Minnetoska POA Board Operating Procedure

Minnetoska POA Board Operating Procedure

Covenant Enforcement and Fines

Objective

The Minnetoska Board of Directors seeks to support the legal covenants we all agreed to follow when we bought our Minnetoska properties and that are referenced in the individual deeds. These covenants are intended to create a restful and appealing environment, as noted in the introduction to the Declaration:

“Our intention is to create and preserve an environment that is appealing and attractive. Minnetoska is a restful, refreshing opportunity for people to retreat, vacation, or live permanently”

Consistent enforcement of the covenants and restrictions by using a standard set of steps will help ensure that the Board follows a fair, reasonable, and predictableenforcement process and that there is ample opportunity for the members to understand the infractions, discuss the issues and to resolve infractions without unnecessary conflict.

This policy also applies toboth Section 4 of the Declaration (Covenants and Restrictions) and Section 2 of the Declaration, which addresses the reserved rights of the Association to enforce assessments.

Covenant enforcement

According to section 5 of the Declaration, either the Association or individual owners can enforce the covenants:

“The Association, or any Owner, shall have the right to enforce, by any proceeding at law or equity, all restrictions, conditions, covenants, reservations, liens and charges now or hereafter imposed by the provisions of this Declaration.”

This enforcement provision is very broad and flexible, in that the Association or any individual owner may elect to enforce covenant violations. And according to the Bylaws, the Board has a duty to

“promulgate and enforce such rules and regulations and such restrictions or requirements as may be deemedproper respecting the use, occupancy and maintenance of the Project”

However, there is some discretionary judgment in this requirement with the phrase “as may be deemed proper”. The position of the current Board is that violations that are not visible from the Common Areas and that do not affect the peace or enjoyment of the area by other owners will not be enforced by the Association. This position does not preclude individual owners from enforcing the covenants; it is simply a decision by the Board to more effectively allocate limited Association resources, and to clarify its interpretation of the phrase “may be deemed proper”.

For example, the restriction on Residential Use in section 4.2 of the covenants bans operation of any commercial business on the property. However, home businesses that are not visible to other property owners and that do not result in additional traffic or visible clutter are not violations that the Board will address. Similarly, the motor vehicle restrictions addressed in section 4.11 will not be addressed by the Board if these vehicles are not visible from Common Area property, regardless of whether the vehicles are in a closed garage. And the board has decided that ATV’s may be used on the Common Area roads for transportation, but not for joy-riding, as joy-riding falls under the “nuisance” restriction of section 4.1.

The decision as to which covenants will be strictly enforced will be revisited periodically or as complaints arise. But as a general rule, the Board will enforce any violation that effects any owner’s enjoyment of their property or that clearly violates the intention of the Declaration to create a “restful, refreshing opportunity for people to retreat, vacation, or live permanently”. The Board will also address violations that could negatively impact other owners’ property values, such as openly visible trash and property maintenance.

Violations of the covenants and restrictions will be addressed by the following 4-step process, which has been adopted by Resolution of the Board of Directors, June 27, 2015.

Procedure

Step 1: Word of Warning

For the initial notification of a covenant or restriction violation, the MPOA board will send a friendly letter to the property owner, specifically defining the violation and asking for their help in preserving a community that pleases everyone and preserves property values.

This initial communication must not include any threat of monetary fines. If the violation is applicable to all members, this warning should go out as a reminder to all property owners.

In the case of the annual assessment (dues) this initial warning should be a standard non-threatening form letter that we have used in previous years, sent by the secretary.

Step 2: Second Notice

The second written notice should again be neighborly and only threaten a fine if the violation poses a danger to the community. This letter is a follow-up to the first notice, and provides a more detailed description of the violations and why they must be addressed. In many cases, it may be helpful to assure the resident that no one believes the violation was intentional and to ask them to take care of the situation immediately.

In cases of overdue payments, the second notice shall specify a one-month due date.

Step 3: Third and Final Letter

For covenant infractions, the final letter should threaten a fine andinclude a “cease and desist” directive. The letter should invite the resident to a hearing before the HOA board, where a resolution should be negotiated, if possible. The fine should not be a ridiculous amount, and it should “relevant”. For example, if the enforcement is going to require legal assistance, the fine should be on the order of the attorney’s fees to investigate the infraction and provide legal opinions. Or if the infraction involves common area property damage, the fine should be on the order of the repair costs. In cases where the fine is not easily defined, it shall default to $25 for the initial offense.

In the case of overdue assessments, thehearing is not necessary, but it should be offered as a means to discuss payment resolution. For overdue assessments, the fine should be the cost of the legal feesand thepayment shall be subject to an annual interest not to exceed 18%, as specified in Section 2.7 of the Declaration.

The final letter shall be sent by certified mail.

Step 4a: Hearing and Legal Action

At the hearing, if the property owner persuades the board he will rectify the violation and there will be no repeat performance of the issue, the fine could be waived, though a property owner shouldn't expect this.

Notice that the fine is an important step in the enforcement process according to Maryland state law, as nonpayment of the fine can lead to a lien and eventual foreclosure. The MPOA Declaration gives the Board the authority to impose a lien on a lot, which satisfies the lien requirement of the Maryland Homeowners Association Act. The process for filing and acting on the lien is specified in the Maryland Contract Lien Act.

If the infractions cannot be resolved through the hearing and if the final letter is ignored, the Board shall retain professional legal services to develop a suitable strategy for resolving the infractions. Also, in cases where a fine may not be effective, other legal action will be considered.

Step 4b: Legal action without a Hearing

The hearing is not required for “simple” violations, such as those involving non-payment of assessments. For these nonpayment violations, where the violation is obvious to both the member and the board, the Board will impose the lien after the payment date specified in the third and final letter has passed.