Q&A: Fine If You Do… Fine If You Don’t

Q. This has always been an issue of debate in our condominium. How do we set up a fine schedule and what is an appropriate fine schedule that will not be too overbearing?  Although we have had fine schedules someone (new board members, residents, new managing agents) always seems to begin a debate on this topic which leaves the board in a quandary and not knowing exactly how to proceed.  Unfortunately, the same people opening the debate fail to provide a workable solution or provide a solution that is totally subjective.  Fines need to have a scale/schedule (1st occurrence, 2nd occurrence, etc.) and need to have a monetary bite so owners don’t elect to pay the fine rather than abide by rules (i.e., I’ll move on a non-moving day because the fine is only $50).  Another issue is what value/amount fine for what type of infraction (i.e., the board can’t charge the same fine to one owner for failing to properly recycle and to another owner for moving in on a non-moving day). It has to be fair but include some teeth so the problems don’t keep reoccurring. 

                                — Board President

A. “Your question seeks both legal and policy answers,” says Attorney Eric Brophy, a partner of the New Jersey-based law firm of Diegnan & Brophy, LLC in Berkeley Heights.

“With regard to the legal issue, the answer is simple.  The New Jersey Condominium Act provides,  'Subject to the provisions of the master deed, the bylaws, rules and regulations and the provisions of this act or other applicable law, . . . the association may impose reasonable fines upon unit owners for failure to comply with provisions of the master deed, bylaws or rules and regulations, subject to the following provisions . . . A fine for a violation or a continuing violation of the master deed, bylaws or rules and regulations shall not exceed the maximum monetary penalty permitted to be imposed for a violation or a continuing violation under section 19 of the ‘Hotel and Multiple Dwelling Law (HMDL),’ . . .' N.J.S.A. 46:8B-15(f).

“Stated simply, fines relating to violations of the governing documents are limited to the extent that fine may be imposed under the HMDL.  Section 19 of the HMDL provides “Any person who violates, or causes to be violated, any provision . . . shall be liable to a penalty of not . . . more than $500.00 for each violation, and a penalty of not . . . more than $5,000.00 for each continuing violation”. N.J.S.A. 55:13a-9(b).  Thus, it is clear that the board has great latitude in setting fine schedules.  Of course, the board has the discretion to assess fines lower than the statutory minimum limits, but any fine cannot exceed the maximum fine limits.

“With regard to the policy considerations relating to fines, and in light of the statutory authority, the board should have a feel for the tolerance of its homeowners toward fines.  While there is no hard and fast rule regarding fine schedules, if there are particularly troubling issues in which habitual offenders are undeterred by the fine schedule, then the board should consult with its attorney and property manager to target a fine schedule that addresses these issues.  However, any fine schedule must always balance compliance/deterrence with fairness.  It is advisable that the association codify the fine schedule via resolution, so that it is of public record and can be found by anyone inquiring.” 

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