Category Archives: Legal Compliance

Get advice from expert on reserve fund needs

Q. I am the board secretary for a condo community on Lake Norman. We have 60 units and are about 25 years old. We strive to keep everything in good order but things happen. My question concerns setting amounts for reserve funds.

We have looked into having a professional “reserve study” done but the cost, from $4,000 to $5,500, is expensive for us. Do you have a rule of thumb that might give us some guidance? Is there a Web site that you can suggest for me to search? Are there reserve requirements in North Carolina as there are in some other states that set limits?Most HOAs that have clubhouse/swimming pool, trails, athletic fields, etc. have capital accounts, also known as reserve funds, to pay for upkeep and replacement. Condominium associations are responsible for maintaining the buildings themselves, so capital reserves are absolutely critical for them. Most HOAs allocate a portion of each month’s assessment income to these accounts.

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Do HOAs have any clout in prohibiting sex offenders?

Q. We live in a small neighborhood in Union County with a volunteer board of directors. A few families are interested in adding a amendment to our covenants, conditions and restrictions (CCRs) prohibiting sex offenders from residing in our neighborhood. The board went to our attorney last year and was informed that we could spend the money to try to do this, but he doubted it would hold up in the courts if the sex offender is registered and living by the law. Your advice?

Dealing with residents who are convicted felons or sex offenders is a growing concern. It is possible to ban such persons from renting a home by amending the CCRs to adopt specific leasing restrictions that give the HOA board the authority to approve or reject all proposed leases.But attempting to ban such persons from purchasing a home likely would be found unenforceable by the courts. While felons and sex offenders are not considered a “protected class” under anti-discrimination laws, it is possible that a restriction that prohibits sex offenders from purchasing a home in your community would not be upheld by the courts, or worse, expose the HOA to a potential civil rights claim.

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Handling HOA business by e-mail

Q: Can the board of an HOA handle any items via e-mail and have those acceptable as legal actions? I am wondering if the approval of meeting minutes can be handled via e-mail rather than waiting for the next meeting. If so, they could then be posted on our Web site and not be held up for the next meeting’s action.

If your HOA is organized as a nonprofit corporation as most are, it is governed by the N.C. Non-Profit Corporations Act (Chapter 55A of the N.C. General Statutes). The laws authorize a board to take action by majority vote at a board meeting.There is no substitute for the open exchange of ideas that occurs at a face-to-face board meeting. However, in recognition of the fact that decisions sometimes need to be made between regular board meetings, the laws also authorize the board to take action without a meeting, provided there is unanimous written consent of the directors.

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Flooding launches a border war, HOA action

Q. Our homeowners association has become involved in an issue between two homeowners related to the natural flow of water from one home into the next.

Homeowner No 2 has put up a 4-inch metal retainer as well as sandbags just inside his property line to keep the water from overflowing into his yard and possibly entering his foundation. This water then backs up into the yard of homeowner No 1, causing puddling and possible entry into his foundation. The HOA board has requested that No.2 remove the retainer and sandbags as specified in the covenants, conditions and restrictions (CCRs), which in essence, forbid them unless first approved. The CCRs further state that with 10 days notice, the HOA may remove obstructions if the owner doesn’t.

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