Most associations have faced lot owners who refuse to “play by the rules.” Those owners may ignore limits on pets, attempt to build non-permitted structures, or create nuisances on their property. While injunctions can often require the lot owner to follow property restrictions, Associations have another tool that is less expensive and often makes sense as a first step in resolving the problem. N.C. Gen. Stat. § 47F-3-102(12) and §107.1 applies to all planned communities subject to the Planned Community Act regardless of their date of creation. It gives associations the power to fine and suspend privileges of lot owners for failure to comply with the declarations, bylaws and rules and regulations of the community. Notice and an opportunity to
N.C. Gen. Stat. § 47F-3-121 contains restrictions on the ability of associations to regulate or prohibit American and state flags and political signs. Be sure to check your declarations to make sure they are in compliance with this statute.
An association board of directors may take over operation of a planned community and discover that the declarant or declarant-controlled board entered into contracts that the board wishes to end. N.C. Gen. Stat. § 47F-3-105 provides that an association’s contract that began while the declarant controlled the association can be terminated without penalty. The contract must not be a bona fide contract or it must be unconscionable to the lot owners at the time the contact began. The board must give at least 90 days’ notice before terminating the contract. If your association has had discussions with your declarant regarding a turnover of the association to an elected board, it is important to have a properly prepared document spelling out
Associations, planned communities, and condominiums subject to all of the provisions of the Planned Community Act and the Condominium Act are required to permit proxy voting. Planned Communities and condominiums formed after the effective date of those statutes are permitted proxy voting unless the articles of incorporation or bylaws prohibit or limit proxy voting. One owner of a lot may execute a proxy, but if a lot is owned by more than one person, each owner of the lot may vote or register a protest to the casting of votes by the other owners through a proxy. It is important to make sure that proxies are dated. A proxy is void if not dated. A proxy terminates eleven (11) months
For several years the subject of short-term rentals has been a hot topic in planned communities. A North Carolina Supreme Court case had held that an amendment to declarations outlawing short term rentals may not be permissible in area where short term rentals are common. That decision did suggest that while outright prohibition may not be allowed, limitations on rentals were permitted. Planned Communities have been dealing with the issue by amending their declarations in a number of different ways but we have not seen a case reach the Court of Appeals yet that would offer more detailed guidance on what will and will not be permitted. We will update this topic as new decisions are published.
Our Community Association Report has been on hiatus and is now back online. We hope you enjoy this edition of our our Planned Community Report. Let us know of any topics you would like to see addressed in future reports.
Be sure that your notice of the annual meeting contains the time and place of the meeting, the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, or any budget changes, and any proposal to remove a director or officer. N.C.G.S. § 47F-3-108.
Trying to predict how a court will rule on planned community issues can be difficult. Each community has a unique set of covenants and many issues that arise do not impact enough lots or money to reach the Court of Appeals. However, there appears to be a trend developing in that could be harmful to lot owners – application of a contract analysis. The Court of Appeals has approached declarations as a simple contract with lot owners and in some recent cases and upheld provisions that placed a burden on lot owners and/or associations. Some judges are taking the position that if the declarations give the developer an unfair advantage there is no remedy because lot owners agreed to the
Amendments to the Declarations of planned communities subject to the Planned Community Act must have the approval of at least 67% of the votes allocated by the Declarations. In most all circumstances, each lot has one vote meaning that there must be “Yes” votes cast by the owners of at 67% of all lots—not just the lots that vote. A lot that fails to vote is the equivalent of a “No” vote.
In an August 1, 2017 decision, Tanglewood Property Owners’ Ass’n v. Isenhour, et al., the North Carolina Court of Appeals affirmed the duty of a property owner that has the right to use an easement in a subdivision to pay for a share of the cost of maintaining the easement. In this case a voluntary property owners’ association created prior to the Planned Community Act was awarded judgment against a lot owner who claimed that he did not use all of the roadway easement in a subdivision and was not a member of the association. The Court’s opinion restated the principle that the obligation to contribute to road maintenance can be calculated on a pro rata (per lot) basis without