Fine Lines: Navigating the New Law Regarding Monetary Penalties

By Amy Tinetti, Esq. & Matt Meadors, CMCA, AMS, PCAM

This article first appeared in the Communicator, Fall 2025 Edition. To view click here.

On July 1, 2025, the latest bad law to impact community associations in California was thrust upon us. Assembly Bill (AB) 130, which modified Civil Code sections 5850 and 5855, is arguably one of the most negatively impactful law changes this industry has experienced in decades. It creates some impossible challenges for community associations and leaves associations, their boards of directors, and those who work with associations with more questions than answers.

Even the enactment of AB 130 was unique because the bill did not go through the normal legislative process. CAI’s California Legislative Action Committee ("CLAC") was actively working with Senator Wahab (D-Senate District 10), who initially introduced the language in a standalone bill. However, the language amending Section 5850 and 5855 was added to AB 130 (a massive bill adopted as part of the state budget process) days before the law was enacted. The language proposed by Senator Wahab did not go through the normal legislative process (it was not assigned to any legislative committees) and the public did not have the opportunity to comment on the proposed language (which typically happens). All budget-related bills were required to be passed and signed by Governor Newson by midnight on June 30, 2025, so that the State could continue to operate with a budget on July 1. Because the amendments to Sections 5850 and 5855 were included in a budget bill, the law changes became effective immediately (on July 1, 2025).

It is important to note that the new law does not require associations to adopt new enforcement policies and schedules of fines. Associations may continue to take enforcement action and levy fines so long as they do so in compliance with the law. However, given the many questions presented by the new law, compliance may be a challenge. Associations and those who work with them can only do our best with the new law until it is (hopefully) changed or there is some judicial interpretation of the law following a challenge in court.

$100 CAP ON FINES

The headline feature of the new law is a cap on fines of $100 per violation (or a lesser amount if stated in the association’s schedule of fines). As is the case with many laws, a one-size-fits-all approach has been taken, yet every association is unique – that is why the principle of self-governance is of paramount importance for community associations. A $100 fine may be appropriate for one community, or for a particular violation, yet for other communities $100 may be a reasonable price for someone to pay for the privilege of violating the governing documents. A $100 fine may be appropriate for a standard parking violation, but it isn’t appropriate when someone parks an RV in the community because fines are cheaper than storage costs. And in today’s short-term rental market, a $100 fine is a small price to pay when the owner can rent their home for hundreds or thousands of dollars per night.

Another issue with the new law is that "violation" is not defined. Therefore, how can an association address continuing, unresolved violations (such as architectural violations)? Attorneys have different interpretations and approaches regarding this issue and associations are encouraged to contact their legal counsel to adopt operating rules that address this issue and others discussed in this article.

THE "HEALTH OR SAFETY" EXCEPTION

The new law permits an association to levy a fine in excess of $100 if the violation "may result in an adverse health or safety impact on the common area or another member’s property." However, in order to impose a fine for a violation with a health or safety impact, the board must make a written finding specifying the health or safety impact of the violation in an open board meeting. The law does not require that the board identify the owner or the separate interest in the open meeting, and because issues of member discipline are typically addressed in executive session meetings, boards may wish to handle this issue as they do decisions to record liens and identify the "violator" by account number or assessor’s parcel number.

Another strange issue in the law is that health and safety violations are limited to impacts on property and not people. Yet associations are charged with taking action to, for example, protect people from harassment – including by levying fines. Boards are encouraged to work with association legal counsel to determine how to best address these issues procedurally and in a written fine policy.

OPPORTUNITY TO CURE

The new law states that a member must be given the opportunity to cure any violation prior to the hearing, and if the member cures the violation prior to the hearing, the board may not impose discipline. Additionally, the law states that the association may not impose discipline if curing the violation would take longer than the time between the notice of the hearing and the hearing itself and the member provides a "financial commitment" to cure the violation. The term "financial commitment" is not defined, and many violations cannot be "cured" by paying money. Furthermore, many violations are not "curable." For example, if a member hosts a huge party that causes a nuisance, is the violation "cured" once the party is over, even if the party created a nuisance for a large number of residents? Again, boards are encouraged to consult with legal counsel to find ways to address these issues.

OTHER MEMBER PROTECTIONS

• The law now makes clear that associations may not impose late fees or interest on unpaid fines.
• The law provides that, if the board and the member reach an agreement at the hearing (presumably about compliance), the board must prepare a written agreement which must be signed by both the member and a board representative. Any such agreement shall be binding and judicially enforceable.
• Although members have always had the right to request internal dispute resolution ("IDR"), the new law expressly states that members have the right to request IDR if an agreement with the association is not reached in the hearing.
• The law now requires the board to provide written notification of the board’s decision to impose discipline within 14 days following the action rather than 15 days.

PRACTICAL (AND MONETARY) IMPACT OF THE LAW

The legislative intent of AB 130, as expressed by Senator Wahab, is to promote housing affordability and family wealth preservation through reduced fines. However, the goal and purpose of fines has always been to encourage compliance with governing documents, not for associations to make money. Now that associations’ options for enforcement have been gutted, associations will be forced to take other actions to secure compliance, including towing vehicles and court actions. These actions will ultimately cost much more for associations and their members.

Amy K. Tinetti, Esq. is a shareholder with Hughes Gill Cochrane Tinetti, P.C. and has been exclusively representing community associations in all aspects of their corporate governance since 2004. Ms. Tinetti is also a Delegate to the California Legislative Action Committee (CLAC) for the Bay Area/Central California Chapter of CAI and a Fellow in the College of Community Association Lawyers.

Matt Meadors, CMCA, AMS, PCAM is the Chief Operating Officer for HOA Organizers. He frequently presents and writes for CAI and served on the Greater Los Angeles Chapter Board of Directors from 2021-2023.