Tag Archives: HOAs and the Law

Rules, Fines and the HOA

HOAs*, including Laurel Mews, have long used fines and penalties to enforce covenants contained in the community declaration, by-laws, resolutions, rules and regulations  However, a 2010 ruling by the Fairfax County judge in the case of Sarnir R. Farran, et al. v. Olde Belhaven Towne Owners Association has complicated that practice under current Virginia Law.

During the 2008 federal election cycle the Farran’s placed political signage in the common areas of their condominium community.   This, the HOA directors felt, was a clear violation of the community rules, and they asked the Farrans to remove the signs.   The Ferrans apparently refused.  Subsequently, the HOA passed a resolution giving itself the authority to levy fines for rule violations.  Believing the board’s resolution exceeded the HOA’s authority under its governing documents, the Farrans sent several letters to the board throughout April, June, and July 2009 requesting that the HOA repeal the resolution. The board refused to do so.

Compounded with other issues, the Ferrans and the HOA could not amicably settle their differences, and the matter ended up in Fairfax County District Court.  The court held that unless the declaration and by-laws expressly gives the HOA power to levy fines for violations of rules,  it may not do so even upon lawful proceedings of its affairs, i.e., in the context of a proper board meeting or unit owners meeting.   The court reasoned that if the declaration and by-laws did not explicitly include the authority to assess fines for violations, then they forbid it by exclusion.

In another case, Shadowood Condominium Association v. Fairfax County Redevelopment and Housing Authoritythe Virginia Supreme Court ruled that unless the declaration or by-laws explicitly allow the imposition of fines, penalties or assessment for rules violations the HOA does not have authority under the law to do so.  But apparently there is a doctrine with the Virginia Supreme Court where the manner in which they rendered their ruling on the case gives it no precedent value. 

But in still another case,  Lee’s Crossing Homeowners’ Association v. Linzie Zinone, which is only tangentially related to Laurel Mews and the topic of fines, the Virginia Supreme Court gave primacy to express provisions of a particular declaration.

So altogether what matters is what is in the governing documents.  As long as the governing documents are consistent with the law and legally recorded, disclosed, etc, they will be controlling.  If the there is no explicit provision to levy fines in the documents then it is an action not available to the HOA. 

So what is a community association to do?  Note that these court rulings do not say that HOAs cannot make rules and regulations, or see that the covenants in its declaration and by-laws be enforced.  Rather the issues are what mechanisms does it have available and what procedures must it follow to affect enforcement.  The law probably does not preclude voluntary financial agreements between owners and HOAs to settle rule violations.  Perhaps a fine could be considered to be a contractual agreement to settle a rule violation that includes the stipulation that the matter is closed and that there will be no further proceedings.

But if there is one lesson in the Olde Belhaven, Shadowood and Lee’s Crossing cases, it is that the HOAs did not follow proper procedure.  Had the associations gone to court first they probably would have easily prevailed.  They instead took an unlawful shortcut.

Therefore the current state of the law in Virginia is that beyond amicably talking matters through and coming to some agreement, or changing the declaration and by-laws, the only way for a community like Laurel Mews to ultimately enforce its rules is via a court of either law or equity, especially given our bylaws at Article X, Section 1, Paragraph (f)

So any time there is a violation of trash, parking, noise or pet waste rules, the HOA may not have the ability to impose a fine over the owner’s objections.  Rather, when the owner objects to the fine, the HOA has to go to district court and have a judge impose such a remedy. 

As a result, matters that were addressable by a simple fine in a self-governed community may require a judicial proceeding to resolve.  This could on one hand invite chaos in condo living as now enforcing community rules has this new potentially complicated and expensive barrier.  It ratchets up the seriousness of violating community rules.  In some instances where the alleged violation is also against the law, e.g., failure to pick up and properly dispose of pet excrement, unlawful parking, trash dumping, and noise violations, it will be a matter for the police.  It is up to the local police authority to take such matters seriously where before they steered clear of HOA matters.  Likewise the district courts must set up simple procedures for homeowners and associations to have their cases heard and resolved.

But a  possible advantage of this new legal environment is that adjudicating these matters before a court could take any personal antipathy between neighbors and HOA leaders out of the process.  Moreover this is arguably a check against runaway and unreasonable HOA administration.  If HOAs fancy themselves as petite governments then there have to be limits to their authority.  So maybe HOAs should be subject to judicial review just like our local, state and federal governments are.

— Lawrence

* It matters if the community is organized under the VA Condominium Act or the VA Property Owners Act as there are significant differences in language and what the courts interpret as the intent of word usage.  The industry seems to apply the term HOA to those properties organized under the Property Owners Act.  That and the fact that Laurel Mews was organized under the VA Condominium Act notwithstanding, the community somehow began to refer to its Unit Owners Association as “the HOA”.  The LM board is not sure as to what is in a name, but we are sure what Act applies in this community.