Homeowners’ Associations Can Provide Benefits

Do you have a neighbor who runs an auto-repair business out of his driveway, leaving junked cars scattered over his yard? How about an amateur racecar driver down the street who likes to tune his extremely loud engine at 1 a.m.? Or my favorite: The upstairs neighbor who kept an 80-pound dog outside on his patio all day, allowing its waste to drop onto the neatly kept patio below.

These are real examples I’ve encountered in 14 years of representing community and condominium owners’ associations. Most every subdivision developed today, and all condominium and townhouse communities, are subject to restrictive covenants and bylaws that govern the conduct of the owners. Owning a home in these communities comes with mandatory membership.

Many buyers bristle at the thought of a nameless board of directors deciding, behind closed doors, what owners can do on private property.

However, community living has benefits. Your association could offer nothing more that a landscaped entrance into your neighborhood, or it could relieve you of many of the burdens of home maintenance. You may even have significant amenities provided for your use.

The homeowners’ association is responsible for maintaining the common areas and amenities. The association also deals with the guy who leaves broken appliances on his front porch.

Put another way, the association board is charged with making sure owners follow the rules. Covenants most often violated are architectural or building restrictions (such as fences, additions, major landscape changes, storage sheds, and detached garages), and general nuisances.

Violations can be addressed in three ways. The first is usually a “cease and desist” letter sent by the board or the association’s property manager. Next, the board can levy fines of up to $150 per violation per day for continuing violations. In drastic cases, the board can file a lawsuit requesting an injunction against the homeowner and ordering him to correct the violation. In most cases, the association can recover its attorneys’ fees and court costs.

Although threats of legal action may seem drastic, restrictive covenants have a valid purpose. They enhance property values by assuring homes are well-maintained and remain architecturally and aesthetically consistent. They ensure the community remains free of unsettling nuisances that would not be covered by municipal or state codes. They can even provide a measure of safety by prohibiting leases to sex offenders and convicted felons.

To allow an association to do its work and pay for the upkeep of common areas, all owners must pay dues. Some associations are self-managed, but most hire professional property managers whose job includes maintaining checking accounts, policing violations of restrictive covenants and supervising all repairs and maintenance.

Most associations are nonprofit corporations and governed by a board of directors that’s elected by the members at an annual meeting, similar to a publicly-held corporation.

If you are looking to buy a home, inquire whether there’s a mandatory association in the community. A seller’s real estate agent is supposed to advise prospective purchasers if that’s so and how much the dues are, but buyers are often uninformed, especially if the seller has no listing agent. If no one mentions it, ask.

While condos and townhomes always have associations, single-family subdivisions started getting them only in the last 10-15 years. You will know if your association is being properly run by getting involved. Such associations are governed by a democratic process. Find out when the board meetings are and whether they are open to all members. If you’re interested in serving on the board, get the word out to your neighbors that you are seeking a nomination. Volunteer to serve on subcommittees.

Warning signs of a poorly managed association include shoddy maintenance of common areas and amenities, selective or lack of enforcement of covenants and lack of a systemic collection on unpaid dues.

Legal change on the way?

The General Assembly is considering a bill that would restrict associations’ ability to take legal action against an owner for unpaid dues or fines. House Bill 1541 was proposed by Rep. Beverly Earle after investigative reports by a local news organization condemned some associations for taking legal action on unpaid assessments.

The bill originally proposed would have made it difficult for homeowners’ associations to collect unpaid dues and attorneys fees, limiting their ability to protect their communities as the members’ desire. It would also have resulted in more homeowners failing to pay dues and an increase in assessments for all owners to offset lost revenue and unrecoverable collections costs.

Fortunately, the Community Association Institute has successfully lobbied for revisions of the bill that make its provisions more palatable. The bill has been referred by the Senate to subcommittees for further study. If it becomes law, it will provide protections for homeowners while allowing their associations to continue to do their important jobs.

This article was originally published in the Charlotte Business Journal in 2005.

2 thoughts on “Homeowners’ Associations Can Provide Benefits

  1. Developer folded/manager folded. Just walked away. 600 lots go to county for tax forfieture.
    Nothing is deeded to closely run hoa which,by the way, never enforce operating doc. Developer was sole road authority over 40 miles of platted private roads with no tax ID # yet are not part of lot owners parcel. Who owns roads…hoa does maintain them now. County held 600 lots for over 10 years with out paying any association dues etc. Most of those lots have now been sold garnering a huge payday for the county. At the time all this was taking place a lawyer was president of our board. He was also an attorney for one of the developer. He should have seen what was coming and warned hoa. No way we should have handed to the county 600 undeveloped lots…taxes about $10 a year(1990).
    1- County took owner ship of lots…assc fees?
    2- County allowed public to come in at will to look at property…road fees? Did this make our RDS public?
    3- The county owned the majority of lots at that time…shouldn’t have taken over leadership of the intire operation.
    4- What about our president at that time…shouldn’t he be held to a higher standard.
    I think the county owes. They made over 3 million on the tax forfeited lots.
    What say you!
    Greg

    • This sounds like a very complex and long-running issue – not something I can offer guidance on in a blog post. Answering your questions would required a thorough review of the community’s governing documents, title research, interviewing those involved and a detailed analysis of all.

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