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Smart Board & Property Manager Legal Guide: The Limits of Fining Authority & How Best to Implement

Alan Tannenbaum, Esq.:

... everybody. This is Alan Tannenbaum of Tannenbaum, Lemole & Hill. I'm here with my partners, Cindy Hill and Jon Lemole, and also Jim Turffs. Destiny Small, I believe, is on assignment out in the field and she may join us. Today's Smart Board is on The Limits of Fining Authority and How Best to Implement. Cindy and Jim, who are the principals in our community association general practice, general counsel practice, are going to lead the way as we go through these topics. It's not a CEU for your managers. Sorry, we didn't get that approved yet. Send your questions through chat. We're going to mute everybody. We will try to get to as many questions as possible, and we will even go on after the noon hour if there are additional questions that need to be answered. We'll stay on and answer as many questions as we can.

So here's the agenda for today. We're going to cover statutory fining provisions, when is fining appropriate, fining process, what happens when fining doesn't work, and alternatives and pre-suit mediation, and then circuit court enforcement if it ends up being necessary. We're going to start off with Cindy's going to discuss what's required by statute, which she'll indicate sometimes differs with what your documents say and it's a matter of which one governs. So Cindy, take over.

Cindy Hill, Esq.:

Thank you, Alan. In the chat earlier before we began the presentation, I heard some successes, some frustrations, and some confusion. So we're going to hopefully help address some of these issues starting with, first of all, this focus is on condominiums and HOAs. So we're not going to discuss co-ops. We don't represent co-ops, but I will say if you are in a co-op, generally, the condominium laws are going to be very similar to the co-op laws.

So fining is a statutory process. It's actually an unusual right to have. You think of a fine, it's usually more something that the city does or a governmental authority does. HOAs and condos are not governmental authority entities. They're not for profit. So it's not surprising that the statutes primarily control how you implement fining and what you need to do with the steps you need to take.

So for condominiums, the statute on point is 718.303, and for HOAs, it's 720.305. We can, of course, put those in the chat if somebody didn't get them when I said them, but they are two different statutes, but they are substantially similar, which can get confusing. So under both statutes, condo and HOA, fines can be levied for violations of the declaration, be it the declaration of condominium or your declaration of covenants for an HOA. For the bylaws or for, it says, reasonable rules, which means that you can fine for your rules and regulations with the caveat that if the rule is found not to be reasonable, that could be an issue.

So who can you levy fines against? For a condominium, the statute says owners, occupants, licensees or invitees. Licensees and invitees is getting pretty legal there, but owners and occupants is pretty clear. You can find the unit owners, you can find their occupants, and a tenant is an occupant. For the HOA statute, it specifies members, the member's tenant, guest or invitee. So again, you can find the owner member, you can find their tenant, you can find their guests.

Generally, it is owners that are fined because they are generally responsible also for the actions of their tenants and guests, and it can be easier to collect or seek enforcement from an owner who is part of the community. That being said, there are situations where tenants can be appropriate to direct themselves as opposed to the owner or fine both. Now, these are considerations you can look into when you're considering fining.

Now, one of the biggest questions I get about the fining process is how it has to work. Under both statutes, you have to start with the board, meeting at an open meeting with the property on the agenda to decide whether or not to levy the fine. Now, what does that mean? The board has to decide at that meeting on the property at the issue what amount they want to vote to fine the property. We'll go into amounts a little later here. Then it is the job of the fining committee, the hearing committee, the grievance committee, whatever you want to name that committee, just that committee, to then have a hearing at which to decide whether or not to impose that fine that the board levied. So you have to follow a two-step process, and the board meeting has to be noticed.

So I get a lot of frustration from communities about, "Well, why do we have to go through this process? It's burdensome. It's cumbersome. People might fix things in the interim." All I can say to all of that is I understand what you're saying, but the process is statutory. If you don't follow the process per the statute, your fines are not worth the paper they're written on, and if someone can test them in a court of law, you could very well lose. So those are the two fundamental parts of the process.

A little further down, Jim Turffs is going to discuss in more detail the process, but that's just fundamental to understand that you have to have the board start the process to levy the fine and the committee meets for the hearing at which the owner can come or not come. Regardless, the committee makes their decision at that hearing whether to impose the fine. Again, we're going to go over this a little more in detail, so bear with me.

What amounts can you fine? If you're in a condominium, it's quite clear, up to $100 a day or $1,000 in the aggregate for a continuing violation. That's it. Jim is going to discuss and we'll discuss later whether maybe you could also start the process again and refine, so to speak, but for the actual fine process as it's set up, it's $100 a day, maximum I should say. It doesn't mean you have to charge $100 day. You can fine for $25 a day if you want, but 1,000 is the aggregate that you can reach maximum.

For homeowner associations, they also have up to $100 a day, but it also says that a fine can exceed $1,000 if the documents say otherwise. So for homeowner association, that's a document-driven question. Do your documents authorize a fine greater than $1,000? That's something that you'd have to get with your counsel to answer, but there is a possibility if you're an HOA that you could fine in the aggregate for more than $1,000.

Here's the second level of frustration I hear from my associations wanting to fine, "We can't get any volunteers for the fining committee." Well, unfortunately, the statute dictates very clearly for both condominiums and homeowner associations that you have to have at least a three-member committee, at least three. Doesn't mean you can't have more, but you've got to have three, and the members cannot include officers, directors or employees of the association, so board directors cannot be on the committee. Managers cannot be on the committee. Your handyman cannot be on the committee.

The statute also prohibits the spouse, parent, child, brother or sister of an officer, director or employee. So the wife of the board president cannot be on the committee. The sister of the treasurer cannot be on the committee, and the spouse of the handyman cannot be on the committee. So this can make it challenging. I do understand that, particularly since people don't necessarily want to play what can be considered a rather mean role against their neighbors, but the statute is very clear. If you do not have the right volunteers, again, you are not following the fining process and your fines are going to be legally challenged and lose on procedure. So if you cannot get the volunteers, the answer is, unfortunately, fining is not going to be an option.

