fine. Fine remains $300 per occurrence at each inspection (this policy indicates that inspections occur no more frequent than monthly, and no less frequent than 2 x / year.

______________________________________________________________________________

Summary: Fines may already be established in a Community Association’s Governing Documents, Rules and Regulations, or Resolutions (also called Administrative Policies or Procedures). These should first be reviewed prior to making a policy, in addition to local, state, and federal laws. After those completions, a fine policy may be established that is considered reasonable and fair. An easy way to determine this is to receive feedback from neighboring communities, your property management company, and ALWAYS have policies reviewed by your Association’s Attorney.