Does the new cap on HOA fines solve a problem or create new ones?

Homeowners’ associations in California have long relied on punitive fines to correct or discourage actions that violate the association’s rules. Yet a new law has limited their enforcement power. Expect more emphasis on compliance through collaboration rather than punishment through escalating fines. 

Let’s say someone moves into a gated community or condominium association. They are bound by the Covenants, Conditions, and Restrictions (CC&Rs), a set of rules established by a homeowners’ association (HOA) to govern the use of a property within a community. These rules dictate standards for property maintenance, aesthetics, pets, parking, and other aspects of community living.

Enter Assembly Bill 130 (AB 130), a law that has drawn new boundaries around what HOAs can - and can’t do - when enforcing community rules. This is consequential because an estimated 36% of Californians and 65% of homeowners live in HOA communities. That is according to the California Association of Homeowners Associations.

Let’s go over some key changes that AB 130 ushered in when it took effect June 30, 2025.

Caps on fines and fewer financial penalties

HOAs can no longer impose fines greater than $100 per violation, except in cases involving health or safety risks. To impose a higher fine on the basis of an adverse health or safety risk, the board must issue a written finding at an open meeting explaining the harm caused by the violation.

The nascent law also prohibits HOAs from charging late fees or interest on unpaid fines. Gone are the days when associations imposed penalties of thousands of dollars. AB 130 ends the practice of “fine stacking,” where small fines snowball into huge debts over time.

While the new law does not erase older fines issued before June 30, 2025, it applies to new enforcement actions.

More due process for owners

Before an HOA can fine an owner, the owner must receive notice of the violation and must be allowed to cure the issue.

People on both sides say the law was poorly written, full of ambiguities, and could lead to more litigation until they are clarified by judges or the Legislature.

~ San Francisco Chronicle Article

Some of our takeaways and advice

Whenever there is a new law on the books, we are often asked questions we don’t have the answer to because it has not worked its way through the courts. Only time will tell, but one thing is certain: The California Legislature has sent a clear message that rampant overcharging for alleged violations should not continue.

There is a broad exception in the law that allows HOAs to exceed the $100 limit in fines when the “violation may result in an adverse health or safety impact on the common area or another association member’s property.” This may embolden associations to continue undeterred in socking their members with high penalties whenever the property owner’s conduct is deemed to pose a threat to health or safety.

Under AB 130, the phrase “adverse health or safety impact” is not explicitly defined in the statute. This is fact-based, and the possibilities run the gamut. It might be loud, blowout parties, speeding in shared areas, broken glass by a pool, off-leash aggressive dogs, or violations of anti-smoking policies. Maybe the owner has the eyesore of a tractor-trailer or a large boat parked out front. The list can go on and on. It will be interesting to see what types of behavior associations will be considered to have an adverse health or safety impact.

In rental relationships, Bornstein Law routinely evaluates the underlying behavior of tenants to determine whether lease violations are curable or not. Some offenses may be curable, while other acts are so egregious that the tenant has forfeited their right to live in the rental community. In an oldie but goodie, we hosted a webinar on making this distinction.

It is prudent for HOAs, their lawyers, and property managers to carefully document violations and ensure that findings are recorded in meeting minutes. Instead of using the cludgeon of financial penalties, they are encouraged to focus on collaboration and working with homeowners to resolve issues. Whenever there is friction in a legal relationship, our strong preference is compliance, not enforcement.

Review your CC&Rs to ensure they are compliant with the law.

To homeowners, we say that you now have greater due process rights and won’t face runaway find balances. Yet homeowners are still accountable, and the new law does not eliminate HOA enforcement. Owners are still responsible for complying with community rules.

AB 130 gives owners a clearer opportunity to communicate with the board, cure issues, and avoid escalating conflicts.