An association’s authority to fine owners for violations is perhaps the biggest tool in the enforcement toolbox. Fines are treated like assessments if not paid. The association may file a lawsuit to collect the fines or foreclose on the lien created by the fines. Let’s look at the statutory authority to levy and collect fines. In Oregon, the law states that the board of directors of a community association may:
(n) Impose charges for late payment of assessments and attorney fees related to the collection of assessments and, after giving written notice and an opportunity to be heard, levy reasonable fines for violations of the declaration, bylaws, rules and regulations of the association, provided that the charge imposed or the fine levied by the association is based:
(A) On a schedule contained in the declaration or bylaws, or an amendment to either that is delivered to each lot, mailed to the mailing address of each lot or mailed to the mailing addresses designated in writing by the owners; or
(B) On a resolution of the association or its board of directors that is delivered to each lot, mailed to the mailing address of each lot or mailed to the mailing addresses designated in writing by the owners[.]
See ORS 94.630 / ORS 100.405
Washington law is very similar, and states that a board of directors may:
(11) Impose and collect charges for late payments of assessments and, after notice and an opportunity to be heard by the board of directors or by the representative designated by the board of directors and in accordance with the procedures as provided in the bylaws or rules and regulations adopted by the board of directors, levy reasonable fines in accordance with a previously established schedule adopted by the board of directors and furnished to the owners for violation of the bylaws, rules, and regulations of the association;
See RCW 64.38.020 / RCW 64.34.304(k)
You may have noticed a critical word in both statutes: “reasonable”. What’s reasonable in one community may not be reasonable in another. Much of the reasonableness depends on the nature of the violation and whether the amount of the fine is too punitive. If the violation poses a health, life or safety issue, a large fine is likely warranted.
A Georgia Court of Appeals case provides some guidance on whether a fine is reasonable. In that case an owner leased her unit in violation of the association’s rental cap. The association levied a fine of $25 dollars per day. The Court found that the fine was reasonable for three reasons: 1) the owner’s actions were a clear violation of the associations governing documents; 2) the association provided an opportunity for the owner to cure the violation before levying fines; and 3) the same amount of fines had been applied to other owners who violated the same rental restriction.
Assuming the amount of the fine is reasonable, the association may not actually levy or impose the fine until after notice and an opportunity for a hearing with the board of directors. When notice of the violation is sent to the owner the association must include a statement that the owner has the right to request a hearing before the fine is imposed. If the owner fails to request the hearing after the stated deadline, the board may then impose the fine.
If the owner does request a hearing, then the board should allow the owner to present evidence or testimony concerning the violation. If after the presentation of evidence or testimony the board still determines that a violation exists, fines may be levied at that point.
Lastly, the amount of the fine must be contained in a "schedule of fines" provided to all owners. The schedule of fines should list the various types of violations with a corresponding fine. It's wise to add language to the schedule of fines stating that the fine may be levied daily, weekly, month, or per occurrence.