Fine Policy
Dennis
Our HOA has an “infinitely escalating” fine policy that reads like this:
FIRST NOTICE: An initial notice of the violation shall be mailed to the Owner requesting compliance within 14 days – NO FINE. SECOND NOTICE: If violation still exists 14 days after the initial notice of violation, a second notice requesting compliance within 14 days shall be mailed to the Owner. A $25.00 FINE will be assessed with the second notice of violation and is due immediately. THIRD NOTICE: If violation still exists 14 days after the second notice of violation, a third notice requesting compliance within 14 days shall be mailed to the Owner. A $50.00 FINE will be assessed with the third notice of violation and is due immediately. FOURTH NOTICE: If violation still exists 14 days after the third notice of violation, a fourth notice requesting compliance within 14 days shall be mailed to the Owner. A $50.00 FINE will be assessed with the fourth notice of violation and is due immediately. CONTINUING VIOLATIONS: If the violation continues without resolution after the fourth notice of violation, a FINE of $100.00 shall be assessed every 14 days until the violation is resolved. In addition, the Board of Directors shall have the right to remedy the violation and/or take legal action, the cost of which shall be invoiced to the Owner and collected in the same manner as assessments.
Then they have this “self help” section that reads: SELF HELP: Pursuant to the Declaration, each Owner shall maintain his residence and lot in good repair. In the event an Owner fails to fulfill his maintenance and repair obligations or in the event an Owner fails to landscape his lot as required by the Declaration, the Board of Directors may have said lot and residence landscaped, cleaned and repaired (“Self Help”) and may charge the Owner for said Self Help in accordance with the provisions of the Declaration. An Owner shall not allow a condition to exist on his lot which will adversely affect any other lots and residences or other Owners. The Board of Directors’ right to exercise Self Help may be implemented at any time during the notification process at the discretion of the Board.
To me, there seem to be some problems with these two, such as:
1.) A.R.S 33-1803A explicitly requires that homeowners be given notice and an opportunity to be heard BEFORE a fine is imposed. The HOA’s process imposes escalating fines automatically after each notice without any mention of a prior hearing. Doesn’t this deny homeowners the due process guaranteed by law?
2.) ARS 33-1803B requires fines to be “reasonable. Unlimited, escalating fines seem, to me, to violate the “reasonable” criteria. Are unlimited, escalating fines legal in AZ?
3.) ARS 33-1803E states that Homeowners ALWAYS have a statutory right AT ANY TIME IN THE PROCESS to petition the Arizona Department of Real Estate (ADRE) for a hearing. The document states the Board’s decision is “final and may not be further appealed,” which seems, to me, to conflict with A.R.S 33-1803E.
4.) Allowing the Board to implement “Self Help” remedies “AT ANY TIME DURING THE NOTIFICATION PROCESS seems, to me, to bypass due process requirements, especially when no immediate danger exists. This could violate property rights under Arizona law, no?
Your thoughts?
Also, besides ARS 33-1803, are there any other Arizona laws (planned community or non-profit acts) that pertain to violation notice/fine/appeal processes for members in HOAs?
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Ray,
The due process established in the statute is triggered by the appeal of any cited violation. If you do not appeal, the association can apply fines based on their published fine policy. If you appeal, the fine cannot be applied until you have been granted your right to be heard by the board or an enforcement committee. While case law has established that fines must be reasonable and commensurate with the significance of the violation. To be reasonable, it must be on a published fine schedule and enforced by a published enforcement policy. Your association enforcement policy is reasonable as long as the remedy to address the violation can be accomplished in 14 days. For example, if the cure of the violation would require the painting of your home, then the application of a fine in 14 days is unreasonable in relation to the time necessary to affect the cure. The escalation provisions are also reasonable conditionally based on the above comment.
I’m working to clarify the due process and fine requirements in statute for this session if possible.
Please remember that because something does not appear right to any individual, does not make the process wrong under the law. There is very little common sense in the governance of these communities until i can codify into law the application of common sense.
Dennis
ARS 33-1803 states “21 days” to respond and request appeal. So how can “14 days” be reasonable?
David,
The 21 days applies to the request to appeal. What I was talking about is after you get the appeal hearing the association can then fine you for the violation. What I was saying is that once the hearing is over, the association should allow you reasonable time to cure the violation prior to the application of the fine. If you do not appeal the notice of violation, the 21 days don’t directly apply. Still, if you are allowed by law to appeal the process 21 days after you receive the notice, the law also explicitly states that you can only be fined after you are granted an opportunity to be heard, and it is inappropriate for the association to apply any fine sooner than 21 days after the notice was received.
Dennis
We have filed a formal appeal more times than I can count (all documented) and never once been given the opportunity to be heard. The notices and the fine policy are in violation of ARS 33-1803 stating, “you have 10 days to appeal”. The fine policy also states that fines will be assessed and due immediately if the violation is not compliant within the 10 days. Moreover, the fine policy states that appeals shall only be heard in closed session and in every instance, fines were assessed prior to the 21 days (even though appeal was requested). The “Appeals Process” document lists 12 requirements and then states “Any appeal that does not meet the above requirements shall NOT be heard by the Board and shall be considered DENIED. Gate stickers for resident access were deactivated prior to the violation notice even being sent.
David,
All of this is in direct violation of existing Arizona law, however, the only way to enforce the law for these communities that chose to totally ignore the law is to take them to court or the ADRE dispute resolution process and before an administrative law judge. I proposed legislation to counter and add accountability to the law to both yours and my Senator, but he refused to carry the bill. You cannot be alone in your community with this problem but nothing will change until some teeth are added to statute to hold associations accountable to the law without litigation. Call or write all your legislators and show them how your community, and so many more like yours across the state simply ignore the law because they can and get away with it. Ask them to have their assistants contact me for solutions in legislation proposals.
Dennis