A Fine by Any Other Name - Part 2 of 2
In last week’s email, we discussed grounds and legal authority for community associations assessing fines. This week, we continue the discussion relating to association fees.
The source of an association’s authority to impose “fees” as opposed to fines may be varied and is the subject of some controversy. The only “fees” (other than attorney and resale certificate fees) explicitly referenced by any of the acts appear in the Washington HOA Act and the Oregon Condo Act. Those acts allow fees for use of the common areas or elements (RCW 64.38.020(10); ORS 100.405(4)(j)) and late fees on assessments (RCW 64.38.020(11); ORS 100.405(4)(k)). The Washington Condo Act and Oregon Planned Community Act reference these and further allow fees for “services provided to unit owners.” RCW 64.34.304(1)(j); ORS 94.630(1)(l). Thus, late fees, common area rental fees, and move-in and move out fees, fees for production of keys, etc. may be justified under the specific language of the Acts as fees for use of common areas or for services provided to owners. Because the Acts differ and declarations differ substantially, you should obtain legal advice with respect to any particular fee to determine whether it is justified under your particular association’s governing documents. If the fee is justified, most people will agree that it should still be contained in a “rule” adopted by the board and published to the owners to ensure proper notice.
Remember, these statutes are subject to the provisions of the declarations, so depending on the language in the declaration, additional fees may be authorized even if they do not relate to delinquencies, use of common areas and services to owners (e.g., move-in and move-out fees). Again, this can only be determined on a case-by-case basis. Similarly, declarations can require that common expenses that benefit fewer than all owners be paid by the owner benefited, which can provide another source of authority for a “fee.” Still other fees, such as a management company’s “delinquency monitoring fee” may be authorized as “costs of collection” of delinquent assessments or fines, authorized by some declarations.
It is important that Associations don’t adopt onerous fees that function as a penalty. Penalties play an important role in the effective governance of associations, but they are not fees. Fees should be charged to cover expenses associated with an activity rather than to discourage the activity. Before adopting a fee schedule, an association must be able to show that the charged fees are reasonably tied to related expenses and that the overall fee is reasonable.
The bottom line is whatever a fee is being imposed or collected from owners, the association should identify the source of authorization for the fee, the basis for the fees to be charged and include such fees (even those fees required by community management companies) in its published “fine and fee schedule.”