For NC homeowners, 2 important things are lacking in our state’s state HOA laws | Opinion
Editor’s note: The News & Observer and The Charlotte Observer recently published “Hopes Foreclosed,” a series of articles on HOA issues in North Carolina.
Mr. Bumble got it right in “Oliver Twist,”: “The law is an ass — an idiot.” In North Carolina that sums up the legal protections of homeowners against homeowners’ associations.
The law says lots of pretty things about how homeowners’ associations, commonly known as HOAs, must operate but provides no real enforcement mechanism or relief for homeowners harmed by their HOAs.
HOAs have legal authority to take as much money from owners as they deem necessary and to place liens on, and even foreclose on, owners’ homes. That’s scary authority, easily abused.
What’s needed is transparency and accountability, but they are sadly lacking in N.C. law.
By law, HOAs are required to make their records available to homeowners. Many don’t. They are required to publish minutes of meetings to show what they are doing. Many don’t. They are required to give notice of meetings and allow owners to speak at them regularly. Many don’t. They are required to give all owners the list of owners’ addresses so they can communicate about association business. Many don’t. You get the idea. Many association boards flout the law with impunity because there are no enforcement mechanisms in the law.
North Carolina law tells homeowners to file suit in court if their HOA is misbehaving, but that’s a $10,000 to $100,000 proposition that almost no homeowner wants to undertake. HOA boards know that, so they routinely ignore the things the law says. If a homeowner sues, the board can use all owners’ money HOA money — from all homeowners — to pay lawyers to drag things out in court until the injured homeowner runs out of money.
Instead of this, the law should support homeowners’ visibility into what boards are doing and establish remedies if they are doing harm. But current laws benefit the developers, property managers and lawyers who make money by building, running and defending HOAs. Then, they spend money on politicians who routinely squelch homeowner efforts to reform laws so that homeowners get a fair shake.
They also prey on towns and counties eager to increase their tax base without providing full municipal services. Municipalities yield governmental authority to HOAs as private corporations and quasi-governments. That shields the arrangements from state scrutiny since the Contract Clause (in Article I, Section 10) of the U.S. Constitution says no state shall make any “law impairing the Obligation of Contracts.” All levels of government get to wash their hands of homeowner protections. “You signed up for this, Bub!” they say.
Well, HOA members didn’t sign up for their boards to violate the law.
Homeowners need accessible remedies when associations violate the law. Homeowners shouldn’t have to shell out for lawyers to hold boards accountable. The law should mandate electronic record keeping by HOAs, open to owners. It should provide for executive and judicial remedies to overcome willful nondisclosure and other misconduct by boards.
It should clarify that the Contract Clause doesn’t negate owners’ civil rights, including redress of grievances. It should either empower and fund the Department of Justice to police HOA misconduct or let homeowners seek relief in Small Claims Court rather than having to spend thousands on lawyers. How can this be done? Homeowners must take political action to force the N.C. General Assembly to enact meaningful and accessible enforcement measures and relief for homeowners.
Politics is an expensive contact sport. Homeowners have been complaining for years about how HOAs misbehave. But they haven’t made the contributions of time and money to unseat politicians in the pocket of the real estate industry and elect pro-homeowner legislators. If that doesn’t change, none of this will.
The NC HOA Law Reform Coalition, which I chair, is bringing people together to change N.C. law to protect homeowners with more than pretty words. We’re proposing legislation now to clarify what records HOAs must give to owners, to establish that withholding records does financial damage to owners, and to let owners seek relief in small claims court. Much more is needed, but let’s start there, together.
Timothy Hinds lives in Raleigh.
