Homeowners Associations - Part I
Today,
I begin a two-part series of newsletters on homeowners
associations. The first will be on a special topic involving lot
combinations guest-written by my partner Philip Roth, who, like me,
represents associations or owners in dispute with their
associations. The second will be on ways you can be effective in
representing clients buying or selling property in communities with
associations.
Lot Combinations by Philip Roth
A frequent question I am currently seeing in association law is whether
the owner of adjacent lots in an association can combine her lots so as
to pay only one dues assessment. A related question is what role,
if any, the community association has with respect to allowing lot
combinations for this purpose.
Background
To place these questions in legal context, you must keep in mind that
any private restrictions upon real property remain disfavored under
North Carolina law. Despite the prevalence of homeowners
associations, judges continue to pay homage to the longstanding
principle that a landowner in North Carolina is free to use his property
as he deems desirable. Put another way, in disputes over property
restrictions, judges choose the interpretation which imposes the least
restriction on property.
A second bedrock principle relevant to these questions is that a
community association board’s authority to govern the property within
the subdivision is contractual in nature. The board’s powers
derive from the association’s governing documents, which are the
restrictive covenants contained in the subdivision's declaration, the
association’s articles of incorporation, and its bylaws. Thus, if the
declaration contains no provision relating to a given issue, the
association board should not act or should move very cautiously in
trying to address the issue.
These principles hold true on the issue of lot combination.
Lot Combination
Unless the declaration expressly addresses whether an owner of multiple
lots may combine them, a community association has no authority to
prevent the owner from doing so.
The remaining question, however, is whether the association then must
accept just one assessment on the combined lot. In 2001, the North
Carolina Supreme Court decided this issue by stating that purchasers of
lots in a community association have a reasonable expectation of the
maximum pro rata share of the community’s general assessments to which
they are obligating themselves. That is to say, if assessments are
on a “per lot” basis, and there are 100 lots in the subdivision, an
owner of one lot in the subdivision can reasonably expect to to
pay 1/100th of the costs to maintain the common areas and roads in the
community.
If, however, a board allows an owner of six lots to combine those lots
and pay only one assessment on the combined lot, the single-lot owner’s
pro rata share of the expenses suddenly increases to 1/95th. This,
the Supreme Court said, has the effect of creating an additional – and
impermissible – economic burden on the remaining lot owners in the
subdivision.
Absent a provision in the declaration, therefore, an association does
not have authority to accept only one assessment on land from which it
previously received multiple assessments.
In sum, although an owner of multiple lots within the subdivision can
combine her lots, she must continue to pay the same pro rata share of
assessments as before.
More on this topic next month. In the meantime, if you have any
clients with issues with their homeowners associations, I encourage you
to refer them to an attorney experienced in addressing those matters.
Do
not hesitate to contact me to receive more information on this topic or
to suggest topics for future editions of 'A Legal Moment'. You may not
rely on this content as legal advice for any specific situation, but
should instead contact an attorney for specific advice. | 
