Most associations and management companies are aware that fines for violation of the governing documents must be imposed pursuant to notice and an opportunity to be heard in accordance with both the Washington and Oregon community association acts. But what about fees? We are often asked what the difference is between a fine and fee in terms of collections. The short answer is that if done correctly, there is little difference between the two in terms of collections, though the source of the fine or fee and the procedures to impose them usually distinguishes the two. This 2-part email will discuss the source of authority for fines this week and fees next week.

The term “fine” is generally used to describe an amount imposed or assessed against an owner for violation of the governing documents. Notice that I did not say violation of the “rules” because “rules” is a general term that leaves some ambiguity. Fines can be imposed for violation of any provisions in governing documents, whether they are called “rules” or not. Some declarations and bylaws contain provisions that you might expect to find in the “rules,” such as provisions regarding parking or pets, while others are silent on these types of issues, leaving them to the “rules” adopted by the board. Other associations have parallel (though sometimes slightly inconsistent) “rules” in both the declaration and the board-adopted rules. Properly adopted and published fines can be imposed for violations of any provision of the governing documents, whether the rule appears in the declaration, bylaws, rules, house rules, “rules & regulations,” “house rules,” “board resolutions” or “policies” such as collection policies or fine & fee schedules.In any case, both Washington and Oregon condominium and HOA/PCA acts require that a number of prerequisites be met before imposing a fine:

• The fine must be included in a “previously established schedule” adopted by the board (or in the governing documents);
• The fine schedule must have been furnished to the owners;
• The association must provide the owner with notice of the violation;
• The association must provide the owner with an “opportunity” to be heard by the board or board representative in accordance with procedures in the governing documents or adopted by the board; and
• The fine must be reasonable.

See RCW 64.34.304(1)(k); RCW 64.38.020(11); ORS 100.405(4)(k); ORS 94.630(1)(n) & (4).

Notably, the provisions in all of the acts are subject to the provisions of the declaration. So it’s arguable whether a declaration that conflicts with these procedures trumps the statutes. However, the ultimate basis for the “notice and opportunity to be heard” concept sounds in the constitutional right to due process, which would trump any governing document provision. Thus, we generally advise that the procedures contained in the Washington and Oregon Acts be followed to avoid such a claim.

In short, reasonable fines for violation of the governing documents not only need to be included in a schedule adopted by the board and published to the owners, but specific procedures must be followed before imposing those fines on an individual owner. Fees, on the other hand, may be treated slightly differently. Tune in next week for a discussion of fees.