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Preliminary Opinion on Authority to Levy Fines for Violations

March 11, 2003 Peter J. Eglick
Attorney At Law

Sent via E-Mail

Innis Arden Club, Inc.

c/o Michael Rasch, President
P. O. Box 7222
Shoreline, WA 98133

c/o Michael L. Jacobs, Vice President
4554 Thackeray Place N.E.
Seattle, WA 98105

Re: Request for Preliminary Opinion on Authority to Levy Fines for Violations

Dear Innis Arden Club:

You have requested a preliminary opinion on whether the Board may establish a schedule and system for fines for covenant violations. As explained below, my response is in the affirmative, subject to suggestions to be provided at a later date as to how such a system could operate.

The chapter of the Revised Code of Washington concerning homeowners’ associations (in a non-condominium context) was adopted by the Legislature in 1995. It defines a “Homeowners’ association” as, inter alia,

a corporation…each member of which is an owner of residential real property located within the Association’s jurisdiction, as described in the governing documents, and by virtue of membership or ownership of property is obligated to pay real property taxes, insurance premiums, maintenance costs, or for improvement of real property other than that which is owned by the member.

RCW 64.38.010(1). The Club clearly falls within this definition.

Having defined its scope, the statute goes on to describe powers which an association may exercise “unless otherwise provided in the governing documents….” RCW 64.38.020. The list of powers includes authority to levy fines, stating that the Board may:

Impose and collect charges for late payments of assessments and, after notice and an opportunity to be heard by the board of directors or by the representative designated by the board of directors and in accordance with the procedures as provided in the bylaws or rules and regulations adopted by the Board of Directors, levy reasonable fines in accordance with a previously established schedule adopted by the Board of Directors and furnished to the owners for violation of the bylaws, rules, and regulations of the association…

RCW 64.38.020(11) (emphasis added).

My review has not turned up any provision in the Association’s governing documents which would bar exercise of this authority. Indeed, particularly in light of the broad language in the Powers section of the Association’s Articles of Incorporation as well as the restrictive mutual easements (covenants), such adoption of fines might well be authorized even in the absence of the state-wide rule established in RCW Ch. 64.38.

Under RCW 64.38.020(11), the system established for the fines must be established in advance (of the levy of any fine), must impose “reasonable fines,” and must include “an opportunity to be heard” before the fine is imposed. None of these are particularly surprising or unusual prerequisites and all can readily be addressed by adoption of amendments to the Club bylaws, or by rules and regulations adopted pursuant to bylaw authority, as the statute contemplates.

As requested by the Club, I will be providing follow-up advice on these particulars. Meanwhile, however, it would be appropriate for the Board, in light of the authority granted in RCW Ch. 64.38, to begin thinking about what level of fines it might impose for what violations and other details of implementation.
Sincerely,

Peter J. Eglick
PJE:rp
c: Carol Solle, Secretary

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