So returning to the fining rights in governing documents as opposed to what's in the statute. Again, condominiums do not have any discretion with the amounts that they can charge. It's $100 a day, $1,000 in the aggregate. It doesn't matter if your documents were from 1973 and say otherwise. The statute controls. That being said, there are always exceptions, but I'm going to go with the statutes going to control.

For HOAs, again, there's the option to fine an excess of $1,000, and there's the further option in the governing documents that HOAs may be able to lien. That's something we're to discuss a little later, lien for a fine. That being said, the extent that some of you might be getting a little excited about how you can implement some punitive fines, so to speak, that are pretty excessive or maybe a lien on the property, you want to step back and think about that because the higher the lien, the more controversial the lien, and if you put a lien on a property for the fines, you are more likely to have a legal contest. So there's a balance there. Fining is meant to discourage acts, not meant to pad the coffers or the association. Fining is meant to encourage people to behave, not to put them in a financial hole necessarily. So these are considerations we're going to discuss as we proceed.

So when is fining appropriate? That's a question, I think, we could probably spend an hour and a half on, but I'm going to give some examples. Smaller violations, first-time offenders, the idea being that a threat of a monetary penalty will make poor or careless behavior less appealing, such as, for instance, there was a gentleman mentioning that people were not putting their trash in the trash compactors, they were apparently leaving in the hallway or next to whatever the facility was. That's pretty lazy careless behavior, and if you start fining for that, people may just well stop that. Parking violations, people using the 20-minute guest spot for their lunch hour. People parking in someone else's parking space when they know they shouldn't do it. Removal of unsightly items from a yard or an entrance way, finings can be incentive to do that. Yard maintenance is a big one. Dirty roofs is another one I see. For larger communities, picking up of dog waste is even something I've seen fining for.

Fining can also, regardless of what the violation be, maybe get the attention of a remote owner or a bank-controlled property. Someone who's inherited or the bank takes ownership, they may not pay any attention to violations until they start to see some monetary penalties. Now, fines are not as useful for larger violations, particularly the ones that are going to be quite expensive to fix, like unapproved structural changes such as a roof replacement. Maybe you have a requirement, they have to have a very tall roof in your HOA and somebody put on shingles. I don't know that a fine is going to fix that. New windows that don't comply, permission wasn't given, unapproved fences. You might think, "Well, fences, that's not terribly expensive," well, price out fences go to Lowe's, particularly the tall vinyl ones are very expensive.

Another risk you have with fining is I've seen situations where someone thought if they pay the fine, they get to keep the violation. For instance, painting your garage door an unapproved color. You fine the owner for doing that and then they pay the fine and they're like, "Now I can keep my color, right?" Well no, that's not how this is supposed to work. So that's another consideration.

Also for fines, if you have a repeat offender and you keep finding that offender and you're not getting anywhere, you may very well need a stronger approach. So with those short guidance on how to consider a fine, whether it's appropriate or maybe not, I'm now going to turn it over to Jim Turffs to give his thoughts on that process as well.

Jon Lemole, Esq.:

Cindy, Jim, Jim, before you jump in there, I've noticed a couple of questions in the chat and I think the gist of the questions is the distinction between fining, let's say, and levying for damage that may have been caused by somebody. So let's suppose somebody causes some damage to a common area or a common element. Can you explain a little bit? I would assume that that kind of a damage claim wouldn't be subject to the fining process, but I want to be clear on whether that's accurate or not.

Cindy Hill, Esq.:

Yeah, thank you, Jon. If that's a question that's coming up, that is an entirely different distinction. If you have provisions in your documents that say that owners are going to be responsible for damage to the common elements or common property created by their negligence or their failure to take action, that is not the same process as what I just discussed here, which is fining. Those are going to be costs related to the fix for whatever that problem is that the association has to spend its funds, and those are not going to be limited by these financial restrictions for fining or require these due process provisions that are statutory, but the documents for each community are going to govern what you have to do in those scenarios.

James "Jim" Turffs, Esq.:

All right. Well, I'll jump in now and start talking about the fining process itself. I'm going to double down on some of the stuff Cindy had said. We've already coordinated. We're going to repeat a few things today because some of the information is that important and really needs to be emphasized that often. On the other hand, I'm also going to gloss over some things. I have about 10 minutes here to talk to you about a very detail-oriented process, so not going to get into the absolute minutia of everything, but I want you to be aware of some of the general pitfalls that come up when we talk about fining.

So for the fining process itself, it actually starts with the original violation letter. Before you even think about fining, you have to let the owner know that they have violated your governing documents in some way, and that's your traditional violation letter. Everybody should be familiar with that at this point. You're going to see a common theme in all the notices related to fining in that they all have to describe the violation, they should all describe the specific provisions of the declaration that are being violated by that act, and they're all going to have to explain how the owner can cure that violation and come into compliance with the governing documents.

So that also starts at the violation letter itself. It needs to be pretty specific. The owner needs to know exactly what they've done wrong, how they can cure it. Another key part of that initial violation letter, if you're thinking about fining, is going to be including a threatening paragraph at the end that explains all of the possible outcomes if they don't do what you're telling them. So in this case it would say, "We can also levy fines against you if you don't comply with our demand here within 5, 10, 15 days," whatever the deadline is.

So after you've told them what they've done wrong, you said, "We might fine you if you don't fix it," you've given them the chance, the explanation how to fix it and everything, they still haven't done it, so you move on to the actual fining process itself. I would point out real quick that some declarations provide a specific deadline for compliance. So it says if an owner is violating the governing documents, they shall have five days to cure. That can be superseded if they can't reasonably cure the violation in that five-day period or 10-day period, whatever your documents say.

So if you're violating somebody for saying, "You've landscaped your lawn completely incorrectly. You're going to have to tear that whole sucker out and replace it," they're not going to do that in five days. So the cure time also has to be a reasonable period to cure. So keep that in mind when you're doing that.

