Common Issues for North Carolina Community Associations

Managing a community association in North Carolina, whether a condominium association or a planned community association, comes with unique challenges. While each association may face distinct circumstances, there are common legal issues that often arise. At Ferikes Bleynat & Cannon, we provide expert legal guidance to community associations to help them navigate these issues. Below are some tips to help identify potential problems early so that you can seek legal advice promptly.

Statutes, Declarations, and Bylaws

Understanding the hierarchy of governing documents is critical for community associations. In North Carolina, state statutes such as the Planned Community Act and the Condominium Act take precedence over recorded declarations and bylaws unless explicitly stated otherwise.

• State Statutes: These laws govern essential aspects of community associations.
• Declarations and Articles of Condominium: These recorded documents take precedence over bylaws and should govern property rights and usage.
• Bylaws: The bylaws govern the internal operations of the association but cannot override state statutes or declarations.

It’s important to ensure that amendments to your association’s bylaws do not conflict with the declarations or applicable state laws.

Recording Bylaws

Unlike declarations, association bylaws should not be recorded with the Register of Deeds. In North Carolina, recording bylaws may be misinterpreted as creating covenants, which could require the same formality for amendments as declarations. Bylaws govern the association’s operational rules and should focus on administrative matters rather than property rights.

Combining Lots and Assessments

Some associations permit property owners to combine lots and pay a reduced assessment. However, in North Carolina, the Court of Appeals has ruled that assessments remain for each lot, even after combination, unless the declaration explicitly permits a reduction in assessments. Simply allowing the combination of lots is not enough—your declarations must specify that the assessment will be reduced for combined lots.

Voting with Proxies and Ballots

• Written Ballots: These should be used for simple “yes” or “no” questions that have already been thoroughly discussed at a meeting. Ballots should include the exact wording of the proposal and provide clear instructions for submitting the vote.
• Proxies: Proxies allow a designated person to vote on behalf of a member and provide more flexibility than ballots. Proxies are particularly valuable for votes taken at meetings where unexpected amendments may arise. Ensure proxies comply with association bylaws and North Carolina law, and include an expiration date of no more than 11 months.

Variances

If your association grants variances to relieve some properties from compliance with certain declaration provisions, proceed with caution. Overuse of variances can render some declaration provisions unenforceable. Always require a written variance application, and document the reasons for granting or denying the request in the meeting minutes.

Maintaining Association Records

Organized record-keeping is essential for continuity between different boards. Keep minutes of board and member meetings in a notebook, and ensure that important documents—such as financial statements, membership lists, and plats—are passed on to successive boards. This helps prevent confusion or disputes over previous actions and decisions.

Restrictions on Property Use

North Carolina courts have been critical of vague property use restrictions, such as those that prohibit “annoyance” or “noxious” activities. To be enforceable, restrictions must include clear, ascertainable standards. For example, a restriction on loud noises may be deemed unenforceable unless it specifies a measurable limit, such as a decibel level. Clear, objective standards are more likely to be upheld in court.

Use of Assessment Funds

Declarations often specify how assessment funds can be used. North Carolina courts are generally reluctant to permit the use of assessment funds for purposes beyond those specified in the declaration. If your association is considering using assessment funds for a purpose not explicitly stated in the declaration, consult one of our community association attorneys for legal guidance.

Amendments to Declarations

The North Carolina Supreme Court has ruled that amendments to declarations must be reasonable and cannot expand the scope of the original declarations beyond what would have been foreseeable to a property owner. This means that amendments that materially alter the nature of the restrictions could be challenged and possibly overturned. Consult with our community association lawyers before adopting any amendments to ensure they comply with the law and are enforceable.

Contact Ferikes Bleynat & Cannon for Legal Guidance

If your community association faces any of these common issues or needs legal advice on how to manage its operations, contact the experienced attorneys at Ferikes Bleynat & Cannon. We are here to provide the guidance you need to resolve issues and ensure the smooth operation of your association. Contact us today to schedule a consultation.