Associations may use fines to curb unwanted, destructive, or dangerous behaviour from continuing within the development. Some associations use them often, while others try to avoid issuing fines. There are pros and cons to using and issuing fines, but monetary penalties won’t be all that effective if they do not align with the offence that was committed.
Fines aren’t intended to bankrupt your homeowners
When a violation notice is paired with a fine, the recipient should be able to pay it off relatively easily. Fines are issued to discourage future violations by owners. Usually, if the association finds that a particular violation is occurring repeatedly, it will add a monetary penalty to the violation notice. Think of a fine as a slap on the wrist, not a method for collecting money for the HOA.
Use your documents to guide you
One of the best ways to approach the issue of fines is to read over your provincial or state laws, and your HOA’s governing documents. Some states or provinces may place explicit limitations on what you can and cannot do when it comes to violations and fines. For example, Florida statutory law states that fines may not exceed $100 per violation (per day). Fines may be imposed for each day that a violation continues, however they cannot exceed $1,000, in total, per violation. Your HOA may have already established rules for tracking and managing violations, and issuing fines.
If fines are not discussed in your governing documents, you may consider assembling a fining committee. This group would not be responsible for issuing fines, rather it would review offenses and set the fines.
Many associations set predetermined amounts for fines related to common violations. A minor violation, such as leaving the garbage can out after garbage day, or failing to pick up after a pet, could come with a fine ranging from $25 – $50 per violation. You don’t want to set the fine so low that it won’t do anything to discourage the homeowner from breaking the rule. But you also don’t want to impose an unjust amount either.
Violations such as unapproved modifications or renovations, or parking a broken-down vehicle on a front lawn, should come with a higher fine because they are more difficult to correct and will require more attention from the board. Furthermore, these more serious violations can bring down the value of the property more quickly than less serious infractions. HOAs may issue fines between $100 – $300 for major violations.
Going higher than that could potentially create legal problems if the homeowner decides to take the issue to court. A judge won’t look favourably on an HOA that uses fines as anything else than a remedy for repeat violations. However, it really does depend on the violation and the community. There may be some unique situations where a $500 fine is reasonable.
If standard fines aren’t working, the association may need to consider some alternatives, such as an escalating fine system, or revoking homeowners’ rights to vote or use shared amenities.
Alternatives to using set HOA fines
Some associations have adopted an escalating fine system. For the first violation, just a warning would be issued. The owner would be warned that a fine will be issued if the problem isn’t resolved by a certain time. A second violation of the same nature would be met with a $50 fine, a third violation would prompt a $100 fine, and the fourth violation fine might be $200.
Here’s an example of how it would look on paper:
2nd violation (same offense)…………$50 to $100
3rd violation (same offense…………..$100 to $300
Additional violations (same offense)…….Up to $400
Serious safety violation……………………..Up to $500
Continuing violation…………..Daily fines up to $1,000
Continuing violation after fine limit has been reached……Suspension of common area privileges
Continuing violation after privileges have been suspended……….File a lien on the property / legal action
Usually, there is a limit on how much a homeowner can be fined. $1,000 is fairly standard. Once this amount is reached, the HOA will have to use other remedies, such as filing a lien on the property, if the state or province allows it, or petitioning the court for injunctive relief. The laws might only allow liens under specific circumstances, like when unpaid fines reach the limit.
Note that an unpaid fine does not automatically become a lien. Before the HOA can place a lien on the home, it has to file and win a lawsuit against the homeowner. If successful, the HOA can record the lien against a property in the county records. Depending on the provincial or state laws, and the HOA’s governing documents, the associate could foreclose the lien if necessary.
The process for foreclosing a lien depends heavily on state or provincial laws. In some places, the HOA must file a lawsuit in court to foreclose. In other places, the HOA may be able to address the issue outside of court. When this second option is selected, the association must follow the process described in the state statutes and association’s CC&Rs.
Some states forbid liens for unpaid fines entirely, while others may prohibit foreclosures when the HOA lien consists only of unpaid fines or related costs such as attorneys’ fees. As stated before, it really depends on where you live, which is why it is so important to familiarize yourself with your laws and rules.
Fines are unpleasant, and no one wants to issue or receive one. Unfortunately, the board has a responsibility to ensure unwanted or unsafe behaviour is put to a stop, and fines can be a simple and fair way to address reoccurring violations.
Fines issued by your HOA should not be arbitrary or discriminatory, and they should be imposed in good faith by the board for the benefit of the property and the community. Homeowners need to understand what actions may result in a fine, and they should be given notice before a fine is issued. They must also have a reasonable amount of time to pay the fine before the association issues another one. Most importantly, fines should never be issued simply because the HOA needs to generate more money.
Every HOA is a little different, which means fines will vary from association to association. A reasonable fine will be different for a neighbourhood of million-dollar homes than it will for a retirement community. The process for issuing fines may also vary depending on where you live, and what your community is like. If you are ever in doubt about what a reasonable fine should look like for your community, consult with a lawyer for answers.
More useful tips:
- 10 common HOA violations
- Enforcing violations during COVID-19
- How to handle violations within your community
- Tips for tracking and managing HOA violations
Learn more about our violation tracking & management feature