Crime and Punishment: Violation Hearings Aren’t Just About Violations

Published on: March 22, 2006

All homeowner associations have rules and regulations and most have at least some residents who violate those rules occasionally, if not repeatedly. Enforcing the rules and the association’s covenants, conditions, and restrictions, is the responsibility of the association’s governing board — a responsibility that some boards execute more effectively than others. The boards that do the best job realize there is a lot more to enforcement than simply identifying violations and punishing violators. Effective enforcement also requires established procedures known to residents and administered with a judicious mix of discipline and discretion by the board.

Discipline and discretion will vary with the makeup of individual boards. Enforcement procedures will also vary, depending on what applicable state laws and association documents require. One key difference is in the requirement, or lack of one, for violation hearings. Some state laws require boards to hold hearings before imposing fines or other penalties and specify in considerable detail how those hearings should be conducted; other statutes don’t mention hearings at all. The Uniform Common Interest Ownership Act, governing common interest ownership communities in approximately 21 states today, requires a hearing only if a member requests one and leaves the structure of these proceedings up to individual associations and their boards.

Although the concept of enforcement hearings is not new for community associations, attitudes toward them have changed. In the early 1980s, association documents often required violation hearings, but lacking other models at the time, many communities structured these proceedings like courtroom trials, with procedural requirements so complex, detailed, and cumbersome that few boards or owners wanted to use them.

The pendulum has swung decidedly in the other direction, putting the emphasis, not on the procedural details of enforcement hearings but on their purpose, which is, or should be, to persuade owners who have violated association rules in the past to comply with them in the future.

Encouraging a Dialogue

While a complaint is inherently adversarial, violation hearings do not have to be. As much as possible, they should be structured to encourage a dialogue in which all parties have a chance both to explain their positions and to hear the positions of others. The “hearing” is as important as the telling. Violators need to hear why the rule they have violated is important and how their failure to comply has affected others. The board, for its part, needs to hear why the violation may have been inadvertent or the result of circumstances beyond the owner’s control.

This exchange of views is more likely to occur if the hearing is relatively informal. Enforcement hearings do not need and probably should not have the rigidity and formality of a courtroom trial. But they do need sufficient structure to ensure that the discussion is orderly and that all parties are treated fairly.

Fairness, both actual and perceived, is essential. Although this does not require the “due process” granted to parties in a court proceeding, recent developments suggest that the courts may be setting the bar for community association governance somewhat higher in the future than they have in the past.

A Higher Standard?

A 1995 California case (Alusi v. Fort Washington Golf and Country Club) provides a possible hint of this new direction. The case involved a decision by the club’s governing board to expel a member for making “vulgar” remarks and violating numerous other club rules. A California Appeals Court overturned the expulsion, finding that the board had failed to provide the “minimal due process” to which the member was entitled. Specifically, the court faulted the board for failing to identify the individuals who had filed complaints against the offending member, and for failing to inform the member of all the charges the board considered in its decision to expel him. Of particular interest to other nonprofits, including community associations, the court refused to apply the “business judgment rule” to the club’s disciplinary proceedings, holding that it was not enough for the board simply to show that its procedures were reasonable and that its decisions were made in good faith — the usual standard for a corporate board.

The impact of this decision and its implications are admittedly limited. First, this was a California Appeals Court ruling, applicable only in that state, and the court “de-published” the decision, which means it cannot be used even in California as a precedent in future cases. However, the decision is interesting and potentially significant, because it mirrors the reasoning in a more recent decision by a New Jersey Appeals Court (Committee for a Better Twin Rivers v. Twin Rivers Home Owner Association), holding that community associations have quasi-governmental powers and so must accord residents at least some measure of the constitutional “due process” protections required of governmental entities.

