Join   |   Find Services   |   Member Search   |   Contact Us   |   Sign In

COVID-19 prevented in-person learning at our March Law Day event, 

but our 2020 Community Association Law Day speakers share Q&A tips from

their session topics. Watch this space for new posts every other day! 

 


 

Green Initiatives for Associations: Solar, Electric Vehicle Stations & More

David Wilson / Black, Slaughter & Black, PA and Tina Pace / Hatch, Little & Bunn, LLP

 

 

 

  1. Is my community subject to North Carolina’s solar statute?

    Maybe, depending on the age of your community. Even where it is subject to the solar statute, there are still steps the community association can require before installation and places that installation can always be prohibited.


  2. Why should my community adopt a solar policy?

    We encourage communities to take a proactive approach, rather than reacting to that first application for a solar installation.  Because the national trend is to allow more solar and to reduce communities’ ability to prevent their installation, it makes sense to be prepared. In addition, adopting a policy now will saves time, energy, and money for your community in the long run.


  3. How can my community be prepared for electric charging stations? 

    There are many factors your community should consider, including the type of charging station, who is using them, where they will be installed, how they will be metered, and potential liability where something goes wrong. Your community can be proactive in thinking about these items and more so that you are ready for the first application to install a charging station in the community.

 


 

Case Law Update

Brian Edlin / Jordan Price 

 

 

 

 

  1. Can a developer build homes in a subdivision in any manner or sequence it chooses?

    No. If the terrain is hilly and could propose a hazard for those occupying homes while other homes are under construction, a developer has a duty to undertake a “safety analysis” or “hazard analysis” and take steps such as sequencing development or conducting mass grading to eliminate the risk of injury from construction accidents. See Copeland v. Amward Homes of N.C., Inc., No. COA18-1021, 2020 WL 63910 (N.C. Ct. App. Jan. 7, 2020)


  2. Can an Owner block a beach access that is maintained by an Association, and can an Association construct improvements in an access easement?

    An Owner cannot block a beach access in an easement intended for the Association’s benefit. And, the Association’s right of access also includes right to construct improvements. Sea Watch at Kure Beach Homeowners' Ass'n, Inc. v. Fiorentino, 834 S.E.2d 190 (N.C. Ct. App. 2019) (unpublished)


  3. Is an Owner entitled to legal fees when he/she sues the Association to compel it to produce certain Association records where the Association, in good faith, attempts to respond to the Owner’s records requests?

    No, where Association acted in good faith and had a reasonable basis for doubt about Plaintiff’s right to inspect the demanded records and otherwise attempted to produce responsive documents, trial court did not abuse discretion in not awarding attorneys’ fees to the Owner. See Almason v. Southgate on Fairview Condo, 833 S.E.2d 253 (N.C. App. 2019)

 


 

Assessment Collections: Overview of North Carolina Law

Tina Pace / Hatch, Little & Bunn, LLP  

 

 

 

  1. What is the first step an association should take for delinquent dues or fees? 
    Send 15-day letters to all required addresses. N.C. law requires your Association to send a notice to a delinquent homeowner that they have 15 days to pay in full and avoid attorney fees.
    This notice must be mailed to:
    1) the mailing address of record at the tax office, 2) the property address, and 3) any mailing address your Association has on file. Failure to send this notice as required means that your Association may not be allowed to collect attorney fees incurred and the lien may not be valid.

  2. When should an association consider filing a lien against a delinquent owner?
    By statute, Associations may file liens if the homeowner is more than 30 days delinquent. Having a lien filed at the Courthouse protects your Association in the event that the homeowner files for Bankruptcy, and may allow your Association to recover if there are surplus funds from a foreclosure sale by the bank. Liens are valid 3 years from the date of filing.

  3. Do all associations really need a formal Collections Policy? 
    Yes, yes, and yes. Have your Board adopt a resolution as to how it will proceed against homeowners with unpaid assessments. Let your homeowners know your policy on late fees, payment plans, and the schedule upon which collections will be pursued by legal action. Then follow your own policy consistently, with regard to all owners in all circumstances.

 

Common Problems Transitioning from Developer to Association Control

Adam Beaudoin / Ward and Smith, PA

 

 

 

  1. What does it mean for our community to “transition?

    Associations often misunderstand what it means for a community association to “transition” from Developer control to Association control. Probably the most common misunderstanding is that transition depends on the conveyance of the real property Common Elements from Developer to Association. The conveyance of Common Elements can certainly be a part of a transition, but it’s not the most important aspect of the shift in control.

