HOA Legal Laws
When disputes arise, HOA boards need legal counsel, ane of the homeowners association rules. Hiring an experienced HOA lawyer safeguards the association from liability.
The recent case involving a North Carolina woman being foreclosed on by her HOA has highlighted the powers that homeowners associations have over their residents. HOAs must comply with state laws that regulate debt collection practices and prohibit discrimination.
Governing Documents
The governing documents of an HOA are the laws that establish how and by whom the community will be run. They usually fall into four categories: Articles of incorporation; bylaws; covenants, conditions and restrictions, or CC&Rs; and rules and regulations.
CC&Rs lay out the HOA’s power of enforcement, procedures for resolving disputes and a number of internal community association rules, including those that govern how property may be used and restrictions on pet ownership, smoking and garbage disposal. These rules are often created by legal professionals and reviewed by government agencies before a community association is formed.These documents are important for a potential home buyer to examine. They must be able to request and receive copies of these documents after a written request.
Bylaws
HOA bylaws provide the specific rules and regulations of an association. These typically cover things like voting and election procedures, membership requirements, how to run meetings, etc. An association’s bylaws are not required to be recorded with the county register of deeds.
Homeowners have a right to question sudden changes in fees and special assessments. They also have the right to ask for a hearing before a decision is made.
An association’s covenants can help protect property values, but a board must make sure to enforce them consistently. Selective enforcement can be challenged as illegal discrimination.
Meetings
Unless specifically prohibited by the association’s governing documents, homeowners have a right to attend board meetings. They can also request access to financial reports, vendor contracts, board meeting agendas and minutes. However, they should be prepared to pay for copying and postage fees.
In addition to a right to attend, homeowners have a right to be heard when their association takes disciplinary action against them or otherwise questions their actions. For example, a homeowner can challenge the authority to place a lien on their property for unpaid assessments or noncompliance with the CC&Rs.
Similarly, a homeowner can sue the association to recover assessments in district or small claims court (depending on the amount involved). The suit must comply with state and federal law, including the Fair Debt Collection Practices Act and North Carolina’s consumer protection laws.
Liens
A homeowners association may have the right to enforce rules on a property by placing a lien on it. This is a process similar to a mortgage foreclosure.
If the HOA board is going to place a lien, it must give proper notice to the owner. In addition, the law requires that a claim of lien not be secured by any fee that does not expressly appear in the association’s declaration. Additionally, the governing documents must provide the owners with a reasonable estimate of the fees for the service, collection, or consultation.
Homeowners also have the right to be heard by a judge before the association can foreclose on their home. This is to ensure fairness and avoid any misunderstandings. They must also have the right to access HOA documents, including financial reports, vendor contracts, and meeting minutes.
Enforcement
The rules and regulations of HOAs are different from those of local law, meaning that local police won’t respond to a homeowner if he or she is breaking the HOA’s own by-laws. Instead, any violation hearings take place in civil court and can result in monetary penalties.
Covenant enforcement is a vital part of keeping an association orderly, and it’s the board’s duty to carry out this responsibility. However, it can be tricky for board members to enforce these covenants without crossing legal boundaries.
It’s also important to note that, by law, all board members must carry Director and Officer’s insurance. This can protect them against claims of wrongful conduct while serving on the board. The governing documents of any HOA should also include indemnification provisions.