Ask the Experts
HOA can cut off services to delinquent condo
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- Created on Saturday, 25 February 2012 00:00
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Q: We are researching how much leverage is afforded to our HOA board before starting lien and foreclosure proceedings on a condo unit that is in arrears on payment of HOA assessments. Does N.C. law allow an HOA to shut off the water to a unit that is past due on payment of association assessments, and when the owner has not responded to an offer of partial payment?
Condominiums offer a range of privileges and services to the unit owners, such as access to swimming pools and fitness centers, use of parking lots and garages, and the provision of utilities such as water. Those privileges are paid for by the assessments levied by the HOA against unit owners.
N.C. Statute §47C-3-102 says, "Unless the declaration expressly provides to the contrary, the association, even if unincorporated, may...after notice and an opportunity to be heard, suspend privileges or services provided by the association (except rights of access to lots) during any period that assessments or other amounts due and owing to the association remain unpaid for a period of 30 days or longer."
While some may think that shutting off an owner's water for nonpayment of assessments is a harsh remedy, especially if children are in the home; others may think that it's unfair to the other owners (who are paying their assessments) to allow an owner to continue enjoying the privileges and services provided by the HOA while not paying for them.
The condo associations I know that have used this tactic have indicated that it is usually very effective in getting owners to pay.
I once heard of a high-rise condo association that would suspend owners' use of the building elevators when they became delinquent, requiring the owners to use the stairs to access their unit. While this was probably effective, it could be a violation of the law (by denying an owner access to his unit) if an owner were disabled or physically unable to use the stairs to get to his or her unit.
You also mentioned partial payment. In most cases, I'm not a proponent of HOA boards approving "settlement offers" with delinquent homeowners for less than the full balance.
The reason is that the other owners in the community will likely face an increase in their assessments, sooner or later, to make up for the budget shortfall created by allowing someone to pay less than he or she owes.
I am a staunch proponent, though, of HOAs working with homeowners on reasonable payment plans, especially in this economy.
In 2006, a change was made to North Carolina's condo and planned community laws that addressed this. That law reads, "The association, acting through its executive board and in the board's sole discretion, may agree to allow payment of an outstanding balance in installments. Neither the association nor the unit owner is obligated to offer or accept any proposed installment schedule."
So the law provides your board with a range of options to deal with delinquent homeowners. Be reasonable, fair and consistent.
Disability can lead to rule exemption
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- Created on Wednesday, 21 March 2012 12:32
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Q: Our condominium rules require dogs be on a leash when being walked in the common areas. One unit owner has a note from her doctor saying that she is not physically able to walk her dog on a leash.
In response, the board proposed an amendment to our declaration to allow a person with a doctor's note to walk their dog in the common area at the rear of our property. The proposal was defeated at a meeting of the owners.
The dog owner insists she is going to walk her dog without a leash anyway. She refuses to hire a dog walker. Besides fining her, what can the board do?
A:Amending your Declaration to fit the needs of one person may not be in the best interest of all owners. But your question presents a common issue: What action can or should an HOA take to accommodate someone with a disability?
A similar situation that I see frequently is when an owner requests the installation of a wheelchair ramp to allow access to the home. The body of law that governs this issue is the federal Fair Housing Act (found here: www.justice.gov/crt/about/hce/title8.php).
The act prohibits discrimination in the provision of services or facilities in connection with a dwelling due to a handicap of the owner or occupant of a home. A "handicap" is defined as a person with a physical or mental impairment that substantially limits one or more of that person's major life activities, or a record of having such impairment. It sounds like the person you referred to could fit this definition.
The FHA's definition of discrimination includes "a refusal to permit, at the expense of the handicapped person, reasonable modifications of existing premises occupied or to be occupied by such person if such modifications may be necessary to afford such person full enjoyment of the premises ... and ... a refusal to make reasonable accommodations ... when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling."
An HOA's failure to provide or allow the access to or use of a home or common areas to a handicapped person could give rise to a housing-discrimination claim against the HOA.
What this means to your HOA is that you are not required to amend your Declaration to avoid a discrimination claim, but your board should consider making reasonable accommodations for handicapped persons.
This may mean granting the owner an exemption from the leash restriction for walking dogs on common areas. In condos or townhomes, it may mean allowing a handicapped owner to construct a ramp on common elements to provide wheelchair access to his unit. However, the construction would have to be paid for by the owner, and the HOA would have the right to approve (or reasonably deny) the proposed plans, which might otherwise constitute an unauthorized alteration.
Can husband and wife serve on same HOA board?
