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November 16, 2006
Does the Board Need to Have a Membership Meeting to Fine Someone?
There are many frustrated people in California, simply because answers are hard to find. Free answers at least. One of my readers asked this of me: "I need some clarification between CC1363 (g) and CC1357.100 - .130 (Adopting or Changing Operative Rules). My question is: Can a Board of Directors implement and enforce a monetary penalty for violations without having a membership meeting first? I am currently a homeowner. My attempts to get clarification from other sources failed because they were not attorneys. I just want to make sure the Board is following proper procedure. Thank you!"
The law in California is complicated but the first inquiry in any event is the governing documents. I have seen a few sets that have some requirements for passing rules, and setting a fining policy could be interpreted as rules. However, notwithstanding anything in the documents (a good legal phrase meaning basically ignore what is in the documents), this is what California law says on the subject:
A Board has to implement a fining schedule and circulate it to members before any member can be fined. The schedule has to be sent out to members when it is approved by the Board and thereafter, when changed. CC1363 (g)
However, when Civil Code Section CC1357.100 et seq. (Adopting or Changing Operative Rules) was signed into law effective the beginning of last year (2005), it added some steps to the process before implementation. The fine schedule is considered to be operating rules and so is subject to that statute. The law requires circulation of new or changed operating rules to the membership so that the members will know what is being proposed and will have an opportunity for commenting on the proposed rules. The period of time is often referred to as the "comment period". Members must have at least 30 days notice before the Board will take action on proposed rules, and must be able to attend the Board meeting where the action is proposed to be taken. There are some exceptions to this circulation requirement, such as if the rule simply reflects California law or some provision in the governing documents (and why, you say? because the Board is not exercising its own discretion or judgment, it is following existing legal requirements).
The Board must then consider implementation at an open BOARD meeting, not a membership meeting. The owners do not get to vote on the rules, only comment (except that if there ARE provisions in your governing documents consult an attorney on this so you are not steered in the wrong direction by the law).
There is a lot more to the inquiry. The fine schedule cannot conflict with the regulatory (called governing) documents of the Association. Once the schedule is circulated and the Board is considering fining an owner, the owner must be given a hearing before any fine is imposed. The law nicely calls it a meeting, ... if the Board is considering meeting to consider disciplinary action, the owner must be given notice and an opportunity the attend the "meeting." There are technical timing and notice requirements on hearings. Whew, the things a person must know just to accomplish a seemingly simple task!!!
Posted by Beth Grimm at November 16, 2006 8:24 PM