ENFORCEMENT OF COVENANTS
This edition of the e-Lawyer is the sixth in a multi-part series which addresses the enforcement of the covenants that regulate deed restricted communities (e.g. HOAs and Condominiums). For purposes of these articles, the term 'covenants' will include the restrictions found in Declarations, Articles of Incorporations, By-Laws, Rules & Regulations and Architectural Guidelines. These e-Lawyer articles will not, however, address issues relating to the non-payment of assessments.
In Part I (Volume V, Issue 4), we addressed the various options that may be available to community associations to enforce their covenants.
In Part II (Volume V, Issue 5) , we addressed the mediation/litigation process that is now required for the enforcement of HOA covenants.
In Part III (Volume V, Issue 6), we addressed the arbitration process that is required by Chapter 718, Florida Statutes, for the resolution of most condominium disputes.
In Part IV (Volume V, Issue 7), we addressed prevailing party attorney fees.
In Part V, (Volume V, Issue 8), we addressed the defenses most commonly raised by violators in response to the Association’s demand for compliance.
In this Part VI, (Volume V, Issue 9), we will address the fining process.
IMPOSITION OF FINES
In Part I of this series, we briefly addressed the various self-help enforcement tools which are possibly available to community associations. In this article we will fully address the technical requirements for the imposition of fines and then utilize a simple example case to outline the process that should be used to actually levy a fine.
A. TECHNICAL REQUIREMENTS FOR IMPOSING FINES:
1. Power to Impose Fines:
As a starting point, both Section 720.305, for HOAs, and Section 718.303, for condominiums, provide that no fines may be levied unless such power is granted by the Association’s governing documents.
2. Who May Be Fined:
Section 720.305, for HOAs, allows fines to be imposed against any 'member, tenant, guest or invitee or both'.
Section 718.303, for condominiums, allows fines to be imposed against the 'owner of the unit, or its occupant, licensee, or invitee'.
3. Use of Fines if Property is Vacant:
For HOAs, fines may be imposed whether or not the subject property is vacant.
However, for condominiums, Section 718.303 prohibits the imposition of fines if the Unit is unoccupied.
4. What Restrictions Can Be Enforced Using Fines:
For HOAs, Section 720.305 permits fines to be imposed for violations of Chapter 720, the Declaration, the Articles of Incorporation, the By-Laws and the Rules of the Association.
For condominiums, Section 718.303 permits fines to be imposed for violations of any provision of the Declaration, the Association’s By-Laws, and reasonable Rules of the Association.
5. Maximum Amount of Fine:
For HOAs, Section 720.305 establishes the fact that all fines must be reasonable. It then provides that no fine may exceed $100.00 per violation, but does allow fines to be imposed for each day of a continuing violation, so long as such fine does not exceed $1000.00 per violation. That section also permits the allowable fine to be either larger or smaller if the individual governing documents provide otherwise.
For condominiums, Section 718.303 establishes the fact that all fines must be reasonable. It then provides that no fine may exceed $100.00 per violation, but does allow fines to be imposed for each day of a continuing violation, so long as such fine does not exceed $1000.00 per violation. Unlike HOAs, the condominium documents may not provide for a different fine amount.
6. Functions of Boards and Special Committees/Required Notices and Hearings:
For both HOAs and condominiums, the Boards only propose the fines. No fine may actually be imposed unless a special committee first holds a due process hearing and agrees that the proposed fine should be imposed. The technical standards for this portion of the process are as follows:
For HOAs, Section 720.305 provides, in relevant part, as follows:
A fine...may not be imposed without notice of at least 14 days to the person sought to be fined...and an opportunity for a hearing before a committee of at least three members appointed by the board who are not officers, directors, or employees of the association or the spouse, parent, child, brother or sister of an officer, director, or employee.
For condominiums, Section 718.303 provides, in relevant part, as follows:
No fine may be levied except after giving reasonable notice and opportunity for a hearing to the unit owner and, if applicable, its licensee or invitee. The hearing must be held before a committee of other unit owners.
7. Composition of Committees:
As reported above, for HOAs the special fining committee must be composed of at least three (3) members appointed by the board who are not officers, directors, or employees of the association or the spouse, parent, child, brother or sister of an officer, director, or employee.
For condominiums, the statute only requires that the committee be composed of 'other unit owners'. While this technically could mean that board members could serve on the special committee, prudence dictates that condominium boards follow the standards imposed on HOAs.
