Davis Stirling Act: What Is It, Rules, Fines, And Violations

The Davis Stirling Act outlines the rules and enforcement guidelines that California’s homeowner associations must follow. The act clarifies responsibilities for HOAs, especially concerning fines and penalties for rule violations. Both homeowners and HOA board members should understand the regulations under this Act to avoid penalties.

What is the Davis-Stirling Act in California Law?

The Davis Stirling Common Interest Development Act is the primary legal framework governing HOAs in California. Enacted in 1985, this law applies to all forms of common interest developments (CIDs), including condominiums, planned developments, and cooperatives. The act aims to protect homeowners’ rights and maintain property values. It provides governance, budgets, elections, meetings, and rules enforcement guidelines.

Does the Davis Stirling Act for HOA Cover Fines and Violations?

The Davis Stirling Act for homeowners associations explicitly allows HOAs to impose fines and penalties when homeowners violate the rules. However, the HOA must adhere to specific procedures and requirements. The HOA must transparently issue fines. Board members must follow due process to avoid abuse of authority and unfair practices.

Here are just some of the things the Davis Stirling Act addresses:

• Notifying homeowners of rule violations
• Providing homeowners with an opportunity to address the violation
• Allowing homeowners a chance to dispute the fines

Davis Stirling Act Rules and Regulations

The California Davis Stirling Act outlines various rules HOAs must follow when issuing fines. Here are the most important ones to remember.

Annual Notice of Policy

If an HOA has a monetary fine policy, the board must adopt this policy and distribute a copy of it to every member. The board must include this policy in the annual policy statement. The policy must include the HOA’s discipline policy and a schedule of penalties for violations as per Civil Code Section 5310. Furthermore, this schedule must be in accordance with the governing documents as per Civil Code Section 5850.

Duty to Enforce the Rules

The HOA has a duty to enforce the governing documents of the association. This includes the rules and regulations of the HOA. If the HOA board fails to enforce the rules, members may force the board to implement them by going to court.

Authority to Fine

There is an implication of the HOA’s authority to issue monetary fines even if the governing documents don’t expressly state it. This implication exists if the HOA has the authority to adopt rules. The Liebler v. Point Loma case makes this apparent.

Delegating to a Rules Committee

An HOA board may form a Rules Committee and delegate certain duties. This includes sending violation notices, conducting disciplinary hearings, and issuing fines. In this case, the HOA board can hear the appeals.

It’s important to note that homeowners don’t have a right to review the minutes concerning disciplinary hearings. An HOA may withhold or redact information pertaining to disciplinary actions, payment plans, and collections. This is in accordance with Civil Code Section 5215. However, the committee’s decisions are generally included in the open meeting minutes as per Civil Code Section 4935.

Following Due Process

An HOA must adopt a fine schedule and notify members of this schedule. The board can follow the same procedure for adopting rules when adopting fines.

The Davis-Stirling Act requires fines to be reasonable. Additionally, the fines must be appropriate and match the nature of the violation. Furthermore, the fine policy should include due process. This involves notifying members of the rules, providing violation notices, and giving members a chance to attend a hearing before the board.

Prohibited Fine Policies

There are two things that the Davis-Stirling Act prohibits:

• Automatic Fines. These are fines that an HOA board issues without proper notice or due process. The HOA board cannot issue automatic fines. Before issuing any fine, an HOA must follow due process and send notice. Even if the same member committed the same violation a month before, the board must repeat the process, as it is considered a separate violation. The only exception to this is a continuing violation.
• Group Fines. An HOA board can’t issue group fines that penalize all members for the actions of a single person. For example, if a member fails to clean up after their dog but it’s unknown who the violator is, the board can’t penalize all dog owners to determine who is the real culprit.

No Notice of Noncompliance

In the past, HOAs could record a notice of noncompliance with the county recorder’s office. However, the Davis Stirling Act no longer permits such recordings.