    When we talk about a community transitioning we are really talking about the control of the Board of Directors transferring from Developer-appointed directors to Member-elected Directors. This “transition” allows an Association to elect its own representatives who will govern the vast majority of all Association decisions. The Association’s governing documents may require additional steps (e.g. the conveyance of all Common Elements to the Association or the transfer of applicable stormwater permits), but at its core a community transitions when the Members have the right to elect their own Board members.

  2. When does a community transition?

    Like many legal answers, it depends. The timing of transition depends on the Association’s governing documents as well as the legal status of the community. A single-family or townhome community organized under Chapter 47F of the NC statutes (the North Carolina Planned Community Act) doesn’t have any statutory requirement for when it must transition. Terms of 10, 15, and 20 years are most common, but in theory the Developer can maintain control of the Board for as long as the governing documents (which are almost always drafted by that Developer) allow. It’s also common for governing documents to link the transition of Board control to certain triggering events such as the percentage of lots sold in the community.

    Condominium owners associations organized under Chapter 47C of the NC Statutes (the North Carolina Condominium Act) do have statutory requirements for transition. Declaring control of the Board expires no later than: 120 days after 75% of all the Units in the condominium are sold; 2 years after the Declarant has last offered Units in the condominium for sale; or 2 years after the Declarant has last used its Declarant rights to add Units to the condominium. In addition, the Condominium Act requires that member-elected Board members gradually be added to the Board of Directors as certain percentages of Units are sold (e.g. within 60 days after 25% of Units in the condominium are sold the members are entitled to elect at least one Board member).

    In addition to the statutory requirements the Association’s governing documents are typically the most relevant source of information regarding community transition so it’s essential to know what the Association’s covenants say in addition to what is required by NC law.

  3. What’s the big deal about transition?

    Developers play an essential role in “building” a planned community both figuratively and literally. During the early stages of the community while they maintain control of the Board they have the authority to appoint their own Directors to govern the community.  And while all Board members owe fiduciary duties to their Associations, the goals and preferences of the Director-appointed Board members may be different from what a member-elected Board would want for their neighborhood or condominium. So the first important consideration of a transition is allowing a community to elect its own Board that will lead the community going forward.

    In addition, transition may be the last opportunity a community association has to negotiate with the Developer about the condition of community amenities, roads, or stormwater facilities. Developers are often incentivized to turn everything (clubhouses, common areas, roads, and stormwater facilities, for example) over to the Association so that the Developer can relieve itself of any liability those resources might include. Similarly, Associations are incentivized to accept those items, but want to make sure that they are getting those resources in good condition without the need for expensive maintenance or repairs. Those incentives often lead to some amount of negotiation between the parties to ensure that both sides can complete their goals.

 

 


 

Managing the Mob:  Social Media’s Advantages, Disadvantages, What You Can and Can’t Control

Chris Gelwicks and Ted Mitchell / The McIntosh Law Firm, PC

 

 

  1. What are some important items to remember regarding social media? 

    Associations should consider the following when adopting social media policies and when using social media in general. 

    • Post with a specific reason. Be intentional with the association’s use of social media.
    • Associations should draft a social media policy in consultation with their attorney.
    • Comments on social media do not constitute “written notice” as required by restrictive covenants and/or rules of civil procedure. For example, a warning of a restrictive covenant violation on Facebook is not a legitimate warning. Also, confidentiality should be a priority.
    • Regardless of the type of social media chosen, make it private and available to members only. Only members should have access and once they move out of the community, remove their access.
    • When posting anything in social media, the association would be wise to remember to just “keep to the facts”….upcoming meetings, new rules regarding use of the pool or clubhouse, social events, etc. Stay away from personal opinions, political comments and political cartoons.
    • One of the best ways to stop the “grumbling” on Facebook is to ask for volunteers!

  2. If the association controls the content on a social media site, is it infringing on the members’ right to “free speech”? 

    The Constitutional First Amendment right to free speech, for the most part, addresses governmental action that infringes on a person’s right to free speech. Since associations are not governmental entities, but instead private non-profit corporations, the Board of Directors for an association may regulate content on social media sites that are owned and operated by the association.

  3. Can an association stop individuals from posting derogatory, false, and/or inflammatory content on social media sites not owned and operated by the association? 
    As with the association-controlled sites, a person may control the content of his or her own social media site, with a few exceptions (for example, using “fighting words,” words that incite “imminent lawlessness,” etc.) and the association has little power to stop it. In the event defamatory language is used, the association, assuming it can prove the language is defamatory, could seek damages for the posting of such defamatory comments.


