In this week’s column, I address the most common mistakes and misconceptions about homeowners’ associations (HOAs) from the perspective of homeowners. My next column will focus on mistakes and misconceptions of HOA board members.
1. I didn’t know the community I was buying into had an HOA, or that its rules were legally binding on me.
The Latin phrase “caveat emptor” (meaning “buyer beware”) applies to the purchase of homes in North Carolina. This means that a buyer has an obligation to inspect and investigate the property being purchased to determine whether the property is part of an HOA and subject to restrictive covenants before buying.
A buyer should get a copy of the covenants, conditions and restrictions (“CCRs”) and bylaws prior to closing, and read these documents carefully. If the buyer needs assistance interpreting the CCRs and bylaws, a real-estate attorney should be consulted.
A buyer can also talk to the property manager if the HOA has a management company. Also, prior to closing, a buyer should work with experienced real-estate agent who is familiar with the neighborhood. A new law that goes into effect Jan.1 will require real-estate agents to provide written disclosures to potential buyers with detailed information about the HOA for a particular subdivision.
2. I’ve fallen behind on payment of my HOA assessments, and now the HOA has filed a lien against my property and is threatening to foreclose on my home. Can they do that?
HOA assessments are a part of the cost of homeownership, no different than mortgage payments and property taxes. Failing to pay any of these liabilities could result in the foreclosure of your home.
Most HOAs are more than willing to work with you on a payment plan if you have suffered a job loss or other hardship. The key is keeping the lines of communication open.
HOAs or their management companies typically send multiple notices before your account is referred to an attorney for the filing of a lien and/or foreclosure. The worst thing you can do is ignore them. Doing so will virtually guarantee that your account will be referred to the HOA’s attorney, which adds significant fees and court costs to your balance.
Despite what many homeowners who are facing a lien or foreclosure think, the HOA has no desire to put someone out of his home. Keep in mind that the HOA board has a legal duty to the members of the HOA to maintain the common areas, and the board has a duty to take action to collect the amounts owed from owners.
If assessments go uncollected, the HOA has only two options: decrease the level of services, or increase the assessment rate on everyone else.
3. My HOA has cited me for a violation of the CCRs, but I’ve noticed other violations by my neighbors that seem to be ignored by the HOA. Am I being singled out?
The CCRs are binding on all homeowners, and every owner is legally obligated to abide by them. If you observe violations, notify your board.
Most HOAs rely on inspections by their property managers and complaints from neighbors to identify violations. Don’t assume that your HOA is not already aware of the violations or is not already taking action to address them.
N.C. law allows HOAs to levy fines against owners who violate CCRs, but the owner must be given written notice and the opportunity to be heard before fines can be levied. So it is possible that your HOA is in the process of taking action against the neighbors who are responsible for the other violations of the CCRs you have observed.
In extreme cases, an HOA can file a lawsuit against an owner who has flagrantly violated the CCRs, but this usually only occurs if the owner is endangering the safety of people in the neighborhood, causing property damage, or impacting the value of neighboring properties.