So at this point, like I said, the violator has not cured their violation. You threatened them, they say, "Screw you," whatever they're doing, they're not going to fix it. So you come back and the board then conducts a meeting, as I think Cindy pointed out. The board decides what the fine should be and recommends it to the fining committee. The fining committee then is responsible for setting a hearing date for that and providing notice to the owner at least 14 days in advance of the hearing that the hearing is going to take place. That 14-day period is critical. A 13-day notice is going to invalidate your fine. So get at least 14 days in and there's nothing wrong with giving more than 14 days, 15, 16, 20 days. Give whatever you'd like but make sure you're at least giving 14 days notice before the hearing.

Now, the notice of hearing, as I said earlier, is going to contain that same information as your notice of violation. It's going to explain, "Here's what you've done wrong. Here are the provisions you've violated. Here's what you have to do to fix it," and in addition to all of that, your notice of hearing is going to say, "A fine has been levied against you for," whatever, "The board has recommended a fine against you for," whatever amount. "You have the opportunity to appear at this hearing in at least 14 days from now." It'll have the date, time, and location of the hearing.

You can present evidence. Again, this is all the contents of the letter. So the owners can present evidence. They can appear with or without an attorney, and under a recent modification to the law, now they can also appear via electronic means as well. So you can't necessarily constrain them to an in-person hearing. So again, you have that extra variance now.

Once they show up at the hearing, again, they can be there with an attorney or without. They can explain why they shouldn't be fined. There were questions in the chat also about the composition of the fining committee. I wasn't going to get too deep into that, but since it's been asked, the fining committee can't be board members and it can't be close relatives of board members. So the statutory language itself is that the committee has to be at least three members appointed by the board who are not officers, directors or employees of the association or the spouse, parent, child, brother or sister of an officer, director or employee. So I saw a question about a live-in companion. If they're not married, if they're not blood related, that live-in companion may very well be able to be on the fining committee as long as they're actually a member of the association, which is going to be a trick there.

So now you're at the fining hearing and the owner's there. Let's say they didn't show up with their attorney. They put on their evidence. Then it becomes the fining committee's choice to deliberate and decide whether or not to approve the fine that was recommended by the board of directors. They can consider all of those facts. The owner says, "Hey, I was out of town. I didn't get your notice until yesterday. I'll absolutely fix it. Give me five more days." The fine committee can, within their discretion, say, "Fine, we're not going to levy it. Go fix it. We might be back here in another 20 days or so, but sure." Alternatively, the board can say, "That's no excuse. You knew this was wrong when you did it. We're going to approve the fine." That pursuant to the statute is where the fining committee's authority ends, approving or disapproving that fine.

So after they've made that decision, again, if they say, "No fine," great, nothing else needs to happen. There's no fine. Everybody goes on their merry way. If they do approve the fine and levy it against the owner, another notice needs to go out, and surprise, surprise, this notice also needs to include a description of the violation. It needs to include a description of what the owner can do to cure, if that's still available. Sometimes you're past the cure point. This is a punitive fine instead of a coercive fine. Maybe they can't cure it, but if they can, it needs to be included in that notice as well.

Very importantly, that post-hearing notice also needs to include a demand for the owner to actually pay the fine. It's what we call the five-day notice. It says, "Okay. A fine has been levied against you in this amount for this reason. It was $100 a day for 10 days. It's $1,000 fine. You now have to pay that fine within five days." That's what really triggers the owner's obligation. If you don't send that post-hearing notice, that fine doesn't really become due. So it's very key to get that post-hearing notice out so you can trigger that right to pay.

Jon Lemole, Esq.:

Jim, when does the fine run from? When does it actually start?

James "Jim" Turffs, Esq.:

So fines can apply, I don't want to say retroactively necessary, but it can apply to the date of the violation. So let's say somebody left their garbage cans out in violation of the governing documents for four days or let's make it longer. Let's say 10 days. So you sent a violation letter saying, "Get it back in." They didn't get them back in and the violation kept continuing. So the fining committee meets and they can say, "Well, the garbage cans were left out on January 1st, left them out until January 11th, so that was a 10-day violation and we're going to levy a 10-day fine for that because they're repeat violator. They knew they shouldn't have done this," whatever reason, but they approve a 10-day $100 fine for that. So it's thinking about it as retroactive. It encompasses the actual dates of the violation of the fine. Does that answer your question or-

Jon Lemole, Esq.:

Yeah, it was a question in the chat. Does it start running from when the board recommends it or does the fining committee have discretion to determine amount, time period, and so on and so forth?

James "Jim" Turffs, Esq.:

Yeah, and we can also infer that from the statute as well because as you look at those requirements and all of these notices about providing notice of what the violation was and how to cure, they start to use that caveat in the language saying, "And you have to explain how the owner can cure the violation, if that's still possible."" It's because often they may have already cured the violation and maybe this is a punitive fine rather than a coercive one, and so it can be retroactive in that sense.

Alan Tannenbaum, Esq.:

Jim, there's a question. In one association, we have a repeat offender smoking in the common areas, breaking Florida Clean Air and condo rules. Would like to know if you have to have a photograph of the person breaking the rules or would presenting witnesses be enough or are witnesses even required? What's the standard of proof for the fine committee?

James "Jim" Turffs, Esq.:

So it's not like a criminal court case where it needs to be beyond a shadow of a doubt, but the board does need credible information to rely upon. Certain violations can be independently verified by the board. So a landscaping violation, for example, the board can drive past, see it, and they can independently verify so you don't need owner involvement, but if it's going to be something that the board can't independently verify like a smoking violation, like you show up and there's nobody there anymore, then yeah, you can rely on other owners' complaints, but after a point, those owners need to be willing to step up, identify themselves, and affirm that, "Yes, this is what I saw. Yes, I reported it. I'm standing by it. I say you did this." So there needs to be something credible for the board to rely upon, but there's not a specific standard like reasonable doubt or preponderance of the evidence like we would use in different types of court cases.

Alan Tannenbaum, Esq.:

So the proof is presented to the board. Does the fining committee also take evidence?

