RealManage Insight

How To in HOA - Community Rule Enforcement

by Mary Arnold, CMCA®, AMS® on Aug 18, 2020 8:15:00 AM
Often malaligned, Community Associations are usually in place to help protect the value of homes in their community. Many HOA board members are interested in serving their community to the best of their ability and know that without enforcing the rules and regulations set forth for the community, including CC&R's, bylaws, and other governing documents that they could be risking their commitment to the neighborhood. All HOA and COA boards have a duty to fairly and justly enforce the rules in place but what are the best ways to approach enforcement? And how can a management company help with this task?

The first step should always be establishing due process.

A due process procedure is a formal process designed to protect the rights of all parties involved.  There are several benefits to using a due process procedure to enforce community association rules: 

  • All alleged rule violations are handled in the same manner  
  • Use of a due process procedure is recognized by the courts as an indication of legally valid rule enforcement
  • The vast majority of rule violations can be resolved with this procedure, thus avoiding going to court
  • The opportunity to be heard in a non-threatening fact-finding forum is often enough to result in a person’s voluntary decision to obey a rule
  • Such a procedure provides an opportunity to explore alternative means to resolve a violation 

Basic Steps in a Due Process Procedure for Handling Alleged Rule Violations:  The following are the basic steps in a community association’s due process procedure for handling alleged rule violations.  If the violation is resolved after any of the steps, it is not necessary to continue the enforcement process.  With all steps, be sure to check your state statutes or governing documents, or consult with your attorney, for guidance with the formal enforcement process, as not all of these may be applicable for your association.

Try Talking First

In most cases, homeowners agreed to be bound by the rules and regulations of the HOA when purchasing their home. Many times owners sign these documents without having the best understanding of all of the ins and outs of the contracts. This can be especially true in developer controlled communities where home builders may still be in the HOA board roles usually occupied by homeowners and can have even stricter rules regarding what is and isn't allowed. In these cases, a well-placed phone call from a Board member or from a management company representative for the board may be enough to resolve the matter. While we still suggest that the incident is documented for ensuring communication integrity, there are many cases where the first step should just be notifying the owner about their possible infraction. 

It's incredibly important that the owner and HOA board have a mutual understanding of the rules and are able to communicate with each other candidly to avoid violations and fines that follow verbal warnings. Community satisfaction plays a big role in ensuring that any and all issues can be resolved amicably.

Issuing Warnings

Most often, the first step required by many HOA rules and regulations is to issue a written warning to the homeowner detailing the rule violation and giving the homeowner the opportunity to fix the issue. If there is not a personal relationship between the board members and owners or if the board wants to ensure that all issues are recorded and stored properly to avoid any potential accusations of impropriety in the future, the board should issue a written warning to the owner. Owners who may not have been aware that they were in violation, often use these warnings to correct the issue before a fine is necessary. 

  1. Issue a formal “Cease and Desist” letter by certified mail which contains:  
    a) A specific description of the alleged violation
    b) The action required to resolve the alleged violation
    c) A specific time within which the alleged violation must be corrected
    d) The penalty (sanction) which may be imposed after a hearing if the alleged violation is not corrected within the stated time (specified by state statute, your governing documents or board resolution)
  2. Issue a hearing notice if the alleged violation is not resolved within the stated time. This is a written notice to an alleged violator that a hearing will be held to consider the alleged violation. 
  3. Hold the scheduled hearing if the alleged violation is not resolved within the stated time.  This is a fact-finding session.  It is an inquiry into the allegations and an investigation of them.  A hearing should be viewed as an opportunity for both the association and the alleged violator to hear the input of the other party, not to engage in additional conflict. 
  4. Issue a decision after the hearing is held. The hearing panel determines the facts: whether a rule has been violated, the penalty to be imposed (if any), and the enforcement date of the penalty (if any).  The hearing panel then issues this information in the form of a decision.  A hearing panel may find an alleged violator to have committed a violation or not - or decide that not enough clear evidence was submitted to allow the panel to reach a clear decision.   
  5. Allow for an appeal of a decision. An appeal is a request for a review of a case by a higher authority.  For example, if the hearing panel is a committee, the board of directors acts as the higher authority.  If the board of directors is the hearing panel, the alleged rule violator must appeal to an authority outside the community association; for example, alternative dispute resolution. 

If applicable legal sources allow, you may shorten the due process procedure by combining the “cease and desist” letter with an imposition of a penalty and a statement of the alleged violator’s right to a hearing to waive (dismiss) the penalty.  If the alleged violator does not request a hearing within the stated time, the party is understood to have accepted the penalty.  If the party does not fulfill the penalty, then a hearing is scheduled.   

Check your governing documents carefully.  Many recent documents specify a “due process” procedure which would prevail.  Also, check your state statutes to determine whether deliberations can be held in private or must remain open and if there are regulations regarding the issuance of the findings of the panel.   