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- Created on Wednesday, 21 March 2012 12:18
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Q. I am on the board of a condo association, and we will be having our annual meeting and board elections soon.
We have a husband and wife who own several units. Both are on the ballot to be on the board of directors.
Can both the husband and wife be elected and serve on the board?
A: Your HOA's bylaws should have a section that describes what qualifications a person must have to serve on the board of directors. Some bylaws require that directors be members of the HOA (in other words, a homeowner). Some require that directors be residents of the state. Some have few or no qualifications.
Unless your bylaws have a provision which states that spouses or co-owners of a condo cannot serve simultaneously on the board of directors, then they both may run for and serve on the board.
Delinquent owner's voting right
Q. In your Feb. 25 column, you said that an association can suspend privileges or services to homeowners who are delinquent in payment of their assessments. Does this mean that these nonpaying homeowners could be prohibited from running for a board seat? Our bylaws indicate that they cannot vote at annual meetings.
A: As stated above, your bylaws should have a section that sets out qualifications for directors.
Some HOA bylaws have a provision that says only members "in good standing" may serve on the board. While North Carolina's corporate and HOA laws do not define "good standing," it is generally interpreted to mean that a member has no outstanding violations of the community's covenants, bylaws, or rules/regulations, and that he is current in payment of his assessments.
As for suspension of an owner's voting rights, I believe voting rights are different from the "community services and privileges" that can be suspended in accordance with the HOA laws in this state.
I view voting in member meetings as a right, not a privilege. However, if your HOA bylaws specifically allow for voting rights to be suspended for nonpayment of assessments, then you have the right to do so. I would still recommend that the owner be given an opportunity to be heard before the board before his voting rights are suspended.
Legislators hear both views of HOA boards
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- Created on Wednesday, 21 March 2012 12:27
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Last year, the N.C. legislature appointed the House Select Committee assigned to gather input from the public and recommend changes to laws that affect HOAs. The committee held several public hearings last year, and we saw some legislation passed - House Bill 165, which I discussed in my Aug. 19 column found here: bit.ly/pPRA4K.
The committee held another public meeting again this week to seek input from homeowners on what changes, if any, are needed to the laws governing HOAs. Some 45 homeowners from across the state spoke at the meeting - some were board members, others were simply concerned homeowners.
A little over half of them spoke favorably of HOAs and thought the law needed few if any changes. Others thought sweeping changes were needed to protect owners from overbearing HOAs.
Serving on an HOA board is often a time-consuming and thankless job. The vast majority of HOAs that I work with are well-run by dedicated and intelligent volunteers. There are other HOAs with boards that may mean well, but don't always make good decisions because of lack of training or education on how HOAs are supposed to run, or because they don't seek advice from professionals when the circumstances warrant.
On rare occasions, I have encountered HOA board members who are corrupt or egotistical, abusing their position of authority, pursuing vendettas and personal agendas, and making their neighbors' lives miserable. Such people are the exception.
On the other hand, I have found that often the most vocal critics of HOAs are people who bought a home in an HOA-controlled community without understanding the ramifications, or people who simply refuse to follow the rules and standards of the community.
Training for leaders
The original version of House Bill 165 introduced last year (which did not pass), while well-intended by the legislature, would have placed enormous administrative burdens on HOAs and their management companies. Legislation requiring the certification and licensing of professional community association managers has been pending in the legislature in one form or another for several years, but the legislature has never acted on it.
There are ample resources for training and education available to HOA volunteers who want to do their job well. The most well-known is the Community Association Institute (CAI), a national organization. There is also a state chapter of CAI.
Community leaders in Union County have formed the Union County Neighborhood Leaders Forum, which periodically holds conferences. HOA-USA.com, started in North Carolina by a Raleigh businessman, has a wealth of information available on its website.
Questions to settle
Some have called for laws requiring mandatory training for HOA board members. Training is a good thing for the leaders of any organization.
Should we make training or certification a prerequisite for a homeowner to serve on his or her HOA board?
HOAs have a hard time finding enough volunteers to fill their positions. Mandatory training could discourage some homeowners from volunteering. If certification standards become mandatory, what state agency would monitor compliance? How would it be staffed and funded?
If HOAs were no longer allowed to bring foreclosure actions to collect delinquent assessments, what other effective and cost-efficient method would they have?
There are no easy answers. The members of the House Select Committee have their work cut out for them.
S.C. association laws differ from N.C.'s
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- Created on Thursday, 19 January 2012 13:50
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Q: Does South Carolina have similar laws as North Carolina when it comes to HOAs?