James "Jim" Turffs, Esq.:

Yeah, at the hearing, again, they are perfectly welcome to entertain anything. They're even more broader in what they can entertain than what a judge would. So again, they'll take testimony from the owner who's violated. They're welcome to put on their case. They should have the information that the board relied upon if it was a written complaint or whatever it was in front of them. They should have the basis for the complaint to start with. At that point, if another owner wanted to appear and testify, they could, though that's not strictly required.

Alan Tannenbaum, Esq.:

There's another question about whether at the fining committee hearing the fining committee can change the amount that the board has assessed as a fine.

James "Jim" Turffs, Esq.:

My interpretation of the statute is no, they cannot. The statute to me reads as the fining committee can approve or disapprove the fine. That's the extent of their authority. I know other associations and even some other lawyers might suggest that the fining committee can levy something less than the full fine authorized by the board. I don't agree with that. I'm not saying they're wrong, but that's not the way the statute reads, and in this case, I think you have to strictly read the statute.

Cindy Hill, Esq.:

If I could come in here, there's some questions that are similar in that the statute's not entirely a model of clarity regarding notice. I've seen some questions about, "Do we have to notice the fining hearing?" It's my position that, yes, you do have to notice the fining hearing and that you should notice it in the same manner you would a board meeting, but there may be something in documents that say otherwise. Some people who practice in this area of law disagree because the statute is not specific on that point. I just don't see a reason why you would want to tell a judge, if it went to court, why you didn't notice it to the community.

I also want to raise, board members will attend these hearings in my experience, and if more than a quorum of the board attends, you actually technically have to notice that as a board meeting as well. So you run into some problems. Also, having board members attend can look potentially intimidating perhaps. There's some nuances to some of these questions, which is why you're not necessarily getting just some very black and white answers in the chat.

James "Jim" Turffs, Esq.:

I'll even double back down on Cindy's first answer there about noticing the meeting. Assuming your governing documents don't talk about it, the statutes obviously don't, but if your bylaws have adopted Robert's Rules of Order, Robert's actually does say that committee meetings should be noticed in the same fashion as director meetings. So that's where I would fall back to. Again, I agree they should be noticed and made open meetings so that other owners can attend, it is an open process.

Alan Tannenbaum, Esq.:

There's a question and really for Jim and Cindy. For somebody who's a consistent violator, so let's say they do a violation, you go through the fining process, and then it's now three weeks later and they're committing the same violation. Is it possible to go through the fining procedure for a second time and not be outside of statutory requirements?

James "Jim" Turffs, Esq.:

Yeah, absolutely. The statutes have a 10-day limit to fining. Again, that can be modified to some degree by your governing documents, by amendment if that's been done, but assuming the statutory base, you can levy a 10-day fine, and if the fine goes on for 20 days, as long as you go back through the notice and hearing process again, you can levy a second fine for the next 10-day block. You can continue that essentially ad nauseum, but do you really want to? If these people are incorporating all these fines, there comes a point where you draw the line in the sand and say, "Hey, fining isn't working," and as we'll talk about a little bit later in the presentation, maybe some other options need to be considered.

Alan Tannenbaum, Esq.:

There's a couple of questions about getting participation for this fining committee. One was from a small association that has difficulty getting people, and what if they can't get three volunteers to be on a fining committee? What are the options then?

Cindy Hill, Esq.:

Well, I'll take that one. Jim, I'll give you a moment to take a breath. The statute is clear, at least three, period, for condos for HOAs. If you can't get three volunteers who are members of your community, members of the association, then you're not going to be able to implement the fining process. I know that's frustrating, but the statutes say with the statutes say.

James "Jim" Turffs, Esq.:

All right. In that case, I've wrapped up. I got to the five-day notice after the hearing, which is what triggers the actual effectiveness of the fine. So beyond that, I'll pass it on over to Cindy for the next section.

Alan Tannenbaum, Esq.:

All right. Cindy's going to cover what happens if fining hasn't worked or the owner hasn't paid. Now what?

Cindy Hill, Esq.:

Before we get to that, I do want to back up and point out, and some of the comments before the presentation started, someone mentioned that suspending owner rights was really working for them as opposed to fining. There is a process both in the condo and the HOA statute, it's in the same statutes as the fining process, where you can potentially suspend for a reasonable period of time, whatever that is, the right of owners and their guests and tenants to use the common elements until the violation is corrected. That is an option. It follows the same process we're talking about here with a fine though. You also have to have the board implement the suspension and then you have to have a committee that imposes a suspension. That's an option. That seems in my experience to work very well if you have a community where people are renting out their property for tenants to enjoy the facilities, the pool, maybe the beach access, what have you. So that's another option to consider with your counsel.

Alan Tannenbaum, Esq.:

Before you go further with that, can the fining committee, does that have to be a separate committee or can that be the fining committee that's also doing that process?

Cindy Hill, Esq.:

That really is the fining committee because that's a good point to bring back to the table, Alan, is the statute says committee. It doesn't call it a fining committee, a hearing committee, a grievance committee. It is a committee. So that committee can suspend, it can fine. An association, if it wanted to, could have two separate committees. I don't see any prohibition on that, but absolutely, can be the same group of three people who are that committee.

Alan Tannenbaum, Esq.:

The initial letter that goes out to the owners would have to indicate that there would be a possible suspension of their rights to use the amenities and so forth as one of the sanctions for the violation, that would have to be in the letter.

Cindy Hill, Esq.:

Yes, just like the letter would say if you were going to fine instead that, "We are going to find you," the letter would say, "We are going to potentially suspend your rights." Again, you would want to have for the board meeting where they would decide that first and the committee would follow up, you'd want to have that property on the board meeting agenda. There are a lot of boxes to check in this process if you haven't already picked up on that listening in. If you don't check those boxes right, again, you can lose the ability to enforce what you have.

The negative to the suspension is, I mentioned earlier, what is a reasonable period of time? Can you suspend somebody from the use of the pool for six months because they didn't pay $100 in past due fees or because they keep parking in the guest spot? These are questions that have to really be weighed out on a case-by-case basis with your counsel, but I do want those who are listening to know that that is an option and some committees are using it successfully.