 

 

Financial Hurdles- Why Associations Fail to Qualify for
Loans & Practical Solutions

Cynthia Jones / Sellers, Ayers, Dortch & Lyons, PA
Chris Bruffey / CommunityPLUS Div. of North State Bank
Mike Roche / CIT

 

 

  1. What are the most common reasons associations would borrow money?Associations typically borrow money in order to perform repair and replacement projects within the community. A loan may allow the association to pay for part or all of the expense without having to deplete reserves. Or it may allow the association to complete a project such as paving, roofing or siding for the entire community all at once which would allow them to obtain better pricing from a contractor because they mobilize the crew once and purchase materials in bulk.

  2. What are the most common reasons associations don’t qualify for a loan? 
    Sometimes Associations have too few units/homes (minimums can range from 20-50 units) or a high delinquency percentage which is detrimental to them in qualifying for a loan.  If more than 10% of the units are past due in paying assessments, there is a high investor ownership percentage, or the dues increase or special assessment being used to repay the loan is too high in relation to current annual dues the association may not qualify.

  3. When considering applying for a loan, does an association need to involve an attorney? 
    As the song goes, start at the very beginning - it’s a very good place to start.  Your attorney can (and should) help you determine what approvals are needed to obtain a loan, to approve the dues increase or special assessment being implemented to repay the loan and to pledge the dues and assessments as collateral for the loan.  Your attorney can also advise about any other aspects the board should consider before moving forward with the loan.

 


 

Time Bombs Hidden in Association Restrictions, Rules, Regulation & Policies

Steve Black & Adam Marshall / Black, Slaughter & Black, PA

 

 

 

  1. What specific areas of community property can be controlled or regulated at any time by rules and regulations?  
    Rules and regulations, in most cases, are developed and adopted by the Board of Directors and can be imposed to govern common areas only (that the Association owns or controls). In contrast, restrictive covenants are those restrictions that govern the usage of an owner’s property or owner behavior on their property.  These restrictions must be recorded in the community declaration. 
    In a single family home community owners usually own their home and all of the land surrounding the home on their lot. Therefore the rules and regulations will likely not be helpful in regulating these areas.   In a townhome community owners own their lot. However, the question becomes what property is included in the lot. Some townhome lots are merely the footprint of the townhome, and in others land surrounding the townhome may be included. Rules and regulations will be able to control the common area, but will not be helpful in regulating the townhome itself or any strip of land included in the ownership of the townhome lot. Rules and regulations in condominium properties can obviously govern more because the vast majority of the community property is common area. 

  2. Why are rules and regulations focused on children a potential violation of the Fair Housing Act (FHA)?
    The Fair Housing Act (FHA) applies to housing providers (i.e. community associations) and prohibits discrimination based on certain protected classes. Familial Status is a protected class under the Act and includes families with children. While often well intentioned, rules and regulations often single out children. For example, a rule that designates a certain period of time for “adult swim” may be a violation of the FHA. Why? This is because “adult swim” is often really a rule to get children out of the pool so adults can enjoy some undisturbed swim time. While that may seem reasonable, it prohibits families with children from having equal access to the pool facilities. Another pool related example of a potential FHA violation would be to state that children must be potty trained and must wear swim diapers before entering the pool. We see this in almost every set of pool rules that we review.  Part of our job is to change rules to make them age neutral. Anyone can be incontinent. Simply changing a rule to state that incontinent persons must wear swim diapers before entering the pool can neutralize potential FHA issues.
    The goal of the FHA is to prevent protected classes from being treated differently because of their status as a member of identified protected classes. Whenever the word children is used in a set of rules and regulations it should raise a red flag and trigger further review.

  3. How much detail should a board include when drafting a particular rule or regulation, so that the association has the best chance of enforcement?
    There is a fine line when drafting rules and regulations between being too vague in the language and too structured. Both have unintended consequences. The courts in North Carolina are trending sharply toward finding rules and regulations and restrictions unenforceable for vagueness. The courts do not like subjective standards. For example, a rule states that vehicles may not be improperly parked in the association’s parking lot. What does “improper” mean? We would suggest that Boards define these types of vague terms.
    In the alternative, rules and regulations often offer too much structure. It is common to see rules and regulations that give very detailed explanations of collection and fining procedure. In most cases the North Carolina Statutes will govern and set certain procedures for these items. We have seen that when a detailed procedure for taking certain action is published in the rules and regulations, and for some reason the association’s own published procedure is not followed, the courts will find the action taken invalid. We tend to encourage Boards to rely on the North Carolina Statutes.

 

 

Service Animals and Comfort Animals and Exotic Pets, Oh my!

Adam Beaudoin / Ward and Smith, PA and Andrew Bateman / TriSure

 

 

 

  1. How do we know the difference between a service animal and an emotional support animal?
    The only type of animal that can be considered a service animal is a dog, and in rare cases a miniature horse.  Accordingly, if the animal is not a dog, it cannot be a service animal, so the next step is to figure out whether the animal's owner qualifies for a support animal.

