Q: I live in a townhouse complex. Neither our bylaws nor our Covenants, Conditions and Restrictions mention anything about fines for violations. Now our board of directors has decided to adopt a set of “rules” which they plan to enforce by levying fines for violations. Is this legal?
If your community is comprised of more than 20 townhomes, it is most likely governed by the N.C. Planned Community Act.
One of the specific powers of HOAs set forth in the act reads, “Unless the articles of incorporation or the declaration expressly provides to the contrary, the association may … after notice and an opportunity to be heard, impose reasonable fines or suspend privileges or services provided by the association (except rights of access to lots) for reasonable periods for violations of the declaration, bylaws, and rules and regulations of the association.”
You say that your bylaws and CCRs (often referred to as the “governing documents”) are silent on the issue of levying fines for violations of these governing documents. My first question is, do your governing documents specify some other method for enforcing them, besides fining?
Unless your CCRs or the HOA’s Articles of Incorporation specifically prohibit fines, your HOA, acting through its board of directors, probably has the authority to levy fines.
The act also has a section that outlines the specific process the HOA must follow for holding hearings and levying fines:
“Unless a specific procedure for the imposition of fines or suspension of planned community privileges or services is provided for in the declaration, a hearing shall be held before the executive board or an adjudicatory panel appointed by the executive board to determine if any lot owner should be fined or if planned community privileges or services should be suspended pursuant to the powers granted to the association in G.S. 47F-3-102(11) and (12). Any adjudicatory panel appointed by the executive board shall be composed of members of the association who are not officers of the association or members of the executive board. The lot owner charged shall be given notice of the charge, opportunity to be heard and to present evidence, and notice of the decision. If it is decided that a fine should be imposed, a fine not to exceed one hundred dollars ($100.00) may be imposed for the violation and without further hearing, for each day more than five days after the decision that the violation occurs.
I always counsel my HOA clients that the hearing/fine process should be used only after multiple written warnings to the homeowner. I also advise that the fine amounts should be reasonable ($100 per day for leaving a trash can out is not reasonable), and that they should be quick to waive fines if the homeowner cures the violation within a reasonable time.
Whenever an HOA board adopts new rules or procedures for enforcement, owners should be provided with written notice of the new rules and the enforcement policies and procedures well in advance of their effective date.