Can Your HOA Impose "Nonparticipation" Fees on Complacent Homeowners?

Can Your HOA Impose "Nonparticipation" Fees on Complacent Homeowners?

February 2010
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You'll probably never be able to get all your homeowners to volunteer for association duty. But is there a way to financially penalize those who don't attend meetings, vote, or volunteer by imposing a "nonparticipation" fee on them? Even if you can, is it a good idea? Are there alternatives that would build participation in a positive way? We've got answers.

Not a Novel Idea

Compelling owners' participation or generating revenue by slapping slacking owners with a fee isn't a new idea. "Sure, I've heard the question," admits Daniel Zimberoff, a shareholder-attorney at Barker Martin PS in Seattle, which exclusively represents community associations in both Oregon and Washington.

"It's not something that comes up frequently, but over the last 20 years, it has come up from time to time," agrees Debra A. Warren, principal of Cinnabar Consulting in San Rafael, Calif., which provides training and employee development services to community association management firms and training and strategic planning sessions for association board members. "You may have a community having difficulty reaching a quorum, and a board member asks, 'Can't we just tell people they'll be fined $25 if they don't return their proxy?'"

Is It Permissible?

Before you antagonize owners with a nonparticipation fee, you need to know whether your state law and governing documents would permit the imposition of such a fee.

"I'd have a hard time recommending to a board to impose fines for lack of voluntary participation unless there's something in the governing documents that requires a mandatory stay on the board or a committee every few years," says Zimberoff of Oregon and Washington law. "I believe that would be outside the authority of the board to impose fines. You can't mandate voluntarism."

Boards in Georgia might also face legal challenges. "Amending the documents to permit this type of fee would be just like other use restrictions facing serious legal challenges," says Tanya Fairclough-James, an associate at Weissman, Nowack, Curry & Wilco PC in Atlanta who specializes in representing community associations. "It's not something the board could unilaterally resolve to do. The board would need to get the votes of all the community members to not be challenged because it's a pretty drastic action. If this is something a board wanted to implement, I'd recommend they get full owner participation. If 100 percent agreed to do that, perhaps it would be permissible."

If you're in Florida, don't even think about it. "In Florida, you don't have the authority to do that," contends Lisa A. Magill, a shareholder and association attorney at Becker & Poliakoff PA in Fort Lauderdale, Fla. "Both the condo and homeowners statutes give the association the authority to fine if their governing documents also contain that authority, but that's only for violations of the governing documents."

Is It Smart?

Universally, our experts say that any attempt to impose a nonparticipation fee would be unwise, to say the least.

"I think it would be subject to serious challenge and a bad idea," says Fairclough-James. "If you want to encourage people to volunteer with the threat of a fee, it could have a negative impact."

Magill agrees. "Regardless of whether the authority is there, I think it's a horrible idea," she says. "Your rights as an association member are similar to your rights as a citizen of a city, state, or the federal government. There's no mandate for you to vote. It's one of your rights and privileges, but nothing requires you to do so. Can you imagine the government fining taxpayers for not voting in mayoral elections?"

Warren says it's a bad idea because it wouldn't even work, and it might backfire on the board that imposes it. "Unfortunately, the individuals who aren't participating are the ones who aren't going to pay a fine when you assess it," she predicts. "There's very little enforcement that can be done against an owner once the fine is assessed except that it could be taken out of an owner's proceeds at closing, but that sort of defeats the purpose.

"I also think it's a little scary to be fining people for not volunteering for the board because I don't think the board's role is for everyone," adds Warren. "It requires a certain amount of time and ability, and penalizing people for it would be scary."

A Better Approach

Rather than demanding participation in the association's governance, experts recommend setting the right tone and using a carrot instead of a stick. "One of the reasons I feel homeowners aren't inclined to participate is that serving on a board or committee is very difficult," says Magill. "It requires an investment of time and effort, and it's not appreciated. If people's efforts were better received, they'd be willing to serve."

But how do you show appreciation? "Recognize those people who volunteer, and reward them," advises Magill. "Mention them in your newsletter, and say nice things about them. If you're hosting a holiday or block party, recognize those people and let everyone else know how much effort they contributed and to what extent. Let people know what your association has been able to accomplish through that representation. Make the volunteer experience positive so people are encouraged to participate. If it's a positive experience, more people will participate."

Warren also suggests getting to the root cause of nonparticipation. "It's generally my recommendation to use a carrot instead of a stick when possible," she says. "It's important to look at why people aren't participating and ask: What can we do about the way we're governing this community that will interest people in participating? Do we need to develop a strong committee process that will train future leaders and make people more aware of what's going on in the community? And are we modeling a good environment? Many times people don't participate because the interaction they see is negative. So the more positive we make the interaction, the more volunteerism you'll have."

If you have rogue members who spread negativity, you can also do more to temper their effect. "Most of the time, it's the five percent who contribute to the negativity in the community, and you can't control them," says Warren. "But the board does have control over how it structures meetings. Do they begin and end on time? Are they focused on issues rather than people? Do they celebrate accomplishments? Does the board communicate with members in a positive rather than negative way? Does the board focus on ways to improve the community rather than the negative? There is some tone-setting that the board has some control over."

Finally, make sure volunteers aren't taxed financially. "Boards would have difficulty if they were to try to offer any compensation, but I think boards can offer incentives to some degree," says Zimberoff. "Cover actual out-of-pocket expenses so that if volunteers have to drive places or make copies, they can be reimbursed."

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