  2. What if we don't believe that the information submitted by the member requesting a reasonable accommodation is legitimate?
    The new HUD guidance provides that in such circumstances the Association may contact the prescribing physician for more information. Granted, the Association cannot inquire as to what disability the member has, but the Association can get more information on the causal link between the member's disability and the need for the support animal.

  3. Are there any types of animals that cannot qualify as a support animal?
    Support animals can almost be any type of animal, but if the animal is inherently dangerous and poses a risk to other members or their pets, it is likely that the Association can deny the request.  We once received a request for an emotional support alligator…and the member wanted to let it swim in the pool!


 

 

Insurance, Amendments, Deductible and Who Pays- the Law and Best Practices

Hunter Litaker / Litaker Insurance and Chris Gelwicks / The McIntosh Law Firm

 

 

 

  1. Why would an association need to make an insurance-related amendment?

    To clarify the Responsibility to Insure: If we know who insures it and what caused the claim, we know who is responsible for the damages. The clearer this is, the easier the claim process is. Easy Claim Process = Happy People

    To reduce claims: If an owner is now responsible for damages to the unit or anything up to the deductible whereas they were not prior, they are typically much more proactive on proper maintenance & repair moving forward.

    To save money: The less insurable you are, the less attractive your annual premium will be. Passing costs onto owners opposed to paying everything from common expenses also helps reduce claim payouts. A 30% increase to an owner’s HO6 policy is likely exponentially less expensive than a 30% increase to an association’s policy that insures the buildings throughout the entire community.

  2. Would an association policy pay for a condo owner’s appliance leak causing damage to flooring and the ceiling of the unit below?

    The association is responsible for providing insurance based on the language found in the insurance section of the CC&Rs or Declaration. If the documents say the association is to insure the units to 100% replacement cost minus a specific or ambiguous deductible, then that is what the association must do. Water is a covered cause of loss so therefore if the association insures the unit and water from the appliance overflowing causes damage, the association insurance is the policy applicable – subject to the deductible. If you can prove the damage was caused by a willful or neglectful act, the owner would likely be responsible for damages but that is almost impossible to prove.

  3. Why do we need to amend the Declaration? Can’t we impose rules/policies?

    Changing insurance requirements that are contained in the Declaration of Covenants requires an amendment to the Declaration, adopted either via vote or written agreement, of at least 67% of the membership votes or voting percentage. Such amendments may require the Board and supportive members to go door to door to obtain the required number of votes or voting percentage to pass the amendment.

 

 

Complicated Collections

Bonnie Braudway and Charles Meier / Marshall, Williams & Gorham, LLP

 


 

  1. How should a board handle collections when there is evidence the owner may be mentally incompetent? 
  2. Can an association cut off water to a delinquent unit owner when water service is provided by the Association?
  3. Is there a minimum amount that must be owed before a delinquent account is sent to an attorney? 

 

 

 

What HOA/Condo Leaders Need to Know About Meeting Procedures and Robert’s Rules

Jim Slaughter / Black, Slaughter & Black, PA

 

 

 

  1. Do North Carolina HOAs and Condominiums have to follow Robert’s Rules of Order?
  2. What procedures should HOA and condo boards follow at board meetings?
  3. Where can I find more help on running effective meetings?

 

 

Anything but Easy: Easements and HOAs

Ben Karb and Mike Hunter / Offit Kurman Horack Talley

 

 

 

 

  1. Why are easements important in an HOA?
  2. How are easements created? 
  3. Why is it important to understand easements?

 

 

 


Community Association Psychology 101: Building Relationships and Dealing with (or Avoiding) Certain Personalities

Matt Waters / Jordan Price Law Firm

 

 

  1. What is “community psychology”?
  2. How can community psychology and emotional intelligence help the Association function better?
  3. How can recognizing and addressing cognitive bias help associations avoid conflict?

 

 

 

Rentals, Rentals, Rentals

Lori Jones, Jordan Price

 

 

 

  1. Are rental restrictions the answer?
  2.  What options are there when it comes to rental restrictions?
  3. Are there “bad” or unenforceable rental restrictions? 

 

 

more Calendar

7/23/2020 » 7/24/2020
CAI-NC Annual Conference

7/23/2020 » 7/24/2020
VIRTUAL EXPO BOOTHS 2020

9/23/2020 » 9/26/2020
CEO--MC Event from national CAI

WHY JOIN
 Why become a member of CAI?


Membership Software Powered by YourMembership  ::  Legal