Nebraska Condo Fines: Notice and a Hearing First, No Dollar Cap

The fining power sits in the Nebraska Condominium Act, at § 76-860, which is titled "Unit owners association; powers." Subdivision (a)(11) grants the association two related powers in one sentence: it may impose charges for late payment of assessments, and it may levy reasonable fines for violations of the declaration, bylaws, and rules and regulations. The fining half of that sentence carries a condition the late-fee half does not, namely that the fine follow notice and an opportunity to be heard. Nebraska sets no maximum fine, no per-day cap, no cure period and no schedule the association must publish. The words doing the work are "reasonable" and the notice-and-hearing clause, and both are tested in court rather than before a state agency.

The statute reaches a defined set of properties. Under § 76-826(a), the Nebraska Condominium Act applies to all condominiums created in this state after January 1, 1984. For condominiums created before that date, only a listed group of sections applies, and § 76-826(a) spells out which parts of § 76-860 carry back: subdivisions (a)(1) to (a)(6) and (a)(11) to (a)(16). The fining subdivision, (a)(11), is inside that carry-back list, so a pre-1984 Nebraska condominium is subject to the same notice-and-hearing requirement, though only as to events and circumstances occurring after January 1, 1984, and without invalidating existing provisions of its master deed, bylaws or plans.

The protection cannot be drafted away. Section 76-828 provides that except as expressly provided in §§ 76-825 to 76-894, the provisions of those sections may not be varied by agreement, and rights they confer may not be waived. A declaration or a set of board rules that purported to authorize summary fines with no hearing, or a purchase agreement in which a buyer waived the hearing, would run into that section. It also bars a declarant from using a power of attorney or any other device to evade the act's limits.

Unpaid fines do not stay unsecured. Section 76-874(a) provides that unless the declaration otherwise provides, fees, charges, late charges and interest charged pursuant to subdivisions (a)(10), (a)(11) and (a)(12) of § 76-860 are enforceable as assessments under that section. A fine can therefore ripen into the association's lien on the unit, which becomes effective when a notice containing the dollar amount of the lien is recorded in the office where mortgages are recorded, and which may be foreclosed in like manner as a mortgage on real estate. The association must give reasonable notice of a foreclosure action to every lienholder whose interest would be affected, and the lien is extinguished unless enforcement proceedings are instituted within three years after the full amount becomes due. Note the opening words: a declaration may opt out, so an owner facing a lien for fines should read the declaration first to see whether fines were made lien-enforceable at all.

Nebraska does not extend any of this to ordinary homeowners associations. The Condominium Act governs condominiums, and the only Nebraska statute that speaks to homeowners associations by name is the Municipal Custodianship for Dissolved Homeowners Associations Act at §§ 18-3101 to 18-3105, which lets a city petition the district court to take over a dissolved association's affairs. It says nothing about fines. A Nebraska HOA that is not a condominium fines under its recorded restrictive covenants and its nonprofit corporation bylaws, and an owner disputing such a fine argues contract and corporate law rather than § 76-860.

There is no state regulator for condominium fines in Nebraska. Enforcement runs through the courts. Section 76-837(b) provides that any right or obligation declared by §§ 76-825 to 76-894 is enforceable by judicial proceeding, and § 76-837(a) directs that remedies be administered so the aggrieved party is put in as good a position as if the other party had fully performed, while barring consequential or special damages except where the act or another rule of law specifically provides them. 01 is the owner's direct route: if a declarant or any other person subject to the act, which includes the association, fails to comply with any provision of the act, the declaration or the bylaws, any person or class of persons adversely affected has a claim for appropriate relief, and the court in an appropriate case may award costs and reasonable attorney's fees.

An owner fined without notice and an opportunity to be heard is adversely affected by a failure to comply with § 76-860(a)(11) and can bring that claim. Running the other way, § 76-874(f) requires that a judgment or decree in an assessment lien action include costs and reasonable attorney's fees for the prevailing party, so an owner who loses a foreclosure fight over fines that were properly levied can be charged the association's fees as well.