Summary:  Having good rules is one thing; enforcing them is another.  Particularly if your board has the power to impose fines on violators, you need to be careful to follow the correct process.  In effect, your board is acting like a judge and jury, so local laws may require safeguards to protect the owners.

Governing documents:  Every association should have a "due process resolution" that lays out how  violations of the association’s governing documents will be handled, particularly if the association has the power to impose fines.  Assuming your board has the authority under your governing documents to impose a fine or other penalty on a violator, what process should you follow?

Maryland condos:  Under the Maryland Condominium Act, the association must issue a written cease and desist notice giving the owner 10 days to cure the violation.  If the violation continues or if the same rule is violated again within a 12 month period, the association should schedule a hearing and give the owner written notice of the hearing.  The notice must include the nature of the alleged violation, the time and place of the hearing -- at least 10 days after the notice, an invitation to attend the hearing and present evidence, and the proposed sanction to be imposed.  The hearing should occur in executive session; that is, the hearing is not open to other owners.  Finally, the minutes from the hearing should contain a written statement of the results and the sanction imposed, if any. 

Maryland HOAs and DC condos:  Neither the Maryland Homeowners Association Act nor the District of Columbia Condominium Act specifically requires a certain process to be followed prior to imposing fines.  That said, we recommend that associations with the authority to impose fines and other penalties follow the process in the Maryland Condominium Act.

Montgomery County, MD:  In Montgomery County, the Commission on Common Ownership Communities (“CCOC”) allows associations and owners to file Complaints arising from covenant violations with the CCOC.  Before filing a complaint, the association or owner is required to have “exhausted its remedies”, meaning that the they have followed any process outlined in the association’s governing documents before turning to the CCOC for help.  For associations, this means that the association must provide notice and a hearing before making a final decision (i.e., the process outlined in the Maryland Condominium Act set forth above), even if the governing documents don't actually require this.  Once a final determination is made, the association can file a Complaint with the CCOC seeking enforcement of its decision.   Please note that the Montgomery County Code imposes a duty on associations to notify owners in writing of their right to file a Complaint with the CCOC after an association determines that a dispute exists.  Further, the association is not permitted to take any enforcement action against the owner for 14 days after it notifies the owner of its CCOC rights.  Accordingly, in the letter notifying an owner of a Board’s decision after a due process hearing, the owner should be notified of his or her rights to file a Complaint with the CCOC.  Please also note that if your association is located in Montgomery County, the Montgomery County Code requires the association to provide annual notification of the services available through the CCOC. 

All jurisdictions in Maryland and DC: If, after a hearing, the association determines a violation exists and the owner refuses to comply with the governing documents, the association may want to consider seeking injunctive relief from the appropriate court.  This requires filing a Complaint with the Circuit Court in Maryland and the Superior Court in the District of Columbia.  Because attorneys' fees can quickly add up in these actions, the violation should be serious enough to warrant judicial relief.  (Although it should be noted that the Maryland Condominium Act allows the prevailing party in such an action to recover attorneys' fees, as do most governing documents for associations in Maryland and the District of Columbia.  So if your board wins in court and the owner has the funds, your fees may be paid.)  Prior to seeking injunctive relief, counsel should review the history and facts carefully with the association to ensure litigation is warranted.

Finally, associations should remember that the purpose of issuing fines and sanctions is to gain compliance and this power should not be used for punitive purposes.  In addition to fines, other sanctions that may be available, depending on the authority contained in the governing documents, include suspension of voting rights or the right to use recreational facilities such as pools and gyms.  Once compliance is obtained, owners’ rights to vote and use facilities should be restored.