Live in a home governed by a condominium, co-op orhomeowner's association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.
Question: Our condo association currently has 14 owners who have failed to provide proof of the required condo insurance. Three of these unit owners are deceased, and their beneficiaries refuse to secure insurance or pay association fees. All previous notices sent to these owners have been ignored.
Our governing documents state that each owner must obtain and maintain individual casualty and liability policies at all times and provide the association with a copy of their coverage.
To address this, we are considering implementing a policy to levy fines
of $100.00 per week. If these fines remain unpaid after 30 days, then we intend to restrict access to common areas and eventually place a lien on the properties.
Could you please advise if we have the legal authority to impose these fines, restrict common area access, and place liens on these units under our governing documents and local laws? Signed, L.M.
Dear L.M.,
Your question raises several different but connected issues.
First, it is extremely common for condominium documents to require owners to carry either casualty or liability insurance, or both. And if you have that language, it can be enforced. Every community association has three primary enforcement tools — the imposition of fines, the application of a suspension of rights to use the common elements and, finally, bringing legal action to compel the owner to comply. So, you are on the right track.
The Condominium Act provides that a condominium can apply a maximum fine of $100, up to $1,000 in the aggregate for a continuing violation. If you do not have a further limitation in your governing documents, you can apply that maximum fine. If you only want to fine these owners $100 a week instead of a day, that’s entirely fine — but ultimately the maximum will still be the same. Once you reach $1,000 (10 weeks, in your case) that’s the largest fine you can apply. And you can’t simply restart the fine and call it a new violation.
The board should apply these fines at a properly noticed board meeting. You must then provide the owners with at least 14 days’ written notice of the fine and their opportunity for a hearing in front of an independent grievance committee. At the hearing, the grievance committee will decide whether the fine goes into effect.
Alternatively, and instead of or in addition to a fine, you can also suspend their owners’ right to use the common elements. You would use the exact same procedure, and again the grievance committee would have the right to say “yes” or “no” to the suspension. So, you don’t need to wait until the fine is unpaid before you suspend use rights — in fact, that can be the primary penalty if the board prefers.
Let’s assume, as you suggested, that the board applies a fine only, and that fine goes unpaid. After 90 days, the board has the right to suspend the owner’s common element use rights for this nonpayment (this applies to nonpayment of assessments as well). But again, I don’t see any reason to wait — if you think the suspension will motivate owners to purchase the required insurance, you should probably just suspend their rights in the first place.
What you cannot do, however, is place a lien on their units for failing to pay the fine. The Condominium Act provides that a fine can never become a lien on a unit, even if it goes unpaid. The only penalty for failing to pay a fine is to suspend that owner’s use rights; or, instead, to sue them to collect the fine.
Now, you can lien a unit for failing to pay assessments. You say that some of these units have gone unpaid because the owners are deceased and their beneficiaries refuse to pay. There’s no reason to let that behavior go unchallenged —you have a right to collect from whomever owns the unit and, if they fail to pay, you can place a lien on the unit and foreclose. There is a required statutory procedure before you attempt to foreclose on a unit, and the minimum timeframe for that procedure is 120 days — so you don’t want to let things drag out.
You’ll need to send a Notice of Late Assessment first, which is a statutory form letter informing the owner of their delinquent account, and then wait up to 30 days to see if they pay. If they don’t, a lawyer can send them a notice of intent to lien, wait a mandatory 45 days, place a lien on the unit, send a notice of intent to foreclose, and then file an action in court to foreclose the lien. The process of foreclosing that lien could easily take another 6-12 months, so it pays to act quickly so that the debt doesn’t get out of hand.
Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. 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.
This article originally appeared on Palm Beach Post: Can condo board fine owner who refuses to get insurance?
