COMMON LAWS

Common Laws is a general legal information column written by two local attorneys, Lyn and David Batty. A prior version of this column originally appeared on DavidsonNews.net.

There are many scary stories about Homeowners Associations. There are tales of people losing their homes to foreclosure because they painted their front door the wrong color, or didn’t seek approval for a shed in their back yard, or couldn’t afford to pay their dues in a timely manner and faced a board that wouldn’t accept their offer of partial payments. There is a local story of a Huntersville man who faced steep fines and possible foreclosure for planting pansies in the park across the street from his house. A memorable “X-Files” episode featured a monster conjured by the Homeowners Association to wreak lethal vengeance on homeowners who didn’t roll their emptied trash bins back to their proper spot before dark. Despite fears, thousands of Charlotte-area residents choose to live in neighborhoods with Homeowners Associations. This is because Homeowners Associations serve a positive function, such as maintaining common areas, organizing social functions, and dealing with real problems, such as neighborhood drainage issues or aging playground equipment.

Running a Homeowners Association takes a lot of time and effort. That is why most neighborhoods hire an outside property manager to handle the day-to-day operation of the Homeowners Association. Property management is a big business in North Carolina – think of the annual dues you and your neighbors pay to your Homeowners Association. Some of these dues pay the management company’s fee. Homeowners Associations backed by a property management company are powerful; they have the resources to employ professional advisors, attorneys, and lobbyists.  Homeowners Associations are armed with statutory remedies that give effect to the favorable language contained in the association’s declarations and covenants. These resources enable Homeowners Associations to move quickly and decisively and overwhelm an unwary homeowner.

I fought the Board, and the Board won

 Those of us who live in neighborhoods governed by Homeowners Associations go into the bargain with open eyes. Pre-closing, we review the restrictions, and enjoy a moment of gratitude that we won’t have to endure yards full of waist-high weeds, permanent front yard bounce-houses, or a neighbor’s exciting new home-based Sriracha sauce operation. We feel secure, knowing we are good neighbors and upright citizens, and never dream that the sharp focus of the powerful HOA might one day be trained on us. Us? Never. Unfortunately, disputes between homeowners and their HOA are not uncommon.

There are many North Carolina appellate court cases related to disputes between homeowners and HOAs. Quick overview: homeowners almost always lose. In those cases where the homeowners win, the reasoning of the court in ruling for the homeowner is instructive in highlighting the proper limits on HOA power. When homeowners win in a way that could open the door to confusion and more litigation, the North Carolina legislature often updates relevant statutes to make it clear to the courts that the HOA should win on the same facts next time.

Traditionally, expansive property rights are favored in the law. Therefore, property restrictions, as well as affirmative obligations to pay dues and assessments, are reviewed carefully by courts for ambiguity and overreach. The North Carolina Court of Appeals has set forth the following standard for interpreting covenants that impose a duty on homeowners to pay assessments:

Covenants that impose affirmative obligations on property owners are strictly construed and unenforceable unless the obligations are imposed “in clear and unambiguous language” that is “sufficiently definite” to assist courts in its application. Beech Mountain Property Owners’ Ass’n, Inc. v. Seifart, 48 N.C.App. 286, 295, 269 S.E.2d 178, 183 (1980).

We found a compelling case in our research that relates a useful and entertaining story of how courts approach the problem of vagueness in neighborhood restrictions, to the benefit of the homeowner and her pets.

The Tale of Fred and Barney: Two Nigerian Dwarf Goats

 In Steiner v. Windrow Estates Home Owners Ass’n Inc., 213 N.C. App. 454, 713 S.E.2d. 518 (2011), property owners who lived in a planned equestrian community were in a dispute with their HOA over two Nigerian Dwarf Goats. The owners had purchased the goats as pets and had named them Fred and Barney.

