On very short notice, and without meaningful opportunity for public input, the California Legislature has passed Assembly Bill 130, which significantly changes how HOAs can impose fines. This bill was tucked into an emergency budget package unrelated to HOA governance and signed into law this week. It is already in effect. 

The language used in the changes to the law is extremely vague and leaves many open questions. HOAs can no longer impose fines over $100 per violation. There is an exception for violations that fall under what the new changes to the law refer to as “adverse health or safety impact on the common area or another association member’s property.” We have no idea what this might mean. It is also unclear whether you can impose a fine for more than one occurrence of the same type of violation. 

Below is an overview of the changes to the law:

• Fines are capped at $100 per violation, unless the health or safety exception applies.
• If the violation impacts “health or safety,” boards may impose fines above $100 only if the board makes a written finding (at an open meeting) that the violation impacts health or safety.
• Homeowners must be given the opportunity to cure the violation. If a homeowner “cures” the violation or provides proof of a financial commitment to cure the violation before the fine hearing, the board can’t impose a fine. How this works with non-curable violations like noise or nuisance is unclear.
• Associations must now send notice of hearing results within 14 days (previously 15 days).
• After the hearing, if the owner and board don’t agree, the owner may request Internal Dispute Resolution (IDR). The law is helplessly unclear on what the board and the owner are supposed to agree upon. This could mean the fine imposed or whether the violation was cured (or anything else?).
• If the owner and board do “agree,” both sides must sign a binding written agreement, which is judicially enforceable. Again, the law is unclear on what the agreement will be about, and it appears to signal the author’s confusion as to the difference between an IDR meeting and a disciplinary hearing. 

Unfortunately, the law seems to blur the lines between fine hearings and IDR, creating confusion about how these processes are supposed to work together.

Most associations will need to review their fine and enforcement policies and make changes to conform to the new law. Depending on the changes made, there may not be a need to use the standard 28-day notice and commentary procedures typically used for rule changes. However, individual notice will still be required. Until these changes are made, boards should comply with the restrictions outlined in the new law. Boards should also consider whether other forms of discipline and conflict resolution are now more practical.

We expect that clarifying legislation will be introduced at some point, which could take months or years. We will keep you informed as we learn more. We strongly encourage everyone to reach out to their State representatives to express their opinions about the new law and how it adversely impacts a homeowners association from economically and effectively enforcing its governing documents to the detriment of owners who voluntarily acknowledge and comply with the governing documents.

In the meantime, associations should consult with legal counsel before considering the imposition of fines of more than $100 per violation. Please don’t hesitate to reach out if you need help navigating this new law or updating your community’s enforcement practices. We're here to help.