Levying Fines

An HOA's ability to enforce its rules against a non-compliant homeowner depends on the applicable state law where the HOA members own their property.  A second consideration is the stated powers given to the HOA by its ruling documents, like the CCRs (Covenants, Conditions, and Restrictions), bylaws, and other governing documents. How a particular HOA Board's enforcement policies work also depends on the procedures the Board adopted for enforcement of its rules. Generally, bylaws allow the HOA board to impose a cash fine against non-conforming homeowners. These bylaws also require written notice to the homeowner of the precise violation before the Board can levy a fine against the homeowner's account. In addition, check the HOA rules to see if repeat offenders face a different fee schedule than first-time offenders.

Homeowners can and often will protest fines that they deem to be unfair or believe were made in error and that is to be expected. Handling those situations is something that should be carefully considered, are special circumstances relevant and how can the board and owner amicably resolve the issue. When a management company is involved, often times the notification of fines is delivered by their company and a representative like a Community Manager (CAM) will help the owner and board understand the situation. These situations can be tense and it is a good idea to record all conversations and make notes of any resolutions that are made with regards to the fines and violation notices.

Alternative Dispute Resolution

A number of community associations are turning to alternative dispute resolution (ADR) as a means of encouraging people to comply with rules and guidelines.  It involves submitting a dispute to a trained, uninvolved third party for assistance with solving a problem.  The third party’s decision may be nonbinding, or the third party may merely act as a facilitator.  However, this approach can be a more efficient and effective way to resolve a dispute than a drawn-out lawsuit. 

An alleged rule violator might consider ADR if he or she is dissatisfied with the community association’s decision or appeal verdict.  A community association might propose ADR when confronted with a difficult rule enforcement situation or the possibility of prolonged litigation.  In many jurisdictions, ADR is either required or encouraged before filing suit or during the discovery process after the lawsuit was filed - but before trial. 

How Arbitration Differs from Mediation:  Arbitration is a process in which a third party (the arbitrator) renders a decision as to the respective liabilities of all parties.  The object is not to reach a settlement; instead, the arbitrator ultimately makes a ruling.  It is an adversarial process that results in the same “win-lose” or “lose-lose” that you would see in litigation.  The arbitration can be binding or non-binding; a binding arbitration typically cannot be appealed.  In contrast, mediation is a non-adversarial process that is intended to bring about a “win-win” resolution.  A neutral third party (a mediator) attempts to guide the parties into reaching a resolution that is favorable to everyone.  Like arbitration, mediation can be binding or nonbinding, depending on the terms agreed upon between the parties before the session begins.  The mediator does not attempt to blame either party and should not take sides.  However, the mediator will often give his/her opinion on the outcome of the case, should it go to trial, in order to facilitate settlement.  A good mediator also will attempt to make the parties see the realities of their position.   

To learn more about how HOA Boards carry out the duty of enforcement, you may be interested in the July 2020 article from naplesnews.com entitled "When to enforce, when to change the rules."

Resources for Rule Enforcement Assistance

There are a number of internal resources a community can use to encourage an owner or tenant to conform to community association rules, as allowed by the governing documents and applicable state and local statutes: 

  • Suspension of owner’s voting rights:  While mild, a community association may use this to encourage rule violators to conform to association rules.
  • Suspension of the use of recreational facilities and common areas:  Uses the community’s resources to encourage someone to conform to association rules.
  • Fines:  Be sure your community association has the authority to impose and collect fines.
  • Eviction:  The process of physically removing a tenant (not an owner) from a property.  This process involves the local court system and use of an attorney.
  • Self-help: Self-help means the community association takes action to correct the violation itself.   

External Resources for Enforcing Rules 

Community associations can also draw on resources within the broader community to help them enforce association rules.  In certain situations, it may be better to have someone else wear the black hat instead of the association and its management.  Local government agencies and municipal services can be great resources for enforcing rules.  Take the time to build working relationships with each of the following parties. 

  • Local Health Department:  Your local health department can be asked to enforce the local health code.  Possible areas of violation include the number of occupants in a unit, internal use of a unit or storage on a lot, or pervasive stench or pet feces.
  • Local Zoning Department:  This local agency can assist with enforcement of such rules as a fence or shed regulations, setback restrictions, restrictions on commercial use of dwellings, and removal of vehicles, boats, and trailers.
  • Local Police Department:  In some jurisdictions, the police will enforce traffic regulations or tow violators of the community’s parking rules.  The police can also help with noise control and suspected illegal activity.  It is a good idea to develop a good working relationship with your local police department before you need its help. .
  • Local Fire Department:  Your local fire department will help with enforcement of fire lanes and the removal of hazardous materials.
  • Local Building/Housing/Property Standards Department:  These terms refer to the local government office that issues building permits.  They may be able to help if a unit is in violation of an existing building, plumbing, fire or electrical code.    
  • Local Animal Shelter or Animal Control Officer:  This agency is a good source of information on types of pets and weight classifications when your community association is defining rules for pets.  You can also request that this agency patrol your community for animals in violation of its pet rules. 

At RealManage we know that rule enforcement can be challenging. If you are a board member and want to learn more about the Rules and Regulations for community associations visit https://www.realmanage.com/rule-development-and-enforcement for a free downloadable guide to rule developement.

Rules and Regulations Download - CTA