8. Enforcement of Fines:
This issue is perhaps the most important element of the fining process because, in our view, the fining process is not about the money. Instead, it is about using an internal enforcement process that, in many cases, will result in voluntary compliance. Frankly, if the fining process does not result in compliance, the next step should be to send the matter to the Association’s legal counsel for one of the formal legal procedures outlined in Parts II & III of this series.
Another important reason why the matter should be referred to the Association’s attorney is that, in any action to collect a fine, the Association will be required to prove to a Judge or Arbitrator that the underlying violation actually exists. In other words, there is no legal presumption that the violation exists just because a fine was imposed. If the Association must prove the underlying case, it might as well ask for a judicial or administrative order curing the violation.
That being said, if an Association wishes to only collect the money, the following standards exist:
a. Neither HOAs nor condominiums may covert a fine into a lien; however,
b. Both HOAs and condominiums may file legal actions to recover the fine with the prevailing party in such actions being entitled to the recovery of their reasonable attorneys’ fees and costs.
B. EXAMPLE CASE :
Now that the technical requirements have been established, we will use the following simple example case to illustrate the fining process:
Mr. & Mrs. Brown purchased a Living Unit in Dreamacre. The Declaration for Dreamacre prohibits 'large dogs'. On January 1, 2006, Mr. & Mrs. Brown fulfilled their lifelong dream and purchased their very own pitbull dog and immediately brought it to their home in Dreamacre and proudly walked the dog around the community. The Board wishes to fine the Browns as permitted by Dreamacre’s Declaration.
1. Commencement of Enforcement Action Using Normal Violation Procedures:
Because all enforcement actions should begin with a letter to the alleged violator, management sent a demand letter to Mr. & Mrs. Brown on January 20, 2006, asking that the dog be removed on or before February 15, 2006.
(Please note that the number, form, and timing of such letters is in the discretion of the Board, but must be in compliance with any specific procedures contained in the community’s governing documents.)
2. Board Action:
Mr. & Mrs. Brown ignored the demand letter(s), so management placed this issue on the agenda for the March 1, 2006 Board meeting. At that meeting, management presented evidence to the Board reflecting why it believed that the Browns’ dog violated the 'large dog' restriction (photographs, data concerning dogs, etc.). The Board, after reviewing management’s information and drawing on its own knowledge of the matter, took the following formal actions:
a. It found that there was reasonable cause to believe that the Browns’ dog violated the 'large dog' prohibition;
b. It proposed a fine of $1000.00 against the Browns because the dog constituted a continuing violation; and
c. It directed that the matter be submitted to the Association’s Fining Committee for a 'due process' hearing at the committee’s next hearing date which was scheduled for April 1, 2006.
3. Notice of Hearing:
As a result of the Board’s decision, management prepared a formal written notice and mailed it to the Browns by certified mail on March 5, 2006. The Notice contained the following:
a. A specific identification of the alleged violation;
b. A statement that the Browns could be fined up to $1000.00;
c. The date, place, and time of the Fining Committee meeting; and
d. A directive that the Browns appear at the hearing to address the committee, bringing with them any support, evidence and witnesses that they had concerning the matter.
4. The Fining Committee Hearing:
On April 1, 2006, the duly constituted Fining Committee opened its meeting and called for the Brown case to be heard in the following order:
a. Management first presented the HOA’s case against the Browns.
b. The Browns then presented their case to the committee.
5. The Fining Committee’s Decision and Order:
After a full and complete hearing on the matter, the Fining Committee, by majority vote, came to the conclusion that a violation existed and imposed the full $1000.00 fine against the Browns. On April 15, 2006 the above decision was converted into a written order, which was sent to the Browns with a directive that the fine be paid on or before May 1, 2006.
In spite of the fine and written order, the Browns refused to remove the dog. As a result the Board is faced with the decision as to whether it wishes to merely attempt to collect the $1000.00 or whether it wishes to cure the underlying issue.
As outlined above, in our view, it simply makes no sense to just collect the money and leave Accordingly, we would advise our clients that the matter be referred to us for a complete violation action along with a demand for the payment of the fine.
In Part VII, we will discuss the other available self-help enforcement tools.
The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition was prepared by Robert L. Taylor, Esq. of Taylor & Carls, P.A. The information contained in The Association e-Lawyer should not be acted upon without professional legal advice.
©2006 Taylor & Carls, P.A. All Rights Reserved.
The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
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