Montana HOA Fines: No Cap, and a Board Resolution Alone Creates No Liability (§ 35-2-517)

Montana has no planned community act. Title 70 of the Montana Code Annotated runs from Chapter 15 through Chapter 33 without one, and the only Title 70 provisions aimed at associations are section 70-17-901 on use restrictions, section 70-17-210 on covenant enforcement and abandonment, section 70-1-522 on political signs, and the Unit Ownership Act at Title 70, chapter 23 for condominiums. None of them mentions fines. An association's power to fine therefore comes from the recorded declaration and, where the association is incorporated as a nonprofit, from the Montana Nonprofit Corporation Act at Title 35, chapter 2.

Section 35-2-517, enacted as section 45 of Chapter 411, Laws of 1991, is the sentence that matters. It reads in full: "A member may become liable to the corporation for dues, assessments, or fees. However, an article or bylaw provision or a resolution adopted by the board authorizing or imposing dues, assessments, or fees does not, of itself, create liability." Read carefully, that is a burden-shifting rule. A Montana board cannot manufacture a debt by resolution. If a board adopts a fifty dollar per day fine for an unapproved fence stain, the resolution is the authority to charge, not the source of the obligation. The association still has to show the owner is bound, which in practice means pointing to the recorded declaration or covenant that the owner took title subject to. An owner disputing a fine should start by asking for the specific recorded provision, not the board minutes.

Section 35-2-520 is the only Montana statute that puts a notice-and-hearing procedure around association discipline, and it is narrower than it first looks. It applies to expulsion, suspension, or termination of membership in a public benefit or mutual benefit corporation, which is the category most Montana homeowners' associations fall into. Such action may be taken only "pursuant to a procedure that is fair and reasonable and is carried out in good faith." Subsection (2) supplies a safe harbor: a procedure is fair and reasonable if the articles or bylaws provide not less than 15 days' prior written notice of the expulsion, suspension, or termination and the reasons for it, plus an opportunity for the member to be heard orally or in writing not less than 5 days before the effective date by a person authorized to decide that the action not take place. The alternative safe harbor at (2)(b) is a procedure that takes into consideration all relevant facts and circumstances. Notice by mail must go first-class or certified to the last address in the corporation's records, or it may go to an authenticated electronic identification on file. Subsection (4) sets a one-year deadline: a proceeding challenging an expulsion, suspension, or termination, including one alleging defective notice, must be commenced within 1 year after the effective date. Subsection (5) confirms that a suspended or expelled member can still owe dues, assessments, or fees for obligations incurred before the suspension. Because the section governs membership status rather than money, it reaches a Montana board that suspends your voting rights, pool key, or gate code over a violation, and it does not by its terms reach a straight monetary fine.

Condominium owners are governed by the Unit Ownership Act, and it sets no penalty either. Part 10 of chapter 23, titled "Enforcement and Penalty," is repealed. What remains is section 70-23-506, which requires each unit owner to comply with the bylaws, the rules adopted under them, and the covenants in the declaration or deed, except as provided in 70-1-522, and then states that "Failure to comply with the bylaws, rules, covenants, conditions, and restrictions is grounds for an action maintainable by the association of unit owners or by an aggrieved unit owner." The statutory remedy Montana gives a condominium association is a lawsuit, not a self-executing fine, and the same section gives an individual aggrieved unit owner standing to sue.

The lien question has a clean answer for condominiums and no answer at all for everyone else. Section 70-23-607 gives an association of unit owners a lien on the unit and its undivided interest in the common elements, but only where the association "furnishes to a unit any services, labor, or material lawfully chargeable as common expenses," and only for the reasonable value of those common expenses. That lien is prior to all other liens except tax and assessment liens and a first mortgage or trust indenture of record, and it requires recording a verified claim in the county containing a true statement of the account after credits and offsets, the owner or reputed owner's name, and a description sufficient to identify the unit, indexed in the book kept for liens under Title 71, chapter 3, part 5. Fines and penalties are not services, labor, or material, and the section never names them. Non-condominium associations in Montana have no statutory lien at all; any lien right they have is whatever the recorded declaration created.

Two other Montana sections limit fines indirectly. Under section 70-17-901, an association may not enforce a covenant that imposes more onerous restrictions on the types of use of a member's property than existed when that member acquired their interest, so a fine levied under a newer, more restrictive covenant is unenforceable against a pre-existing owner who never agreed in writing. Under section 70-17-210(2) and (4), an owner can defend on abandonment by showing the covenant was not "equally and consistently enforced under whatever method an association uses to enforce covenants on all properties subject to the covenant over at least a 2-year period," which is a direct answer to selective fining.

There is no Montana agency that reviews association fines. The Secretary of State registers nonprofit corporations and takes annual reports but does not adjudicate member disputes, and Montana has no HOA ombudsman or division of real estate role here. Every fight over a fine ends up in the district court for the county where the property sits.

If the association wants the money, it must sue on the obligation or, for a condominium, follow the lien route in 70-23-607 and then foreclose under 70-23-608. Section 35-2-517 means the association's complaint has to plead more than the board resolution that set the fine. For an unincorporated Montana association there is no statutory collection machinery whatsoever, which leaves an ordinary contract action on the recorded covenants; section 70-17-210(1) identifies who may bring a covenant enforcement action, including a party to the agreement or that party's successors, the owner of a burdened or benefited interest, and the association or governing body itself.

If you are the owner, the practical sequence in Montana is short. Demand in writing the recorded covenant provision the fine rests on, since 35-2-517 says the bylaw or resolution alone is not enough. If the association has also suspended your membership, amenity access, or voting rights, check whether you received not less than 15 days' written notice with reasons and an opportunity to be heard at least 5 days before the effective date under 35-2-520(2)(a), and note that section 35-2-520(4) gives you only 1 year from the effective date to file a challenge, including a challenge based on defective notice. Gather evidence of how the same covenant has been enforced against other lots over the past two years for the 70-17-210(4) abandonment defense, and check your deed date against the covenant's adoption date for the 70-17-901 defense. If the association records a lien on a non-condominium lot without a recorded declaration authorizing it, that is a title problem worth raising immediately with the county clerk and recorder and with counsel.