Even though an association has standing to file suit, the Civil Code makes it clear that an association must first try an internal dispute resolution program. Furthermore, except in limited circumstances, litigation initiated by an association without an attempt at Alternative Dispute Resolution will be subject to dismissal by the courts.
Associations are required to have an enforcement policy in place outlining the steps of its Internal Dispute Resolution Process, according to Civil Code section 1363.830. If an association does not have a dispute resolution program in place, Civil Code section 1363.840 establishes one for associations. Associations are now required to provide members an annual summary of its internal dispute resolution process, together with other disclosures required by Civil Code section 1369.590. This summary can go out at the same time the association distributes the pro forma budget or in the same manner it distributes notices or reports (e.g. newsletter) to members.
Usually, these internal dispute resolution programs will include a violation hearing, in which a board has the opportunity to meet with a homeowner to discuss the violation. As part of this process, an association may impose discipline in the form of fines or suspension of privileges. Due process requires that homeowners have an opportunity to meet with the board before the board imposes any disciplinary action.
Investigation & Background
Since Mr. Planter moved into the neighborhood, the HOA has received has received constant complaints, photographs, e-mails and telephone calls about the truck from other members.
Property manager Susan Efficient follows the HOA’s enforcement procedure and sends Mr. Planter a warning letter. Mr. Planter does not respond to the courtesy letter and the complaints continue to come in.
She double checks the CC&Rs. The HOA has a provision in its CC&Rs expressly prohibiting commercial-type vehicles such as Mr. Planters’ truck. Based on this provision, the HOA has the standing and authority to enforce the governing documents. The next step in the HOA’s enforcement procedure is to invite the homeowner to an enforcement hearing before the HOA’s Board of Directors. Ms. Efficient begins preparing the hearing notice.
The Hearing Notice
Requirements of the Hearing Notice: Civil Code section 1363(h) addresses the requirements that apply when a board plans to meet to consider imposing discipline upon a member. Those requirements are:
1) The homeowner must be notified in writing of the hearing at least ten days prior to the meeting;
2) The notice must be delivered by either personal delivery or first class mail;
3) The notice must state, at a minimum, the following 4 items:
a) The date, time and place of the meeting;
b) The nature of the alleged violation for which the member may be disciplined;
c) A statement giving notice that the member has a right to attend and may address the Board at the meeting; and,
d) A statement giving notice that the member may meet with the homeowners in executive session if he or she so requests.
Occasionally, CC&Rs will require even more notice than the Civil Code. For example, some HOA’s governing documents require 15 days notice for meetings in which discipline may be imposed upon a member. A cautious property manager will double check the governing documents to determine whether there are extra requirements for the association setting a violation hearing.
Preparing for the Hearing
Once the notice is complete, Ms. Efficient sends it to Mr. Planter. She gathers the e-mails, memos of telephone calls, photographs and complaints, together with a copy of the hearing notice, and includes this information in the Board’s executive session packet. Two days before the hearing, she receives a message from Mr. Planter stating he will attend the hearing and will bring a witness, his supervisor.
Planning the Hearing, Executive Session or Open Session
Disciplinary hearings are routinely held in executive session. This is permissible under Civil Code section 1363.05(b). Any matter discussed in executive session must be generally noted in the minutes of the next open board meeting. (Civil Code section 1363.05(c).) While a board may elect to hold violation hearings in open session, if a member requests an executive session meeting, the board must schedule the violation hearing to take place in executive session.
Homeowners can bring a fact witnesses, photographs and documents to the meeting in support of their position. Ideally, the homeowner will let the board know so the meeting can be scheduled appropriately and the invitation for the hearing can explain this.
Sometimes a homeowner will want to bring their attorney. If the association is notified in advance, it can invite its attorney to attend. If the homeowner shows up at the enforcement hearing with attorney in tow, the association should request a continuation of the meeting and adjourn the meeting so the association’s attorney can also attend.
The Enforcement Hearing
Mr. Planter arrives early to the enforcement hearing while the Board is still in open session. Ms. Efficient has a handout she provides him, and all other homeowners attending violation hearings, that explains the process of the enforcement hearing. A few minutes later, the open session is adjourned into executive session.
Ms. Efficient introduces the Board of Directors and asks the homeowner to introduce himself. The president reviews the information from the violation notice and presents the HOA’s case. The president also explains the potential for fines and further enforcement action if the violation is not addressed.
Mr. Planter explains his situation. He needs the truck for work. His supervisor explains it usually takes 2-3 months to find storage for a vehicle the size of this particular truck. They talk about timing, costs and alternatives.
The Board decides to provide Mr. Planter 90 days to find a new place to store the vehicle. They waive the fine based upon his response. However, they also schedule a follow-up meeting to make sure he removes the truck within the requested time period. They instruct Ms. Efficient to carry out these instructions and inform Mr. Planter of their decisions.
Notes Regarding the Disgruntled Homeowner
This sample situation involves a homeowner willing to work with a board. Unfortunately, violation hearings often involve a disgruntled homeowner. Often, such a homeowner will demand that the board disclose the identity of complaining parties or point out other houses in the neighborhood with a similar violation.
A board should take great care of and respect the privacy of complaining homeowners and other homeowners in violation with the association. In general, a homeowner attending a violation letter should not be allowed to question the board of directors.
In response to a demand that the board reveal the identity of the complaining party, the board can respond with “in the interest of protecting that homeowner’s privacy we are not at liberty to respond.” Certainly a board would need to turn over the identity of the complaining party in response to a valid subpoena. Out of respect to the complaining party’s privacy the board should not reveal his or her identity, unless required by law.
Likewise, if a homeowner points out other homes in violation, the board should not reveal the status of other enforcement actions. The board or property manager can respond with “we are here to discuss the violation at your lot” or “you are welcome to submit a written complaint to the property manager” and refocus the meeting to the violation at hand. Likewise, out of respect for the privacy of other homeowners, this information should not be revealed, unless required by law such as in response to a valid subpoena.
After the Violation Hearing
If a board imposes discipline upon a member, the board is required to provide the member written notification of the disciplinary action by either personal delivery or first-class mail, within 15 days of the decision. (Civil Code section 1363(h).) However, even if discipline is not imposed, it is still good practice to send a letter to homeowners invited to violation hearings stating the board’s decision.
In this example, the problem is voluntarily addressed by the homeowner. Unfortunately, violations are often not resolved so easily and require additional letters and ultimately litigation. While a community association has the discretion to decide whether to enforce its governing documents, an association can be sued for breach of fiduciary duty for not doing so.
If often takes time and money to cure a violation. One of the tools available to an association to obtain compliance is the violation hearing. However, there are other tools available to an association to obtain compliance. With consistent and persistent enforcement of governing documents and the establishment of a firm and fair enforcement policy, the quantity of violations in your association will diminish over time.