New Prohibited Conduct by Homeowners’ Associations
Laws change. It’s that simple. Recent changes to Idaho law concerning homeowners’ associations (“HOA”) and the impact such law may have on an HOA’s ability to levy fines for violations of its CCRs is the subject of our latest blog post.
As you may be aware, Governor Otter recently signed a new law that prohibits certain actions by HOAs. The new law (I.C. § 55-115) prohibits the imposition of a fine by an HOA on its members unless such authority is clearly stated within the subdivision’s CCRs. The new law becomes effective July 1, 2014.
An excerpt of the new law states:
(2) No fine may be imposed for a violation of the covenants and restrictions pursuant to the rules or regulations of the homeowner's association unless the authority to impose a fine is clearly set forth in the covenants and restrictions and:
(a) A majority vote by the board shall be required prior to imposing any fine on a member for a violation of any covenants and restrictions pursuant to the rules and regulations of the homeowner's association.
(b) Written notice by personal service or certified mail of the meeting during which such vote is to be taken shall be made to the member at least thirty (30) days prior to the meeting.
(c) In the event the member begins resolving the violation prior to the meeting, no fine shall be imposed so long as the member continues to address the violation in good faith until fully resolved.
(d) No portion of any fine may be used to increase the remuneration of any board member or agent of the board.
Why is understanding this new law important for developers and HOAs?
In short, one of the key tools for maintaining the character of a neighborhood and preserving property values is the power of an HOA to levy fines against property owners who violate the subdivision’s CCRs. Without authority to levy fines, an HOA does not have the proper tools to address violations of its CCRs and must turn to the courts to protect the property values of its members. This can be time consuming and costly for HOA boards and members.
Given this new legislation, all developers and HOAs should review their CCRs to confirm that specific language empowering the HOA to impose fines on property owners for CCR violations is included. If such authority is not clearly spelled out in the CCRs, then the developer or HOA should amend the CCRs to provide for the imposition of fines. In addition, HOA boards should adopt policies and procedures to make certain they are complying with new law’s requirements for notice and service to violating members.