Hate thy neighbor?
When relationships between HOAs and homeowners are contentious it can turn ugly.
- Are relations between HOAs and residents getting worse? Here’s why experts think so.
- Know your rights: 5 things to watch for when it comes to neighbor vs. neighbor disputes
- How much power do HOAs have in North Carolina? We help you understand some rules and laws.
- HOAs limit corporate landlords in Charlotte. What about neighborhoods without them?
Dan Johnson has a favorite job description for homeowners associations. He says they operate in “the realm of petty tyrants.”
The Charlotte financier acknowledges that he formed his opinion after his former condominium board fined him tens of thousands of dollars and then tried to take away his home in a bitter and costly legal fight over ... drapes.
Terri DeBoo describes HOAs as “the ultimate power for people with small lives.”
“I mean, they can take away your home if they don’t like where you put your garbage cans,” the former south Charlotte homeowner says.
And Stephen Eldridge compares the volunteer boards who oversee hundreds of thousands of homes in the Carolinas to a Ponzi scheme, in which residents pay for services they either never receive — or do at a level that never justifies the expense. Statistics from ipropertymanagement.com say homeowners’ fees are growing twice as fast as property values.
Those same stats claim that more than 85% of residents support their HOAs or condo associations or are at least neutral about them. According to these findings, an overwhelming majority of those who live in association-managed communities believe the boards keep their neighborhoods attractive and inviting, and their property values high.
But Johnson, Eldridge and DeBoo, who all say they have left managed communities in Charlotte and will never go back, are part of a vocal minority of critics who chafe at some HOA rules — as well as the vigor in which they are enforced.
“It gets into ‘The Crazy,’” says DeBoo, who left her south Charlotte neighborhood, in part, after a neighbor used the HOA to declare war on the installation of her backyard pool.
“You would have thought I was putting in a bordello,” she says.
Distrust fuels divide
Two legal experts on opposite sides of the HOA divide say the already-fraught relationship between the neighbors who sit on the boards and the neighbors who live under the board’s rules and directives may be worsening, due largely to the widespread anger and suspicion directed at most sources of authority — from politicians to school boards to all forms of government.
A Gallup poll released in July reported that just 27% of Americans expressed confidence in their institutions — the lowest level ever recorded in the 50-year-old survey.
A similar distrust — largely driven by social media — enshrouds HOAs, even as the number of HOA-run communities in North Carolina and across the country continues to grow.
This morning, 1 in 4 North Carolinians, an estimated 2.75 million people overall, awoke in their houses, condos and townhouses beholden to the rules of one of the state’s 14,100 HOAs. That includes almost 40% of N.C. homeowners — the ninth-highest rate in the country. By 2040, according to industry analysts, the so-called “community association housing model” will become the state’s dominant form of housing.
Yet the horror stories of alleged HOA abuses often are the ones amplified and repeated most. When readers of The Charlotte Observer and The News & Observer recently were asked to share their experiences with HOAs, there was a common theme.
They complained about developers and absentee management companies that pocketed their neighborhood fees but failed to cut the grass or provide promised amenities such as pools and tended landscaping. They recounted being pecked to death over minor violations of the community rules while never getting a clear accounting of how the neighborhood’s money was being spent.
Harold Hudson, a retired Presbyterian hospice chaplain who is now his HOA’s president, said that he had been forced to take over his association board near Lake Norman after the longtime leader was found to be taking kickbacks from a plumber hired to do unauthorized work.
Charlotte attorney Mike Hunter, whose practice represents more than 500 HOAs around the Carolinas, says most of the volunteer boards he works with operate with the best interests of their communities at heart. Yet, he says, they are unfairly pilloried for “trampling on the rights of poor homeowners.”
“Overall, the relationship has become nastier over the past several years, more acrimonious, like society as a whole,” Hunter says. He blames social media, which allows anonymous critics to say things online that “they would never say to someone’s face.”
Likewise, Charlotte real estate attorney James Galvin, who has represented homeowners in HOA disputes for almost two decades, says relations between the two sides “mirrors the lack of social trust that exists in society in general.”
The nuclear option of foreclosure
But Galvin also believes HOAs often are their own worst enemies, either by misinterpreting their rules or misapplying their largely unbridled powers to force compliance — from leveling daily fines to the nuclear option of launching foreclosure proceedings.
In one recent case, Galvin says he represented a Charlotte woman whose HOA temporarily fined her $3,000 a month after she inherited her dead mother’s dog — a violation of the neighborhood rule that limited her to the dog she already owned.
“HOAs attract two kinds of people: those who really want to serve their own communities, and those who are only attracted to power,” Galvin says. “That makes them either mini-democracies or, more cynically, mini-totalitarian states run by people who have been given authority that they have never had in any area of their lives before — and probably for decent reasons.”
Chapel Hill-based attorney Jim White said North Carolina’s laws tilt heavily in favor of HOAs, especially when it comes to foreclosures.
“To me, I think the state foreclosure laws would make sense if what they said was that an HOA would have the right to place a lien on property. That’s powerful. But to force the property into a public foreclosure sale over hundreds or you know, a couple of thousand dollars is excessive,” White said.
Sometimes it takes even less money to lose a home. In 2016, a couple living in St. Croix, who had bought a house in University City so their daughters could attend UNC Charlotte, were foreclosed upon by their HOA after they unknowingly fell behind on their dues by $204.75. The case eventually reached the state Supreme Court, which ruled in 2021 to uphold a Mecklenburg judge’s decision to return the home to its owners. By then, the house had been largely gutted, Galvin says, and required tens of thousands of dollars in repairs to be habitable.
