What’s Required to Fine an Owner in an HOA?

An owner recently sent me an email asking what is required to fine an owner in an HOA. Civil Code Section 1363 sets forth the requirements. If you had my book entitled ‘THE DAVIS STIRLING ACT IN PLAIN ENGLISH” you would know because the law is recited and then explained with comments. See below (and note the book is available on my website at www.californiacondoguru.com).

Civil Code section 1363:

“(f)    If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association member for a violation of the governing documents or rules of the association, including any monetary penalty relating to the activities of a guest or invitee of a member, the board of directors shall adopt and distribute to each member, by personal delivery or first-class mail, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents. The board of directors shall not be required to distribute any additional schedules of monetary penalties unless there are changes from the schedule that was adopted and distributed to the members pursuant to this subdivision.

Comment:  The purpose of the statute is to give a member notice if the association is going to consider imposing monetary penalties (fines or cost reimbursement assessments) and to explain what conduct is subject to the penalties. This is accomplished to a certain degree by the “schedule of fines” that must be sent to owners before any fine is imposed. The schedule may be general or specific, but in any case, unless it restates exactly what the CC&Rs or other governing documents that cannot be changed without membership approval say, it is subject to circulation to the members before adoption per the requirements for rules found in CC 1357.100 and following. Legal counsel should be consulted to review the fine schedule to see if it comports with the CC&Rs and Bylaws provisions and manner of notice required therein to members. The “fine schedule” must be distributed upon adoption by the Board, and thereafter anytime changes are made, but it seems to me a good idea to send it out annually with the budget package, as a reminder. A copy should also be given to new owners with the governing documents that are provided upon sale or transfer of a unit or residence. If the Owners do not know the rules, they cannot follow them. And for a landlord Owner, it is much easier to get tenants to read the rules than the CC&Rs.

 (g)          When the board of directors is going to meet to consider or impose discipline upon a member, the board shall notify the member in writing, by either personal delivery or first-class mail, at least 10 days prior to the meeting. The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined, and a statement that the member has a right to attend and may address the board at the meeting. The board of directors of the association shall meet in executive session if requested by the member being disciplined. If the board imposes discipline on a member, the board shall provide the member a written notification of the disciplinary action, by either personal delivery or first-class mail, within 15 days following the action. A disciplinary action shall not be effective unless the board fulfills the requirements of this subdivision.

 Comment:  Associations must provide members with notice of a hearing when a fine or other disciplinary action is being considered. These hearings are generally held in executive session even if the owner does not ask for it. The right of member attendance in post-hearing deliberations is debated by industry professionals so legal advice should be obtained if a question arises. For continuing or commonly repetitive violations by the same residents, a Board or manager should get advice from a knowledgeable attorney for guidance in avoiding subsequent or repetitive hearings.



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