If you have ever lived in a community with other people, you likely have experience with a Homeowners Association (or HOA). HOAs are designed to maintain the neighborhood and hold everyone within the community to a certain standard. To be effective, the HOA must have the authority to act when necessary; this authority is typically given in the bylaws and Covenants, Conditions, and Restrictions (CC&R) of the HOA. But what happens when the members of the HOA simply do not like you? Can they kick you out of the HOA just for that? Though each set of bylaws for an individual HOA is different, North Carolina law indicates that it takes more than a dislike for the HOA to kick you out.
Obligations of the HOA to Homeowners
While performing their duties on behalf of the Association, board members and appointed officers have a legal obligation to act in good faith and avoid conflicts of interest. N.C. Gen. Stat. § 47F-3-103(a). Board members and officers must act with reasonable prudence and in the best interests of the Association. Generally, an HOA board’s actions on behalf of the Association must comply with the community’s governing documents. The board is limited to and cannot assume more than the powers granted or implied under the NCPCA (North Carolina Planned Community Act) or the HOA’s governing documents. This means that the HOA has a legal obligation under its founding documents to act honestly, requiring faithful performance in their duties and observance of fair dealing standards without fraudulent intentions in all that they do. The HOA must act solely to benefit the homeowners collectively.
Authority of the HOA
An HOA is typically a helpful instrument in ensuring harmony amongst a community of homeowners; however, an HOA cannot operate for free. Usually, an HOA has in place a system of collections called assessments to pay for the upkeep of the community and the functions of the HOA. Homeowners agree to the assessment amount and the standards of the HOA at the time they purchase their property. Additionally, it is commonly accepted that if the homeowner violates the policies of the HOA, the HOA has the authority to issue fines. But what happens if a homeowner does not want to pay?
An HOA may not seek to recover collection costs from a delinquent homeowner unless the community’s declaration expressly authorizes the recovery of collection costs. N.C. Gen. Stat. § 47F-3-116(h). After payment is more than 30 days late, a North Carolina HOA can record a claim to collect the payment of any unpaid amounts. N.C. Gen. Stat. §47F-3-116. At least 15 days before recording the lien, the association must state the amount due to the lot owner via regular mail to the property address and any other mailing address for the HOA owner in the record. This notification must include a statement informing the lot owner that the document evidences a lien that the HOA can foreclose on the property like a mortgage.
Associations can suspend delinquent members’ access to the Association’s privileges or services, except that the HOA cannot suspend a member’s access to their property. N.C. Gen. Stat. § 47F-3-102(11). The HOA cannot suspend the homeowner’s rights until 30 days after any unpaid amount becomes due and until after the member has received notice of the proposed suspension and the opportunity to be heard. N.C. Gen. Stat. § 47F-3-107.1. The HOA holds hearings before either the executive board or an adjudicatory panel consisting of other lot owners who are not board members. N.C. Gen. Stat. § 47F-3-107.1.
However, before an HOA’s board can impose a fine, the board must notify the homeowner in writing of the proposed fine and allow them to be heard. Any member whose rights may be suspended must be provided notice of the proposed suspension and the opportunity for a hearing before the executive board or an appointed panel. N.C. Gen. Stat. § 47F-3-102(12). If the HOA suspends the homeowner’s rights due to the nonpayment of fees, the amounts due must be at least 30 days late before the suspension can be enacted. N.C. Gen. Stat. §47F-3-107.1. Because the North Carolina Planned Community Act does not authorize the suspension of voting rights by its text, a community’s declaration must specifically authorize the board to suspend voting rights for the board to exercise that power.
Avoiding HOA Fees
There are three typical ways homeowners can get out of paying HOA fees. First, if the fee violates state or local law, the homeowner is not liable for any portion of the fee that would be deemed illegal. For example, under North Carolina law, fines must be reasonable. They cannot exceed $100 per violation and $100 for violations continuing more than five days after a determination is made that a violation has occurred. N.C. Gen. Stat. § 47F-3-102(12). If an HOA fined a homeowner over the amount of $100 for a single violation, the homeowner would not have to pay anything over $100.
Second, the homeowner can appeal the fee to the association board if the fee violates the Association’s rules and bylaws. If the association board refuses to reverse the fee, the homeowner would have a claim in civil court. This is because the HOA only has the authority to do whatever the association rules and bylaws specifically give them the authority to do, nothing more. Suppose the HOA is acting in a way that is in direct violation of or exceeding the scope of the authority the governing documents give them, the homeowner. In that case, the homeowner can hold the HOA accountable for that misstep and refuse to pay.
Finally, suppose the homeowner is unable to pay due to financial hardship. In that case, the Association has the authority to provide a payment plan or other financial assistance measures to work with the homeowner to avoid fees due to failure to pay.
North Carolina courts generally err on the side of unrestricted property rights. Hence, Courts interpret ambiguous restrictions in favor of the homeowner, and general residential restrictions are insufficient to support an HOA policy. Wise v. Harrington Grove Cmty. Ass’n. 584 S.E.2d 731 (2003). There is a “general principle of law and equity” that North Carolina courts enforce restrictive covenants in the same manner as other contracts. Because homeowners are a party to the restrictive covenants and have vested rights and obligations thereunder, homeowners have a legal right to enforce covenants against other non-compliant homeowners or against the HOA itself. Armstrong v. Ledges Homeowners Assoc., 633 S.E.2d 78 (N.C. 2006). In the event of future retaliation, thorough records can help demonstrate if an association has acted arbitrarily or capriciously – or if a board member or officer is not acting in good faith. N.C. Gen. Stat. § 47f-3-103(a).
Long story short: No, the HOA does not have the legal authority to kick you out of your home or out of the HOA, if you have not defaulted on your assessment payments after being repeatedly advised to pay them. An HOA does not have the authority to kick you out simply because they do not like you.
At King Law, there are attorneys throughout North and South Carolina who handle these types of cases and can represent you in this unique situation. Call our toll-free number at 888-748-5465 (KING) to request a consultation with one of these experienced attorneys.