Guest Post By: Weissman, Nowack, Curry & Wilco, P.C.
Webster’s Dictionary defines the word fine as a sum of money levied as a penalty for an offense. Black’s Law Dictionary defines the word fine as a pecuniary punishment. If Mr. Webster and Mr. Black were on the board of directors of a homeowners association or condominium association, they might further define the word fine as a powerful tool to enforce the community’s governing documents. To that end, the following are some of the questions that a board of directors should consider before it decides to implement fining.
1. Does the board have authority to impose and assess a fine? The Georgia Condominium Act (“Condo Act”) and Georgia Property Owners Association Act (“POA Act”) provide that if and to the extent provided in the “instrument,” the association shall be empowered to impose and assess fines in order to enforce compliance. The “instrument” is the declaration of condominium for condominium communities or the declaration of covenants for communities of detached houses or townhouses. The “instrument” (i.e., declaration) is recorded in the county property records and generally includes the recorded attachments, such as recorded bylaws. Accordingly, if a community is subject to the Condo Act or POA Act, the association’s authority to fine must be recorded; and if there is no recording in the county property records that grants the authority to fine, the association’s board cannot begin fining.
Generally, for associations that are not subject to the Condo Act or POA Act, the right to fine should similarly be within a recorded covenant. Sometimes, however, the right to fine is set forth within unrecorded bylaws and not within a recorded covenant. In such a situation, the association can nonetheless impose the fine since association members are subject to the bylaws. However, it is important to review the association’s legal documents, including the covenants, to ensure that the association’s collection powers and lien rights apply to such a fine. The legal documents might, for instance, state that the association has the right to collect “assessments and other charges.” The “other charge” in such an instance could include fines imposed against an association member under the association’s unrecorded bylaws. Ideally, the legal documents will expressly provide that fines are treated as assessments under the association’s assessment and lien provisions. Alternatively, the legal documents could have other provisions to support the collection of the fines. If, however, such a provision does not exist, the association should amend its legal documents to ensure that the association’s lien and collection powers apply to fines.
2. Is there a fining “due process” that must be followed? The bylaws for many associations, as well as some declarations, require that written notice be sent stating the violation, the fine to be imposed, and that the violator has an opportunity for a hearing before the board of directors. There are several different versions of the fining “due process” procedure that might apply to a community. Some procedures, for example, provide that the fine shall not start until after the hearing, while other procedures permit a fine to begin on the date of the violation notice. If your association’s bylaws or declaration include a fining “due process” procedure, that specific procedure must be followed in order for the fine to be valid.
If there is no fining “due process” procedure, boards are not required to provide a hearing. Nevertheless, many boards do provide a violator with an opportunity for a meeting with the board because face-to-face meetings are often beneficial in attempting to resolve the underlying violation that caused the fine to begin in the first place.
3. How much should the fine be? The Georgia Courts of Appeals has held that a $25.00 per day fine for a continuing violation is a reasonable fine. In that case, an owner leased the owner’s property without approval of the board of directors in violation of a covenant restricting leasing. The board of directors began imposing a $25.00 per day fine against the owner. The association later filed a lawsuit against the owner in order to obtain the owner’s compliance with the covenants and to collect the accumulating fine. By the time the lawsuit was eventually tried, 515 days had passed. $25.00 per day for 515 days totaled $12,875.00 for that continuing violation. Wow!!
If, on the other hand, the violation is not of a continuing nature, but is either a one time occurrence or occurs sporadically, a fine in excess of $25.00 may be justified based on the severity of the violation or to discourage the violation in the future. For instance, if an owner removes a mature tree from the property in violation of association’s covenants, a more substantial fine might be a reasonable fine in order to discourage such a violation from again occurring.
4. Are fines effective? The answer is generally yes. A large percentage of violators, when confronted with a fine that will grow as the violation continues, will stop the underlying violation. To achieve compliance, many associations will also waive fines that have accrued since the purpose of fining is to remedy the violation. There are, of course, those individuals who will ignore all enforcement efforts short of litigation, and for those persons, litigation might be necessary — but as shown in the above case, the litigation can include obtaining an order for the removal of the violation and the collection of the fines. Note also that fines are not the most effective enforcement tool for every violation. A board exercising self-help to remedy an owner’s lawn maintenance violation might, for example, be a much quicker approach to remedy the violation and achieve the removal of weeds and knee-high grass.
Before a board implements a fine, the board should consider the above questions. If the board is not sure of its authority to impose and assess a fine or has any other questions or concerns, the board should contact its community association counsel for assistance.