Jon Lemole, Esq.:

Does it go back after the fining committee meets and makes its decision? Does it go back to the board for final approval? That's one question I'm seeing, and the other question I'm seeing is that, can the board decide to do something other than what the fining committee has decided?

Cindy Hill, Esq.:

That does not go back to the board. I'll start with the easy part of that. Once the fining committee has made its decision, the owner is then told of the decision, the owner or tenant, whoever was fined, and there's a new provision actually in the HOA Act that now requires the owner or tenant to be sent a detailed analysis of the findings of the committee, why they were fined, what they can maybe do to fix the violation if it's continuing. There's actually a process there we didn't even get into because, again, as Jim was saying earlier, there's very detailed steps to this process. As for whether the board could then decide to, let's say, renege the fine, that's something the statute doesn't really address in terms of maybe there could be a rehearing, so to speak. I wouldn't know how to advise on that without really special circumstances, but as a rule, once the fining hearing committee has made its decision and implemented the fine, the notice goes out to the owner and the owner has five days to pay. So it's a pretty strict process.

Alan Tannenbaum, Esq.:

All right. Cindy, let's get into our topic number four with the fining has an induced compliance. What are the possibilities?

Cindy Hill, Esq.:

Well, you can also suspend use rights if they haven't paid a fine, just like if they haven't paid a fee, an assessment. For condos, if an owner is more than 90 days delinquent and paying a fine a fee or an other monetary obligation, suspension of use rights can be imposed. What's interesting about this option as opposed to the one I just discussed is the statute's clear you don't have to have a fining committee, hearing committee for this process. This is strictly once someone is more than 90 days delinquent, the board can send out the notice. The board has to make the decision at a board meeting just like everything a board does, but you do not have to have a committee who is the second step of the process if you are suspending use rights for the failure to pay a fine or other monetary obligation, and that ends when the monetary obligation is paid in full.

So if you do suspend someone's use rights because they haven't paid a fine and tell them they can't pay the pool, if they pay the fine, their rights are automatically reinstated. This is the same also for HOAs. The suspension ends when the person pays and, again, the 90 days for that as well. There's also an option, because the legislature apparently really was into suspensions at some point, to suspend the voting rights of an owner for non-payment of a fine or other fees or other amounts due. In a condominium, you can suspend the voting rights of an owner if they've not paid a fee or fine, which is both, now here's where it gets a little trickier, both more than $1,000 and more than 90 days delinquent. So if you fined someone $100 and they haven't paid it in 90 days for a condo, you're not going to be able to suspend their voting rights. You have to have that $1,000 plus the 90 days.

For HOAs, they don't have that $1,000. They can suspend voting rights for any fee or fine that is more than 90 days delinquent. Again, both of these suspensions for voting rights are also ones that don't require a committee or a hearing. They are imposed financially. So the way to distinguish that easily is to remember, when someone has a financial obligation of fine, an assessment, a fee, whatever the charges they're not paying, you don't have to have a hearing for that. If you think about it, it makes sense. If someone hasn't paid, they haven't paid. You don't really need to have an evidentiary discussion. If for some reason someone's check got lost in the mail or replied wrong, there's opportunities to correct that without having a formal hearing. So those are both options for if someone doesn't pay a fine.

Again, for condominiums, you cannot lien for a fine. You can't do that. So that's not an option for you. You don't do that condo. For HOAs, you may be able to lien for the fine. That might be in your document. So that might be a process you can look into and then follow the lien collection process like you would for an assessment. Again, the question keeps coming up, "Can we do a redo? We do the 10 days, fined them and they don't pay. Can we do it again?" As long as the violation's continuing, as Jim was saying earlier, yes, you can do that, but at what point is that hassle worth it? If someone is just refusing to pay fines, is redoing it going to change their mind?

I also saw a question, "Can you only redo it once a year?" No, there's no limitation like that. If you're going to redo a fine, you just have to follow the process that you did the first time and confirm that the violation is indeed continuing because, obviously, if they fixed it, you can't continue to fine.

The last option without getting into the pre-suit mediation and courts is what you can call self-help. Can an association basically go onto the property and fix the problem themselves? There's some real risk in doing that and being accused of trespass and maybe damaging other property owned by owners. So this is not the one you want to start with. This is maybe the one you never want to do, but it is potentially an option in certain scenarios. It can be recommended for a safety or urgent concern, but that's likely to be more of a maintenance repair situation than fining what we're talking about.

I do see in HOAs and some land condominiums as well provisions where an association has a right to come in and mow or landscape work on the property and impose a fee for that. So self-help doesn't really help as much with what you would be fining for, I would say, but it is worth discussing with your counsel if you're having particularly a vacant property, bank-owned property where you're just not getting any traction. So Jon, Alan, what are you seeing questions in the chat that are coming out of what I just dumped on everyone here before we turn it over to Jim?

Alan Tannenbaum, Esq.:

Well, I think one of the things that you may have covered, but there's a question. If a resident cures a violation by the time the fining hearing occurs but not by the due date, can the fining committee throw out the violation and just let the residents slide with no fine at all? So I think the question is after the board has acted, goes to the fining committee, does the fining committee have the discretion to not fine at all or fine in a lesser amount because in the interim there's been compliance?

Cindy Hill, Esq.:

The fining committee absolutely has the discretion to choose not to fine. Absolutely. As Jim was saying earlier though, I agree with him that the fining committee does not have discretion to change the amount the board levied because the statute is very clear that that's the process the board starts with. The board sets that monetary amount. What the fining committee has the right to do is take or reject that amount, and depending on circumstances, that's their decision to make, almost like a jury to a certain extent.

Jon Lemole, Esq.:

There was a question. Can a fining committee meet solely via Zoom? I know that there's a provision now that the owner can request it, but as a matter of starting it off just as, "Hey, we're only going to meet via Zoom, period." Is that possible?

