Enforcement in Homeowners Associations

Enforcement of the
declarations, bylaws, rules and regulations is one of the most difficult
aspects of running a homeowner’s association. The board has a duty to
reasonably enforce its rules and avoid risking liability to the HOA or its
board. At the same time, the members of the board are residents in the
community with neighbors and friends. Enforcement of the rules can cause
personal attacks, disharmony and polarization. Therefore it is important that
the rules are clearly understood, and the decisions of the board are as transparent
as possible. The board should communicate clearly the HOA’s rules and
regulations through newsletters, websites, the annual meeting, and distribution
of a written copy of the rules to new homeowners. The rules should include a
written procedure for enforcement of the rules and includes notice and a chance
for the homeowner to be heard. The board or a manager should make regularly
scheduled community inspections to insure that the rules are being followed and
applied consistently. Any waiver or variance in the rule should be done reasonably
and fairly, to avoid claims of bad faith against the board members. The board
should refrain from enforcing rules where there are municipal or governmental
authorities that can do so, such as municipal code enforcement of abandoned
cars and animal control; state enforcement of environmental issues such as
erosion control, etc.

          Before any enforcement procedure begins, the board should
confirm that they have the authority to enforce the rule. It is important that
the board find the written authority in the rules, bylaws, declarations or
statutes for their actions, and confirm that the provision is valid. Remember
that if a rule conflicts with the declaration, the declaration controls; and if
the declaration conflicts with the statutes, the statutes control. So once the
authority is found, the board should make sure that it is not rendered invalid
by a higher authority.

          When enforcing a rule, if the procedure is not set forth in
the declarations, the statutes apply. Depending on the situation, before
following the procedure set forth by the Acts, the board may want to give an
initial warning letter. Just because the warning is preliminary to the statutory
process, or is somewhat informal, be sure that the warning letter is first
approved by the board. Be clear in the nature of the violation and include a
specific date to comply. If there has been no resolution by that date, proceed
under the procedures adopted by the board or as set forth under the statutes as
follows:   

• Send a
  Final Letter of Violation:

• Clearly state the nature of the violation

• Specifically
  reference the provision in the Association documents that makes the offense a
  violation.

• Provide a
  specific date that is a deadline for remedy. The deadline should take into
  consideration the time required for remedy.
  Two weeks or allowing two weekends is typical.

• State the
  consequences of non-compliance. Loss of services and privileges, amount of
  fine, costs of enforcement, etc.

• Provide a
  specific date, time, and location when the homeowner may be heard before the Board.
  Under the statutes, the Board also has the ability to set up an adjudicatory
  panel of members of the HOA who are not members of the Board to hear the
  homeowner’s response to the claims of violation by the HOA. Allowing 10 days
  between the date of the letter and the hearing date is usually reasonable
  depending on the circumstances.

• Conduct a hearing before the Board or the adjudicatory panel.

• The
  homeowner should be given an opportunity to be heard and present evidence and
  may then be excused.

• The Board
  or adjudicatory panel should confirm whether or not a violation has occurred
  and set a reasonable amount of the fine. The fine may not exceed $100 for each
  day more than five days after the decision is made.

• Notify
  the homeowner of the decision of the hearing panel, the amount of the fine, and
  the date that fining will commence, and the right of appeal to the Board if the
  hearing was held before an adjudicatory panel.

• Conduct the appeal hearing.

• If the decision
  was made by an adjudicatory panel, the homeowner has 15 days to appeal to the Board.
  The Board can then affirm, vacate, or modify the decision of the adjudicatory
  panel.

• Initiate
  Fining—The Board must wait 5 days after the hearing before imposing the fine. This
  time is afforded the homeowner as a last opportunity to remedy without a fine. Thereafter,
  the homeowner should receive a monthly invoice for the fine.

• Initiate lien
  procedure.

–Bradley A. Coxe is a practicing attorney in Wilmington, NC with
Hodges & Coxe PC who specializes in Personal Injury, Medical
Malpractice, Homeowner’s Associations, Contract and Real Estate disputes
and all forms of Civil Litigation.  Please contact him at (910)
772-1678.