Association Fines: Is $900,000 too much?

The Aspen Times recently reported that an HOA in Pitkin County is being sued over $900k in fines that it assessed against one of its homeowners.  The fines were assessed against the homeowner as a result of its failure to timely complete the construction of a home. The full article can be read here:  https://www.aspentimes.com/news/local/homeowner-near-aspen-takes-starwood-hoa-to-court-over-900k-in-fines/

The article brings up a common question that comes up for common interest communities – how does a board know if a fine assessed against an owner is ‘reasonable’?  Based on our experience litigating that specific issue, a court will often look at the following factors in determining whether a fine or series of fines relating to a particular violation is considered ‘reasonable’:

  • The location and demographics of the specific community. For example, higher fines assessed by an association in an exclusive neighborhood in Vail will likely be upheld over a vacant lot community in Garfield County that attempts to assess the same amount.
  • The severity of the violation.
  • The length of time that a violation has continued.
  • The background of the owner being fined. Have they been fined for other violations in the community previously?
  • Whether the violation is a health or safety issue in the community.
  • The number of other owners complaining about the violation or who are specifically affected by the violation.
  • Whether obtaining injunctive relief (court order requiring an owner to cease and desist and/or remove unauthorized improvements) is a more effective remedy under the circumstances.

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