Cindy Hill, Esq.:

I can't tell you that the statute authorizes that. There are some associations that have some updated documents that have some provisions regarding Zoom rights. So there may be something in your documents, whether you're condo or HOA, that would authorize that, but the statute does not say that you can have them only via Zoom, and only the HOA statute says that owners or tenants who are going to be fined can appear via Zoom. So condos don't even have anything about Zoom in their statute. So that's a risk.

What I tell clients generally when they want to do something only Zoom, I say, "Well, go ahead and notice it at a physical location as well. That way you have a physical location where people can come, and then if people do want to watch via Zoom, they also have that option." I do understand Zoom has gotten very convenient, but the statute is not up-to-date on all those options.

Alan Tannenbaum, Esq.:

I know there was a question about if the association's attorneys involved in the violation process, can the legal fees be charged to the unit owner?

Cindy Hill, Esq.:

Jim, you want to take that one?

James "Jim" Turffs, Esq.:

Generally not. Your governing documents may be able to tweak that and maybe can make the costs of enforcement collectible, but not by statute. The statute doesn't incorporate passing attorney's fees on for the fining process. Cindy might have some more comments about that.

Cindy Hill, Esq.:

Yeah, and I was going to say I agree with that. I was deferring to you with your litigation experience, but my take on it has been the same, that there's nothing in the statute that says that you can include attorney's fees for that. I would add to that, if you're involving the attorney heavily at that point, maybe the other options segueing into what we're going into now, the pre-suit mediation and pursuing in court, are the better alternatives.

Alan Tannenbaum, Esq.:

Cindy and Jim, there's a question. Apparently, there's an association that has preset fines for certain violations. Does the board actually have to direct a specific fine for a violation or if there's a preset schedule, can the fining committee just apply that specific schedule?

Cindy Hill, Esq.:

I want to open that question with there's a lot of disagreement amongst community association council on that. I know counsel who say, "Absolutely no preset ever. It is not contemplated in the statute. Don't do it." On the flip side, I hear counsel say, "Well, if you have a lot of violators like, for instance, a large community with a lot of tenants, and not to pick on tenants, but they do tend to have less interest in the value of the property than the owners, but it can also be owners of a large property where there's a lot of violations like with trash, with parking, with dog feces, that having those schedules can be helpful in terms of the board can say, 'These properties we're going to be imposing a fine at the schedule provided that we've already agreed to, $50 a day for dog feces, $50 a day for trash.'" So that's really one you have to discuss with your council, whether it's going to make sense for your community, and your council's also have to be prepared to back you up if someone challenges it because it is not clear in the statute that you can do that.

James "Jim" Turffs, Esq.:

I will say my preference on that, as she said, there's two schools of thought, but I prefer not to have set fines, at least not published, have to, "This is what we're going to charge for that fines." The statutes, I think, contemplate a more case by case basis analysis. Again, the fining committee has the option to take evidence to a degree, though they can't modify the board's fines. So if you're in a big community and if you want to have some schedule of fines, I would suggest it be far more informal just like, "Hey, for the fining committee, we have a recommended, suggested," all of these quantitative flowery words in there about why these aren't binding but recommended fines, and then that will allow, I'm sorry, the board that will allow the board to deviate from those a little bit more should somebody be more of an egregious violator or something that was purely accidental.

Jon Lemole, Esq.:

Here's an interesting question I just saw going back through the chat. The fining committee has to be a committee of at least three. Does that mean all three have to be present at the fining committee meeting or is there a quorum? Are you allowed to proceed with a quorum of two as long as you have three on the committee?

Cindy Hill, Esq.:

Jim, I don't know what your take on that, but mine is it says at least three. It doesn't say a quorum.

James "Jim" Turffs, Esq.:

I agree, and that's for the reason that if you try to do a quorum thing, you're going to have to and then you're going to have stalemate fees, and the statute, again, doesn't handle what to do if you have a 50/50 split on a fee decision. So I don't think there should ever be a circumstance under which you have an even number or have to deal with a quorum like that. So I think it has to be at least three and, really, I think should go on to say always an odd number because, again, it doesn't tell you what to do if there's a deadlock.

Cindy Hill, Esq.:

That's a good point.

Alan Tannenbaum, Esq.:

Pre-suit mediation.

James "Jim" Turffs, Esq.:

Stepping on your toes there, Alan. I'll moderate for you. So pre-suit mediation, so we've been through this fining process. We've sent the violation notice. We've sent the notice of hearing. We've had the hearing. We've sent the notice of determination of the fine and the five-day demand to cure. Your owner still isn't doing it. They're still violating. It's going on and on. You have $10,000 of fines against these people. What do you do? Well, fining isn't working. You got to move on to something else. For most violations, that's going to be the pre-suit mediation process.

So pre-suit mediation is important. It's required by statute because even though you're governing documents in chapters 718 and 720 all say, "Oh, the prevailing party in these enforcement lawsuits gets their attorney's fees paid." Well, the pre-suit mediation demand has now been kicked in, and it says that if you don't go through that process, at least try, then you're waiving your right to collect your attorney's fees and costs even if you win. So you at least have to go through the steps. You have to make the effort. Sometimes mediation doesn't practically happen, but, hey, you need to go through it.

So precinct mediation, like everything else, starts with a letter. You've already sent the violation letter out. They haven't done it. Their cure period has lapsed. They're still violating. Whether you fine or not, you determine that litigation is really what you need to do, so you send the pre-suit mediation letter. Pre-suit mediation letter contains the exact same information all those other notices does, "Here's the violation. Here are the provisions you violated. Here's what you had to do to cure. You haven't done it. So now here's a list of mediators. You can pick one or you can suggest other mediators. Come back to us within 20 days from the date of this letter with the mediator you've picked, and we're going to go and we're going to sit in front of them and we're going to mediate this."

So mediation itself, which I think we may have talked about briefly in a previous presentation, is the option to have a board member or the entire board, somebody who has the authority to act on behalf of the board, whether that's one director or the entire board, whatever, shows up. The owner, owners show up, and this is a process that the association's always going to have a lawyer for. The owners may or may not have a lawyer for. The last two I did didn't have counsel present. The mediator will explain the process to them, and that process is that it's an opportunity for both parties to speak to each other directly in a less formal setting, explain, "Hey, these are the rules. We're doing our job. We're enforcing the rules. If we don't enforce the rules, they go away," as the board would say.

