Did you hear the one about the homeowner who, no matter how many violation letters the community association sent, refused to stop parking his car in his front yard? Or how about the homeowner who did not care that her tenant refused to remove his window unit air conditioner even though she had been sent three violation letters? Sometimes a violation letter is not enough, and another tool is needed to “encourage” a homeowner to comply with the applicable Restrictions (which term includes the Declaration and all properly adopted rules, regulations and policies). A monetary fine may just be that tool. It may take a hit to a homeowner’s pocketbook to get the owner to sit up and take notice or, better yet, to take action. Before we go further, some housekeeping is in order. This article addresses issues related to levying fines in single-family and non-condominium townhome associations only. In those types of associations, we believe that, before a fine can be levied, the applicable governing documents must give the association the authority to levy fines. Preferably, fining authority will be found in the applicable Declaration of Covenants, Conditions and Restrictions (the “Declaration” or similarly named document). If not found in the Declaration, fining authority may be in the laundry list of association powers contained in most association bylaws. If fining authority is not contained in any association document, we recommend that, at a minimum, the Bylaws be amended to add language that specifically authorizes the association to levy a fine for a violation of the Restrictions. Once fining authority is confirmed or in put in place, there are steps that the association must take and steps that the community association can take to make fines an effective tool in enforcing the Restrictions.

Step 1: Follow the Law

Texas Property Code Section 209.0051(h)(1) states that a board of directors may not, unless done in an open meeting for which prior notice was given to the owners, consider or vote on fines. To be clear, the decision to levy a fine must be made in the open session of a properly notice meeting. This decision should be documented in the board meeting minutes. Having said that, the name and address of the homeowner being fined should not be referenced in the meeting minutes. Consider using an internal account number (for example, the account number assigned to the property by the management company) when documenting decisions to levy a fine against a homeowner. It may be prudent to have a standing agenda item for every board meeting such as: “The Board will consider and vote on levying fines on owners who are in violation of the Association’s governing documents.” It is prudent to discuss and clarify this requirement with the association’s attorney.

Step 2: Check to see if a “209 Fine Letter” Exists

Before a fine can be levied for a curable violation (as defined in Texas Property Code Section 209.006), the community association must send a letter that complies with Code Section 209.006. This “209 fine letter” must: (1) describe the violation that is the basis for the fine; (2) state any amount due to the association form the homeowner (including amounts other than the fine amount); (3) inform the owner that the owner is entitled to a reasonable period to cure the violation (i.e., specify the date by which the violation must be corrected) and avoid the fine; (4) inform the owner that the owner may request a hearing before the Board (or a committee appointed by the Board) on or before the 30th day after the date the notice is mailed; and (5) inform the owner that the owner may have special rights or relief if the owner is serving on active military duty. A 209 fine letter must also be sent for an uncurable violation (as also defined in Texas Property Code Sec. 209.006), however, because an uncurable violation is a violation that has already occurred and is not ongoing, the 209 fine letter for an uncurable violation does not have to give the owner an opportunity to cure the violation or specify a date by which the violation must be cured.

Step 3: Be Ready to Prove the Violation

As many of you have probably experienced, many times a homeowner’s defense to a violation is to deny, deny, deny. This is easy to overcome. Photograph, photograph, photograph. When possible, which should always be the case if the violation is a curable violation, the association should stand ready to produce a dated photograph(s) to support its 209 fine letter. A picture does not have to say a thousand words – it only has to say, “This happened on this date” and the violating owner will not be able to deny that the violation occurred.

Step 4: Communicate Consistently and Effectively

A homeowner should never be surprised that the association has fining authority or that a fine has been levied. If the community association has a newsletter, every newsletter should have a “Thank you for complying with the rules section”. An eblast to all homeowners who have registered an email address with the association should be sent multiple times a year reminding homeowners that the community association has rules to live by and encourage all owners to comply and avoid the possibility of a fine. The community association’s website should have a copy of the fine policy along with copies of all other association governing documents. This is not just a good idea; it is required by Texas Property Code Section 207.006 for all single-family and non-condominium townhomes associations that are entitled to levy regular or special assessments. In fact, all governing documents must be recorded, or they are unenforceable.

Step 5: Be reasonable

Though many community associations use fines as part of an enforcement program, fines are not a cure all. In some instances, levying fines may only lead to an argument about the payment of fines. You can try to avoid these arguments by documenting violations as discussed above. If possible, investigate to determine if there are special circumstances. It may be that the homeowner has had a major life event that has affected the homeowner’s ability to remedy a violation. In that instance, fines may not be an effective tool in obtaining compliance. The board should also be conscious of the fact that levying fines may not work in some situations and the only way to obtain compliance is through a lawsuit seeking a court order that the violation be cured. In summary, fines present another tool to assist in enforcing a community association’s governing documents; however, before levying a fine, an association must ensure that it is complying with all applicable laws – including the law of common sense.