Hunter says he counsels his HOA clients to show restraint and treat foreclosures and fines as a last resort. Most of the boards do, he says.
“Just because I have the power to do something doesn’t mean it makes sense to do it if it makes the association look bad or if there’s a less Draconian remedy available,” Hunter says. “Not every violation is a $100-a-day violation. Yes, we have morals. Yes, we have a conscience.”
‘Over freaking window coverings?’
Yet stories of HOA excesses still capture the headlines.
Last month, the Washington Post reported on how an HOA in a Texas town was threatening to foreclose on an elderly couple because they fed the neighborhood ducks.
Closer to home, Johnson, the Charlotte financier, says he almost lost his Elizabeth condominium 10 years ago in a bizarre dispute with his board over his decision to install plantation shutters to cover his windows instead of the board-required white-trimmed drapes.
He says he cleared the change with the developer of the community before construction of his own unit had even begun.
Five years after Johnson moved in, however, the condo board deemed his window treatments a major violation of the community’s architectural standards and retroactively fined him $100 a day for every day he had lived with his shutters — $182,500 in all.
When Johnson refused to pay, his neighbors on the board started foreclosure proceedings. Johnson eventually won in court. But he spent $12,000 to hire Galvin as his attorney. Meanwhile, the board underwrote part of its legal expenses with Johnson’s own condo association fees.
“So it was like suing yourself,” he says.
Johnson has since sold his condo and moved to Plaza Midwood where he lives in an HOA-free zone. Looking back, he says, his former board used its authority like a bully and not as neighbors.
“Nobody likes HOAs. Because of what they represent. Because of he power they have over you. Because there’s no accountability,” Johnson says.
“One hundred dollars a day, five years after the fact? That was the entire value of the condo. Over freaking window coverings?”
HOAs increasing
Planned residential communities began emerging in significant numbers a half century ago, primarily in the South and West. Under neighborhood rule books known as “Declaration of Covenants, Conditions and Restrictions” — CC&Rs for short — homes had a similar look and feel and perhaps the identical mailbox in the alley out back. The grass got cut and the ferns got watered. Front porches came back into fashion. The streets seemed safe. Property values climbed.
In 1970, slightly more than 2 million Americans lived in HOA neighborhoods. By 2019, the number had risen to 74 million. HOAs increased from 10,000 to 351,000 over the same period, according to industry figures. Today, 53% of all homeowners live in an HOA development, which is also where 80% of new residential construction is taking place,
So if HOA neighborhoods remain so popular, why the bad rap for HOA boards?
Simple, says one HOA president: We’ve earned it.
“HOAs have a way of attracting people who like to enforce rules against other people and can be officious,” says Marc Bickler, president of the Ballantyne Residential Property Owners Association in Charlotte for the past four years. “If board members want to enforce every digit of the CC&R, they can make life unpleasant for a lot of people. Everybody is guilty of something. You would have hundreds of violations at any given time.”
‘Somebody has to pay attention’
The N.C. legislature passed the North Carolina Planned Community Act in 1999 to catch up with the exploding market for planned communities. Hunter, the attorney, says the N.C. law gives HOAs the power they need to maintain the appearance and overall architectural style of the neighborhood, all designed to keep property values high.
“People wanted to live in communities that had certain amenities and someone had to maintain those amenities,” Hunter says. There were also rules regulating how you used your property. “People did not want to buy a lot if your next door neighbor could put up a mobile home.”
Galvin, though, points out that the statute was written by industry attorneys and leaves very little power for residents. A property owner can sue, but that’s an expensive strategy with an uncertain outcome.
Nonetheless, big cases involving HOAs still bubble up in court. In June, the state Supreme Court sided with a group of Raleigh homeowners in a dispute with their HOA board over the installation of solar panels on their homes. The board had ordered the residents to remove the panels and had been leveling daily fines until they were. But the state’s highest court ruled that since the neighborhood covenants did not specifically prohibit solar panels, the HOA could not enforce its ban. Nor could it restrict the panels to the back of the home.
Charlotte-area HOA presidents such as Bickler and Greg Rosenfeld, who heads the Watermark Lake Norman Condominium Association in Cornelius, say their job is to avoid unnecessary disputes with residents while still enforcing the rules necessary to maintain their communities’ property values and quality of life. That means tamping down on the major neighborhood problems that threaten them.
“What if we ran our HOA like a business instead of running it on a falsely strict code of behavior? What if you counseled people to look the other way when they saw a garbage can in the wrong place?” Bickler says. “It’s a balancing act. If you handle it the right way, you can get things done and people don’t feel like you’re looking at them with a pair of binoculars.”
In the 10 years Bickler has been on the board, it has used the fees from its 825 resident members to build parks, repair trails, hire full-time security and install license plate readers at all the neighborhood entrances.
“If you don’t over-engage in the minutia and you’re thinking about the community then you can be progressive,” he says. “I’m biased but I think we’ve found the balance.”
Rosenfeld, a retired neurosurgeon who has been president of his board for the past year, also speaks of finding middle ground — one between protecting the neighborhood’s future without intruding on the owners’ rights to “live their lives and be happy.”
A critic of former HOAs he came in contact with in the past, Rosenfeld says he quickly developed a new appreciation for the work HOA volunteers do.
“Most people don’t realize how many emails, text messages and phone calls a board member gets,” Rosenfeld says. “Most people want to live their lives and not worry about the things that condominium associations have to worry about.
“Somebody has to pay attention.”
Mary Helen Moore of The News & Observer contributed.
This story was originally published August 05, 2022 6:00 AM.