Then the owner says, "Well, the rule is vague," or, "We don't agree with this rule," or they explain that, "Hey, this is overreaching." Then you can either work together or split apart. The mediator acts as a translator, going back and forth between both parties trying to explain what's going on. The hope is to reach a settlement agreement, basically a contract that says both parties are going to abide by these terms and that's how we're going to fix the problem.

There are great benefits to mediation. It allows for you to be very creative. If you take a matter like this in front of a judge, let's say an owner has built a shed in their backyard that's inappropriate, for whatever reason, it violates the governing documents. You can consider a thing, you take it to court. A judge is just going to say, "Tear it down," or, "Pay this amount of money," assuming funds for the association. Via mediation, you can consider a lot of different things like concealing the shed, splitting costs for the demolition of the shed. You can get more creative. You can consider things more than just black and white or money or not money. So it's pretty good. We've had really good success with mediation since it's been instituted, and so it is a really great process.

So more specifically about mediation, it's also confidential. So it gives the parties a chance to speak to each other about things that might help but that otherwise might prejudice their case. So if you come back in and the board knows that there's a weakness in their case, they can discuss that and try to work around that with the owner or if the owner points it out and says, "Hey, you can't do this because ..." You can talk about it. You can talk about all those little facts and details, the whys. Then even if the mediation falls apart and an agreement isn't reached, none of that information can be used in court. It can't be disclosed outside of the walls of the mediation. So again, a little extra security, a greater ability to talk to each other and work through the problem than you're going to get if you go to court where the judge or the trier of fact is going to be listening in or is going to be able to get that information and use it against you, so another great benefit to that.

At the end of the day, if you do reach a mediated agreement, it's a binding contract. If the owner or even the board doesn't fulfill the conditions of that contract, it's a lot easier to enforce in front of a judge than trying to argue about your governing documents. So if I go in and say, "Hey, Judge, mediation didn't work. We're talking about a shed here and this and that," then you have to explain the governing documents to the judge. You have to explain why they were violated. You have to prove everything. Alternatively, if you're going to a judge, if you've mediated an agreement, you have this contract, it says the owner's going to tear down the shed and they don't do it or don't do it in the time, it's a lot easier to take that document to a judge and say, "Hey, Judge, here's our contract. It says they were going to tear down the shed within 30 days. They didn't do it. Here we are." Much easier for a judge to understand. It really simplifies that process and saves ultimate litigation funds because these things can get really expensive if you end up trying to try them.

Alan Tannenbaum, Esq.:

Jim, just to clarify for everybody who's not familiar with mediation, it is a settlement process, meaning a mediator doesn't decide anything. Mediator just acts as a settlement facilitator.

James "Jim" Turffs, Esq.:

Right. So to expand on that, mediation is a pre-suit process. It involves finding a neutral mediator. Just because one party's worked with the mediator in the past, doing this as long as we have, I know most of the mediators who are going to ... I've worked with them as far as these types of disputes. Not a problem. They're very neutral. They will acknowledge, "Hey, I've worked with Mr. Turffs before. I'm not prejudice. I'm not going to side with him because I know him. We're all here. It's independent."" I like to think of mediators as translators. They will listen to the association's position and they will try to translate it into language that the owner will understand.

Then when the owner says, "Okay, I get that, but here's my position." They can translate that back into what the association can understand into its language and really just helps everybody understand the problem better, and once that understanding is reached, the solutions follow fairly quickly.

 To be clear, I think, at least in the way I've seen mediation used, you're talking now generally about a violation that is significant and worth the possibility of going to court over if it's not resolved by the owner. I think strategically, utilizing the mediation, pre-suit mediation procedure as a strategic tool, the benefit there is that if the owner chose not to participate in that process, and if somehow you wind up in court and you don't win as the association, the owner, because they didn't participate in the mediation process, forfeits their right to recover attorney's fees back from the association. So there's that defensive strategic reason for using mediation in addition to, "Well, let's try to avoid going to court in first place and hopefully we can all come to a settlement." Am I understanding that right? Would you, Jim and Cindy, agree with me that that's the overall overarching parameters of the pre-suit mediation process?

James "Jim" Turffs, Esq.:

Absolutely. It just provides ... It's a far more cost-effective option to litigation, but once the process is broken down, again, thousands of dollars of fines aren't getting the job done, this owner consistently violates, this is something that is clearly heading to litigation or maybe even just seems like it's heading to litigation. I don't want to [inaudible 00:53:05] because I know we have you here, if I'm permitting to talk a little bit more about the litigation option, which I actually don't think we're going to have for you, so we'll get into it.

Alan Tannenbaum, Esq.:

No, I've actually gone to less question and answer because there are a lot of questions and we can go on for a few minutes after the noon hour. So let's get into the question. There's an interesting one. If the owners attend the committee meeting, do they have a right to speak to try to defend the owner being fined?

James "Jim" Turffs, Esq.:

I'm sorry. I did not hear that. Some noise just started outside my window.

Cindy Hill, Esq.:

I had the same problem. Sorry, Alan. There's a building being built next door to us, just so that all of you know.

Alan Tannenbaum, Esq.:

All right. If owners attend the fining committee meeting, they're not the violator, they're just members of the community. Do they have a right to speak to try to defend the person being fined?

James "Jim" Turffs, Esq.:

That's a fair question. Again, not necessarily addressed in the statute. It is being held as a committee meeting, so-

Cindy Hill, Esq.:

An owner could potentially present someone as a witness, but I would say on the flip side, somebody couldn't just raise their hand and start interrupting the hearing process.

James "Jim" Turffs, Esq.:

Again, so my position is that the fining committee can entertain whatever evidence comes before them. So if there are witnesses, if there are people who can contribute additional information to the matter at hand to help advise the committee, they can consider it. I don't know I would go as far as to say they have a right to speak on agenda items here like they would at another meeting, but somewhere in between, I think.