The HOA held a hearing on the permissibility of the goats and found that the goats were in violation of two of the community’s restrictive covenants. Paragraph 6 of the restrictive covenants stated: “No offensive or noxious activity shall be carried on upon any lot, nor shall anything be done thereon tending to cause embarrassment, discomfort, annoyance, or nuisance in the neighborhood. There shall not be maintained any plants or animals, or device or thing of any sort whose normal activity or existence is in any way noxious, unsightly, unpleasant or of a nature as may diminish or destroy the enjoyment of other property in the neighborhood…”

The second covenant in question stated: “No animals, livestock or poultry of any kind shall be raised, bred or kept on any lot except that horses, dogs, cats or other pets may be kept provided they are not kept, bred, or maintained for any commercial purposes…”

In response to the Board’s action, the Owners sued the HOA, seeking a declaratory judgment from the court that the goats were pets, were not offensive or noxious, and that the Owners should be allowed to keep the goats. The court examined the dispute bearing in mind the policy that the law favors full property rights. The court stated: “The law looks with disfavor upon covenants restricting the free use of property. As a consequence, the law declares that nothing can be read into a restrictive covenant enlarging its meaning beyond what its language plainly and unmistakably imports.” Wein II, LLC v. Porter, 198 N.C. App. 472 (2009).

Examining the plain meaning of undefined terms in the covenants, the trial court determined that according to Merriam-Webster’s Collegiate Dictionary, “the distinguishing feature between “livestock” and a “pet” is that “livestock” is primarily “kept for use and profit” while a “pet” is “kept for pleasure.” The owners bought the goats as comfort pets to help the wife during her treatment and recovery from cancer. The goats had been neutered and were both male, so they could not breed or produce milk. The court held that Fred and Barney met the definition of pets.

Next, the court turned to the issue of determining the meaning of the terms “noxious” and “offensive.” Not surprisingly, ill-defined and subjective terms such as these are often the sticking point in disputes between owners and HOAs. HOAs are often labeled “arbitrary” in trying to enforce such nebulous terms. The appellate court honed in on the obvious problem with the language, ultimately holding that Paragraph 6 was void for vagueness. The court would not enforce the language of the covenant against the homeowners.

In explaining their rationale, the North Carolina Court of Appeals cited the U.S. Supreme Court in a case voiding a town ordinance for vagueness: “Conduct that annoys some people does not annoy others. Thus the ordinance is vague, not in the sense that it requires a person to conform his conduct to an imprecise but comprehensible normative standard, but rather in the sense that no standard of conduct is specified at all. As a result, men of common intelligence must necessarily guess at its meaning.” Coates v. Cincinnati, 402 U.S. 611, 614, 91 S.Ct. 1686, 1688, 29 L.Ed. 2d 214, 217 (1971).

The NC Court of Appeals noted that within the covenants as written, there was not “sufficient guidance or definition to permit the Board, or a court, to make any sort of determination of who is right, and this is the essence of vagueness.” Steiner at 467.

In Steiner, the owners were allowed to keep their pet goats due to vague language in the restrictions. We wonder how many HOAs have struggled with enforcing vague terms, trying to determine what is embarrassing, annoying, or noxious. We wonder how many boards have ultimately succumbed to inserting their own subjective notions, or bowing to the desires of one or a small number of particularly sensitive neighbors.

Is there any hope for change if I don’t like the rules of my Homeowners Association?

Yes. If there is a lot of concern or unhappiness about restrictions or rules that no longer work as intended for the majority of people, there are sometimes ways to make changes. For example, in our neighborhood, McConnell, the original declarations stated that there were to be no mailboxes in the neighborhood. We went to the Town Post Office every day to pick up our mail. It was small-town nice and we were charmed by the idea when we moved in. We bought our house with the full understanding of the obligation to pick up our mail instead of having it delivered. But for many neighbors who were busy working, volunteering, and raising children, it was time-consuming and inconvenient. A group began talking about an amendment.  According to the covenants and by-laws, 75 percent of the homeowners in McConnell needed to approve the change. It took several years to gather the necessary approvals, but eventually the rule was changed.

Sometimes the problem isn’t a particular rule, rather it is the way that rule is being applied. Remember that HOAs are made up of people, specifically, volunteers. Perhaps for some that makes their motives automatically suspect, as if they are only there to pursue an agenda of pristine perfection. Regardless of their motives, people serve for terms and they can be voted out of office if their views are unrealistic or out of touch with the needs of the neighborhood.

If you have a legal question of general interest, please send us an email ([email protected]) and we might use your question in an upcoming column.

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David and Lyn Batty live in Davidson and as lawyers, they also want you to read this disclaimer:  We write this Common Laws column for informational purposes only. This column is not legal advice and it should not be relied on for making any decisions that may affect your rights. If you need legal advice regarding a specific situation you should consult a lawyer. No attorney-client relationship is created with any of our readers. Although we try to ensure that the information we provide is accurate, we disclaim any liability for inaccurate, incomplete or out-of-date information appearing in this column.