Again, these decisions do not establish judicial precedents; the New Jersey decision is being appealed and may yet be overturned. Still, both reflect a line of judicial thinking that associations should at least consider when formulating or reviewing the procedures for their violation hearings. Whether the hearings are required by statute or association documents, or conducted voluntarily, as is the case in some communities, associations should develop written procedures detailing how the hearings will be conducted. If the hearings are voluntary and held at the discretion of the board, the procedures should state that clearly. The enforcement procedures should also:

  • Require written notice to owners explaining the violation and the sanction(s) the board intends to impose.
  • Give owners the right to be represented by an attorney and to present witnesses at the hearing.
  • Require the board – or other hearing body — to issue a written decision and specify the time period within which that will occur.

Who Should Hear the Complaint?

The board is the obvious choice for this assignment, but not necessarily the best one, because it requires the board, in some cases, both to lodge complaints and to rule on them, which can be awkward, to say the least. Creating a special committee to conduct violation hearings is one way to separate the board’s legislative and judicial responsibilities; this approach has the added advantage of creating a potential appeals process by allowing owners unhappy with the initial decision to seek further review by the board.

Some associations have their attorney conduct violation hearings, which also avoids making the board both plaintiff and judge in some proceedings. Where the attorney acts as the hearing officer, board members attend the hearing but do not participate actively, unless they are providing evidence of the violation. It is the attorney who conducts the hearing, decides whether a violation has occurred and what the sanction should be.

Attorneys who have acted as hearing officers say this approach can work well. Among other things, they note, owners are less likely to ignore the hearing notice and more likely to take it seriously if it comes from the association’s law firm rather than directly from the board. The attorney may also be able to conduct the hearing more dispassionately than board members. But the attorney’s involvement also creates a more formal, judicial tone that some associations prefer to avoid, if they can. There is no right or wrong approach; boards should use the hearing structure that works best for them and for their associations. But they should also have their attorneys review their procedures to make sure they are consistent with the association’s documents and applicable statutes.

An Owner’s Rights

However the hearing is structured, owners should have the right to be represented by an attorney. If the owner is accompanied by an attorney, then the association’s attorney should be present as well, to provide advice, if needed, and to ensure that the hearing is conducted properly, in accordance with the procedures the board has adopted.

Owners should also have the right to present witnesses on their behalf, but they do not have to be given the opportunity they would have in court to “confront their accusers.” The board or hearing officer should definitely hear from all parties and sometimes having warring neighbors in the same room can clear the air constructively, producing a mutually satisfactory solution to their dispute. But if emotions on both sides make a calm discussion impossible, it will likely be more productive if the parties present their testimony separately. The hearing procedures should allow the board or hearing officer to determine how the testimony will be heard.

While owners don’t have the right to “confront their accusers” in an enforcement hearing, in most cases, they should have the right to know who their accusers are. Except in rare situations where a threat of physical violence exists, associations should insist that all complaints be submitted in writing and signed by the owners bringing the complaints. Absent a signed complaint, boards should not seek sanctions against an owner unless board members are able to confirm the violation independently.

Sanctions

Associations usually have broad discretion in the types of sanctions they impose, although there are some obvious limits. Because residents of the community typically own their properties, boards do not have the option of “voting them off the island;” however, they can revoke some of the privileges of association membership. Suspension of voting rights is one possible penalty, although, given that many owners don’t vote, it is not always the most effective one. Suspending access to recreational amenities is often a better option, as is the imposition of fines — the sanction of choice for most communities. It is important to remember, though, that the goal is not to punish violators or to produce revenues for the community, but to encourage compliance with the rules.

Although even-handed application of the rules and the sanctions is essential, rigid enforcement is not. Boards have the discretion to waive or reduce penalties and should do so when they determine that extenuating circumstances justify those decisions. That said, boards must also consider the political ramifications if they impose a sanction against one owner but waive it for another accused of the same violation. This does not mean boards should not exercise their discretion, only that they should have a good reason, and the documentation to support it, when they do so.

The pre-sanction hearing provides an organized structure within which to evaluate complaints and enforce association rules. But at its best, this process also has the potential to mediate disputes and to dispel the residual ill feelings that could otherwise continue to cloud relations between neighbors or between owners and the board long after a violation has been alleged and a sanction imposed. In this sense, violation hearings can be an effective community building tool, and they should be structured and conducted with that overriding purpose in mind.