URGENT – HOA FINE LIMITATIONS
How You Can Take Action
July 2nd, 2025
There is a last-ditch effort to make some corrections to this disastrous bill. There are rumors that the housing trailer bill may need and receive some cleanup. I’m not a fan of rumors and there are no guarantees this will happen, but we’re throwing a Hail Mary and I’m asking for your action, NOW!
Per my earlier email, you’re now aware that in a late-breaking budget maneuver, the contents of SB 681 were put into the housing budget trailer bill, AB 130 (Committee on Budget) (see sections 3 and 4 here). CACM was opposed to SB 681 and had been advocating against the provision that caps fines for violations of governing documents at $100. Because this provision was just adopted as part of the budget package, it is now law and associations are no longer able to impose penalties over $100 unless they “may result in an adverse health or safety impact on the common area or another association member’s property.” Associations are not able to charge late fees or interest on fines and penalties either.
We are not going quietly and I’m asking you to contact your legislator to urge them to reverse this harmful action through cleanup budget trailer bill legislation. To be clear, we are not advocating against the budget or the entire AB 130. We are only advocating by against sections 3 and 4. You can find your legislator here. Please call their district office or send an email along the following lines:
[ I am a constituent [you can fill in commentary about how you live/manage communities in the district] and am concerned about sections 3 and 4 of the recently enacted housing trailer bill, AB 130. These sections cap homeowner association fines to $100 when a member violates the governing documents. While I understand the budget has been signed, we are urging that any cleanup trailer bill legislation includes elimination of these sections.
A foundational principle of homeowner associations is agreement of all homeowners to abide by the governing documents for the common interest of all homeowners. Fines for governing document violations are the only enforcement tools boards of directors have to fulfill their fiduciary duty to the HOA homeowners. Without the ability to incentivize individual homeowners to comply with rules through fines and penalties, the only other option is litigation, which will ultimately shift enforcement costs from one owner to all homeowners in the community. Homeowners should not have to pay for one homeowner’s unwillingness to comply with the rules, which often negatively impact everyone else’s use and enjoyment of the community. This law protects the violator to the detriment of all of those who are complying with the rules. This short-sighted law will undoubtedly backfire and compromise affordability for a larger swath of homeowners. We urge that these sections be eliminated in trailer bill cleanup legislation. Associations make up over 35% of California’s housing stock and the practical negative impacts of this change should not be underestimated. ]
🚨Effective Immediately!
July 1st, 2025
As many of you know, CACM has been heavily lobbying against SB 681 (Wahab, D, Fremont). This is a housing affordability bill that, in addition to other limitations, prohibits HOAs from imposing fines or penalties above $100 for violations of governing documents. We had been negotiating in good faith and felt that we were moving toward a much improved bill for HOAs, with potentially a complete elimination of the cap. Unfortunately, in a late-breaking maneuver, the contents of SB 681 were all put into the housing budget trailer bills, SB 130 (Committee on Budget) and AB 130 (Committee on Budget) (see sections 3 and 4), including the $100 fine cap. Below is a snapshot of the changes to Civil Code, and the above links will show you the specific Bills. These are all posted on our website as well.
Here’s what’s URGENT! The Governor has signed the budget to include the violation fee limitation effective immediately! This means that HOA boards will no longer be able to impose fines and penalties for governing document violations above $100 (or whatever the fine schedule says if it is less than $100).
This will likely cause confusion and conflict within the HOAs. I strongly encourage you to contact the HOAs legal counsel immediately to help communicate this to your client Board of Directors.
CACM is disappointed in how this all went down. Especially given our hard work and honest negotiations in the SB 681 process. But the budget process is complex and unfortunately, we got swept in as part of a larger affordability package that had momentum behind it for many other unrelated reasons. In somewhat “good” news (relatively speaking!) the cap language was modified based on our discussions with the Legislature and it allows the $100 cap to be exceeded if the violation “may result in an adverse health or safety impact on the common area or another association member’s property.”
SEC. 3.
Section 5850 of the Civil Code is amended to read:
(c) A monetary penalty for a violation of the governing documents shall not exceed the lesser of the following:
(1) The monetary penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation.
(2) One hundred dollars ($100) per violation.
(d) (1) Notwithstanding subdivision (c), the board may impose a penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation that is greater than one hundred dollars ($100) per violation, if the violation may result in an adverse health or safety impact on the common area or another association member’s property.
(2) Before imposing a penalty on a violation pursuant to this subdivision, the board shall make a written finding specifying the adverse health or safety impact in a board meeting open to the members.
(e) A late charge or interest shall not be charged to a member for a monetary penalty.
SEC. 4.
Section 5855 of the Civil Code is amended to read:
(c) A member shall have the opportunity to cure the violation prior to the meeting. The board shall not impose discipline in either of the following circumstances:
(1) The member cures the violation prior to the meeting.
(2) If curing the violation would take longer than the time between the notice provided pursuant to subdivision (a) and the meeting, the member provides financial commitment to cure the violation.
(d) If the board and the member are not in agreement after the meeting, a member shall have the opportunity to request internal dispute resolution pursuant to Section 5910.
(e) If the board and the member are in agreement after the meeting, the board shall draft a written resolution. The written resolution, signed by the board and the member of the dispute pursuant to procedures not in conflict with the law or governing documents, binds the association and is judicially enforceable.