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May 24, 2005
Fines - Are They A Viable Means Of CC&R Enforcement?
"FINES UPHELD IN COURT" This is a headline you may have read lately. One thinks "Alas, all is not lost." There have been some recent newspaper reports about a case in Santa Barbara saying that a court upheld $277,000 in fines imposed by a homeowners association against an owner. The owner was described as "the neighbor from hell". Ever had one of those? If so, then you are probably thinking "there is a God." The person had continuing, multiple rules violations. They included things like: blocking horse trails, putting screens around his property, and installing flood lights which caused the “parking lot” or “ballfield” look on the property.
The Owner apparently refused to comply with the association's rules, and the board fined him $100 per day. This was the first time out-of-the-chute (according to the newspaper articles) for this association to fine anyone. As you can probably imagine, the Board had to have been at its wit’s end with this Owner. Luckily (and probably quite justifiably), the court said:
“Hope Ranch did not abuse its discretion in finding continuing violations of the building guidelines or in imposing monetary penalties against [the owner] until such time that [the owner] demonstrated that the violations had been cured. Despite warnings and extensions of the correction or abatement periods, defendants delayed, failed to respond and have their own intransigence to blame for the large amount of the accumulated penalties.
. . . [the] Board acted upon reasonable investigation, in good faith, with regard to the best interests of the Association, and not in an arbitrary manner and its actions are entitled to deference ... The amount of $277,000 as a monetary penalty is not unreasonable on its face given the contribution of [the owner's] own actions and inactions to the amount of the penalty ... The monetary penalties ... were not impermissibly punitive because [the owner] could have prevented the imposition of damages by simply curing the violations and providing evidence to Hope Ranch in a timely manner showing that the violations had been cured.”
This ruling provides hope; it illustrates that courts are willing to uphold fines when boards act reasonably in enforcement options. However! Do not rush to rely on newspaper reports as the status of the law in this State. The case has been divided into parts to be heard and there is not a final judgment yet on all issues. Even when it is final, and even if in the final judgment there is a ruling in favor of upholding the fines, there still is a chance of appeal of the case. Until an appeals court hears the case, there is no binding decision that will prevail in other fines cases. And even then, any decision may be deemed not fit for publishing which is fairly common in HOA cases - it means the decision cannot be recited as binding legal authority.
I don't want to sound like a "doubting Thomas" because the treatment of fines in this case by the court is very important and very hopeful since the legislature has taken away the right of associations to collect fines via most means, leaving the necessity of filing a court action as the ultimate remedy. But there is more to this situation than the impression given by the press (ah, what else is new). I am in the process of researching and following the case, anticipating a full-blown article about enforcing the governing documents to come in the summer edition of The California Homeowners Legal Digest. Are you a subscriber yet? If not, get on board! Visit http://www.californiacondoguru.com and sign up!
Posted by Beth Grimm at May 24, 2005 2:42 PM