Dear Poliakoffs,
Our HOA board consists of five members, and our membership is over 600 homes. Our board set up a new “Compliance Committee” which consists of three people: the vice president of the board, one director and one resident.
That committee establishes the violations that are subject to fining, determines the fine, and then sends the fine to the law firm to mail a notice of the fine.
As I read Section 720.305(2)(b), a fine “may not be imposed unless the board first provides ... an opportunity for a hearing before a committee of at least three members appointed by the board who are not officers, directors, or employees ...” nor family members of the board. Our board has never established such a committee.
In their policy for fining, they even refer to the hearing before the “3 member Compliance Committee.” They apparently believe that as long as the law firm is sending out the fine notices, they can continue the process they now have in place.
I am also not aware that the board solicited volunteers to serve on the committee, per the statute. Many of us would appreciate it if you can set the record straight.
Signed, E.T.
Dear E.T.,
Your question raises two separate issues — whether the so-called “compliance committee” may promulgate fines, and then, how those fines may be appealed.
The HOA Act, at Section 720.305, Fla. Stat., provides that an “association” may promulgate reasonable fines.
Generally speaking, associations act through their boards of directors. In fact, the statute later acknowledges this fact in stating that “a fine or suspension levied by the board of administration” may not be imposed without the opportunity for a hearing in front of an independent grievance committee.
However, I believe that an association board can, by majority vote, delegate such responsibilities to a committee, such as the “compliance committee” noted in your question. I do think that the board should do this formally by action at a board meeting, but overall I am comfortable with a committee being established to impose fines.
To be safe, I would recommend promulgating the fine at a noticed committee meeting — while that is not strictly required by the statute, I do think it is prudent to avoid arguments that the fine has not been properly imposed (I know of arbitration cases that invalidated penalties when they were not imposed at a properly notice board meeting, but I am not sure how a judge would rule in this slightly different context).
Once the fine is properly implemented, that fine may not be imposed without providing the parcel owner and anyone else to be fined with at least 14 days’ notice and an opportunity for a hearing before a committee of at least three members appointed by the board.
That certainly cannot be the same committee as the “compliance committee.”
First, it’s intended to be an independent review, and you would not want the same committee both promulgating and reviewing the fine. Second, the review committee cannot include any officers or directors. So, to the extent that the board is not affording persons the opportunity for a hearing in front of an independent committee, that procedure would violate the HOA Act, and any fine would be invalid and uncollectable.
The fact that the law firm is sending out fining notices is, as far as I can tell, entirely irrelevant. It serves no official legal purpose, other than that notice is required, and someone needs to send it out.
Perhaps the board could delegate the power to fine to their law firm, but I personally would never agree to take on that role for a client of ours — it’s just not an appropriate role for the association’s counsel. And, even if that was the case, the committee is still the entity that recommended the fine, so it is not truly independent; and it would not be a legal review committee, as it contains two directors.
Based upon your question, I would say that your association’s fining procedure is flawed, and that the fines it imposes are subject to challenge.
Ryan Poliakoff, a partner at Backer Aboud Poliakoff & Foelster, LLP, is a Board Certified Specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff, pioneer of the community association legal industry, tireless advocate, and author of treatises, books and hundreds of articles. Ryan Poliakoff and Gary Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living. Email your questions to condocolumn@gmail.com. Please be sure to include your location.
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