Alan Tannenbaum, Esq.:

So it sounds like the intelligent approach, if the violator is presenting people in their defense, the committee probably should allow at least those witnesses to speak, but if somebody raises their hand and they're not being called by the violator, the committee has a discretion of saying, "We're not really taking input from you because you haven't really been called as a witness." There's a question about how the mediator gets paid or they both sides contribute to that or just the association? How does that work?

James "Jim" Turffs, Esq.:

It's set up as a 50/50 split, so you pick your mediator. Again, the owner, well, whoever is the respondent, so if the association is saying, "You're in violation. We've sent you this pre-suit mediation notice," it contains a list of mediators and then the owner gets to pick. So that list of mediators contains their costs, their hourly fees or whatever it is. The owner has the opportunity to review their websites and investigate those, and so they will pick the mediator based on that information, and then the fees will be split 50/50. It can be varied. The statute does say that it doesn't have to be 50/50. I've never seen mediation where it hasn't been. I can't really think of an idea off the top of my head about why you'd want to bear more of that cost or something like that, but the short answer is 50/50.

Alan Tannenbaum, Esq.:

Can the mediator require payment in advance as a condition of going through with the mediation?

James "Jim" Turffs, Esq.:

Mediator can, if they have a minimum two-hour fee or something like that, yeah, they can ask for ... Again, that's just going to be by contract with the mediator. So they can schedule their payment certain different ways, but again, I don't see that happening as much anymore. It used to be mediators had two-hour minimums or something like that. I think the trend now is just to do straight hourly and just really bill you for what you get, at least that's what I've seen more often, not to say it's the only way.

Alan Tannenbaum, Esq.:

What if the owner doesn't pay the mediator and it's an advance fee requirement? Do they waive the right to mediate or is the mediation considered concluded?

James "Jim" Turffs, Esq.:

Again, so I think it's within reason for the mediator to say, "You're not paying our fees." Payment of the fee is certainly part of it. So if they're not doing what they need to get access to the mediator, then I think you're safely going to be able to tell the judge down the road, "We offered, they pick the mediator, and then they refuse to participate in the mediation by refusing to pay and meet those contractual obligations." So again, the owner has to sign a contract with the mediator, so does the association, and if they agree to those terms and then don't abide by them, well, then they haven't complied with the mediation required.

Alan Tannenbaum, Esq.:

Folks, this presentation will be available on our website probably within a week to 10 days, so you can refer other people to it. I'm just looking to see if there's any last couple of questions that Cindy or Jon wanted to attack.

James "Jim" Turffs, Esq.:

I want to reach out. There was one I didn't get a chance to type to here, which is asking about how specific rules should be. I think it's a balancing test for enforcement purposes. The more explicit your rules are, the easier they're going to be in front of a judge. So if in your example you say patio tile has to be one color, having a list of colors that are approved is going to be a lot easier to defend in front of a judge rather than saying, "Well, we don't think that color that they've asked for is aesthetically pleasing," because then a judge is going to go, "Well, is that really in your purview?" Uniformity, yes, aesthetics certainly has a part to play here, but did the owner really know they were violating by picking this color because you didn't tell them you couldn't have that color? The more vague they are, the more discretion the board has, but that discretion might also weaken your case if you get to litigation.

Alan Tannenbaum, Esq.:

One question was about selective enforcement. So fining committees, having their committee meeting, the owner shows up and says, "Well, you fined me for this violation, but there are six or seven other people who are committing the same violation and you're not assessing any fine against them?" Does that set up a potential defense for that violator?

James "Jim" Turffs, Esq.:

I will tell you what I recommend in that situation and then let anybody else respond, but what I recommend is, oh, I recommend the fining committee or the board say, "Fine. Tell us what those addresses are and we'll take care of it."

Cindy Hill, Esq.:

Agreed.

James "Jim" Turffs, Esq.:

That really undercuts it. You say, "We just didn't know about those violations. Come on, rat on your neighbors and we'll go take care of it for you." Very often, they will turn around and say, "Well, I don't want to complain about my neighbors," or, "I don't have the list with me," but that's really, I think, the way you handle it.

Alan Tannenbaum, Esq.:

I'm just looking through the chat and one of the questions, and maybe we'll take this as the last one unless there's anyone in particular you wanted to answer, but again, I think this has been asked and answered, but again, once the fining committee levies its fine, is there any adjustment at all on that that the board can make? Gets the report back from the fining committee, it obviously can't increase that fine, but can it reduce it or can it then decide, "We don't want to fine at all after all"? Cindy or Jim?

Alan Tannenbaum, Esq.:

Well, the fining committee acts, assesses a fine. What is the discretion of the board at that juncture as to, number one, maybe decreasing the penalty, didn't thought it was excessive or deciding not to follow through at all?

James "Jim" Turffs, Esq.:

So I try to address one of those variations, that question in the chat. Since the fining process actually starts with the board, it would be odd for me to see a board recommend a fine to the committee, have the committee approve it, and then have the board go, "Ah, we didn't mean it." So that would be odd. Ultimately, the board is the one responsible for collecting these amounts. The fining committee levies the fine, but then the board's going to be the person responsible for actually collecting assessments, fines, payments. So theoretically, they could probably direct that the fine be removed.

The statutes don't really talk about it. There's no formal process for that. Aside from doing something pretty weird as far as changing their collections policy or something, I think it would be hard to do. I think once the board levies the fine, you're probably going to be stuck with it, but that's not to say there isn't a way for the board to forgive it or something like that down the road, but not that I know of.

Alan Tannenbaum, Esq.:

All right. Folks, we're going to conclude. You can get a copy of the PowerPoint. You can email Michelle for that, but remember that this entire session is going to be on our website probably within seven to 10 days, so you can always refer back to it. I believe that when we publish it, it also has a transcript that's published with it, so you'll have access to that. I want to thank everybody for participating today and we're going to have another interesting topic, yet undetermined for next month. Hope everybody can come back for that. Everybody, enjoy your lunch and have a nice day and we're going to conclude at this juncture. Thank you.