Davis Stirling Act Recommended Fines

The Act encourages HOAs to develop a fair and effective fines policy. Here are some key considerations.

For Deterrence

Fines are designed to deter violations of the governing documents. As such, the HOA board must adopt a fine schedule matching their community’s demographics. A $25 fine, for instance, may be insignificant to a neighborhood filled with wealthy residents. On the other hand, the same amount could be too unreasonably expensive for other communities.

Flexibility

Fines should be flexible, allowing for a substantial penalty on a first violation instead of just a warning letter. Many associations have policies that require a warning letter for a first offense. This can restrict the board’s ability to address serious initial violations, such as actions that endanger others. Unless the governing documents require the board to issue a warning on the first offense, it’s best to start with a monetary penalty.

Repeat Violations

The Act allows HOAs to impose higher fines for repeat violations. This is to discourage ongoing noncompliance and reinforce the importance of community rules. By increasing fines for repeated offenses, HOAs can clarify that persistent disregard for the rules will have more serious penalties.

Daily Fines for Continuing Violations

The Act allows daily fines for continuing violations until the homeowner corrects the issue. Daily fines encourage immediate resolution and prevent long-term violations.

How to Collect Fines

When fines remain unpaid, HOAs have several methods to pursue collection.

• Suspend Privileges. One option is to suspend the member’s privileges, such as access to community amenities, until fines are paid.
• Small Claims Court. HOAs can file a claim in small claims court if fines go unpaid. This court process is generally cost-effective and less formal than superior court proceedings.
• Superior Court. For substantial fines or penalties, HOAs can take the issue to a superior court. If the court awards the HOA a judgment for the fines, an abstract of this judgment may be recorded.
• Judicial Foreclosure. The prohibition on fines in liens applies only to trustee sales. As such, associations can include fines in judicial foreclosure actions.

Can an HOA Nonjudicially Foreclose on Unpaid Fines?

An HOA can’t collect fines through nonjudicial foreclosures (trustee sales), even if an association’s governing documents authorize it. This is according to Civil Code Section 5725. The HOA can’t treat fines as assessments. Thus, it can’t include unpaid fines in the delinquent assessment liens foreclosed nonjudicially. However, fines can be included in liens foreclosed through judicial processes.

Can an HOA Levy Late Charges & Interest on Fines?

No. According to the Davis Stirling Act, an HOA may not add a late charge or interest to an owner’s unpaid fine.

Can an HOA Fine a Family Trust?

When a property is held in a family trust, and residents violate rules, associations cannot target the trust itself. A family trust isn’t an entity or legal person like a corporation.

A trust simply transfers assets to a beneficiary without probate, so it cannot own property or be sued. Instead, a trustee (on the trust’s behalf) owns the property in a living trust. The trustee’s name appears on the deed. If occupants of the property violate community rules, the HOA can fine the trustee after following due process.

What Happens if the HOA Board Does Not Follow the Davis Stirling Act?

An HOA board may face serious legal consequences if it fails to follow the Davis Stirling Act. Homeowners can sue the HOA or demand corrective action if the board does not comply with the act’s requirements. Associations that violate Davis Stirling law can face lawsuits, financial losses, and damage to their reputations. In some cases, board members could be held personally liable.

Homeowners may also report violations to state authorities. When this happens, the state authorities may investigate the HOA’s practices. If state authorities find that the HOA has violated the Davis Stirling Act, they may issue monetary penalties or require corrective action.

The Final Word

The Davis Stirling Act is imperative to homeowners associations in California. It provides clear guidance on fines and violations. These guidelines are designed to keep things transparent and fair while holding members accountable.

Navigating the ins and outs of the Davis Stirling Act can come as a challenge. An HOA management company can help with that. Start looking for the best one in your area using our online directory!

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• HOA Violation Notice: What To Do And Homeowners Rights
• Should Homeowners Be Appointed As HOA Violation Enforcers?
• Everything You Should Know About HOA Fines