Court Says Association’s Daily Fines for Refusal to Remove Unauthorized Fence Were “Null and Void”

This case involved a dispute between a community owners association (“Association”) and homeowners (“Owners”) over Owner’s right to install a 6’ high aluminum fence around the backyard their property that Association had not approved. Owners contended that Association had unreasonably denied approval of the fence and that fines assessed against them by Association for retention of the fence are null and void.

The trial court ruled that Association’s actions in denying approval of the fence requested by Owners were within the scope of its authority and taken in good faith, and that fines imposed by Association against Owners of $20 per day for the retention of the fence were valid and directed Owners to remove the fence. The trial court further awarded Association a monetary judgment against Owners in the amount of $35,059.96, and following a subsequent hearing, the trial court granted a motion by Association to hold Owners in civil contempt for non-compliance. Owners appealed the decision by the lower court.

The appellate court said that, in reviewing the actions of a homeowners association, the court should apply the business judgment rule and limit its inquiry to: (i) a determination of whether the action was authorized; and (ii):