Hate thy neighbor?
When relationships between HOAs and homeowners are contentious it can turn ugly.
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- What happens when you have a dispute with your HOA? 5 things to know about your rights.
- How much power do HOAs have in North Carolina? We help you understand some rules and laws.
- Raleigh family sued its HOA after being fined for solar panels. How the NC Supreme Court ruled.
- Have a conflict with your HOA? This video explains what you can do.
Lindsay Addison says the homeowners association in her Raleigh neighborhood feels “like a dictatorship.”
For the roughly five years she’s lived there, Addison’s Whitecroft Manor neighborhood has had a developer-run HOA that she said has lacked transparency and accountability and shown unequal enforcement of the neighborhood’s covenants that Addison said are vague and lack specificity.
Addison, who is a real estate agent, has questioned the neighborhood’s board over the enforcement of shed regulations and appropriation of resident fees, among other grievances, generally to no avail.
“You never win against an HOA,” Addison said. “An HOA is so protected.”
Under her neighborhood’s current HOA leadership, Addison says she’s “always on edge,” anxiously anticipating another battle with the association.
Raleigh resident Sharon McCloud described a battle she had with her HOA over whether she was allowed to install a trampoline in her yard. Other neighbors, she said, didn’t have to jump through the same hoops she did when they installed trampolines or similar play equipment.
Similar stories exist around the Triangle and the state, with several homeowners telling The News & Observer and The Charlotte Observer that their HOAs lack transparency over board dealings and residents’ money and that some don’t enforce rules the same way for all residents.
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 some homeowners who spoke with The N&O and The Observer are part of a vocal minority of critics who chafe at HOA rules — as well as the vigor with which they are enforced and often, the lack of transparency in association dealings.
“There’s no checks and balances,” Addison said of her HOA board and its president. “There’s nobody watching this. There’s nobody making sure she’s doing what she should be doing. And we all will end up paying for it in the end.”
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 boards’ 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 — 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 dominant form of housing in the state.
Yet the horror stories often are the ones amplified and repeated most. When readers of The News & Observer and The Charlotte 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.
Addison told The N&O that residents in her Raleigh neighborhood — which does not have a pool or other community amenities — pay $420 in HOA fees each year, or $105 each quarter.
In the five years she’s lived in her home, Addison said, she has only received one financial statement from her HOA detailing the association’s profits and losses, something her HOA president denied.
Jan Williams, Whitecroft Manor’s developer and HOA president, told the N&O she has provided yearly financial statements to residents each November since 2007. She declined to provide copies of those statements to the N&O.
Charlotte attorney Mike Hunter, whose firm represents more than 1,000 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.
Likewise, Charlotte real estate attorney James Galvin, who has represented homeowners in HOA disputes for two decades, says relations between the two sides “mirrors the lack of social trust that exists in society in general.”
When rules aren’t enforced equally
McCloud, the Raleigh homeowner who fought with her HOA over the placement of a trampoline, said the experience “left a bad taste in my mouth” for the “unfairness” of the board and its architectural committee, which approves changes to the exteriors of homes in the neighborhood.
The incident arose in late 2020 when McCloud submitted an application to the architectural committee. She wanted to install a trampoline in the same location where an outdoor play set was previously approved and installed for about 15 years. The play set sat in an area of the property the family chose specifically because it was safely shielded from stray golf balls that regularly fly into the yard from a nearby golf course, she said.
McCloud thought the application would be approved without issue, since she’d already had a play set in the same location for years, and such equipment is allowed under the neighborhood covenants.
But when she received the approval, it was conditional. She’d have to get final approval from her neighbors before the trampoline could be installed. She eventually found, though, through asking other families in the neighborhood, that no other homeowners had been asked to go through that step when installing trampolines in their yards.
“We felt like we were being isolated when no other family had to jump through the hoops that we did,” she told The N&O.
McCloud’s application was eventually approved after she documented the experiences of other homeowners with trampolines in the neighborhood, who did not have to obtain their neighbors’ approval to install the equipment.
McCloud told the N&O she felt the extra approval in her case arose more from the concerns of one of her neighbors than from the architectural committee or the HOA. But she still said the experience felt unfair and left her wanting more “common sense” in the decisions of the board.
“Where does common sense come in?” McCloud said. “And where does fairness come in, that they allow some neighbors to do certain things that they want to stop other neighbors from doing?”
The nuclear option of foreclosure
Galvin, the attorney, 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.
Homeowners associations can foreclose on a home with ease when bills are 30 days overdue, and Chapel Hill attorney Jim White said with more and more HOAs being run by large commercial management companies, there’s less desire to be flexible.
“Those communities that are managed by large national management companies tend to be more aggressive,” White said. “Collecting their money matters, I think, more than maintaining the integrity of the neighborhood.”
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 had.
“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.”
Hunter says he counsels his HOA clients to show restraint and treat foreclosures and fines as a last resort. Most of them 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,” Hunter says. “Not every violation is a $100-a-day violation. Yes, we have morals. Yes, we have a conscience.”
NC laws heavily tilt in favor of HOAs
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.
There are two types of foreclosures in North Carolina — one that requires a judge and another that is done with just documents, “almost like a rubber stamp procedure,” Galvin explained.
When someone falls a month behind on dues, HOAs can do a non-judicial foreclosure, which can move startingly quickly.
“I’ve just encountered enough situations where people simply didn’t know they were behind or were confused,” White said. “I’ve had multiple people, multiple clients who did not get notices in HOA foreclosures. I’ve rarely encountered that in a traditional mortgage foreclosure.”
However, when someone falls behind on fines related to a violation, HOAs must go through a judge. That is, unless an HOA applies an annual assessment to the built-up fines.
“It happens all the time,” Galvin said. “Obviously they want to push everything to a non-judicial foreclosure because it’s way faster and cheaper... They kind of back into it.”
Galvin doesn’t believe this should be legal and he says it’s unclear whether it actually is, but he hasn’t yet been able to take a case to appeals court.
Addison, the Raleigh real estate agent, said she “will never not pay” her HOA dues because she knows “what the repercussions are” if she fails to do so. Still, “I cringe every time I have to do it,” Addison said, because she doesn’t trust that she’s getting an accurate picture of how her money is being spent.
‘Over freaking window coverings?’
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.
In North Carolina, Dan Johnson, a Charlotte financier, says he almost lost his 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 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 most of its legal expenses with Johnson’s own condo association fees — a common occurrence in legal battles involving HOAs.
Using association fees in legal cases is also a grievance of some homeowners who spoke with The N&O, including Stephen Trachian, who lives in a southern Wake County subdivision with an HOA.
“It’s like, basically they’re able to use our money to fight us,” Trachian said, “and that doesn’t seem like a fair fight.”
Johnson has since sold his condo and moved to an HOA-free zone. Looking back, he says, his former board used its authority like a bully and not as neighbors.
“One hundred dollars a day, five years after the fact? That was the entire value of the condo. Over freaking window coverings?”
When the developer is the HOA
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 had 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. 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: They’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.”
In planned communities, developers control the HOA while it’s under construction, turning it over at a transition meeting to residents when construction is complete.
Addison, the real estate agent, said her HOA is run by Williams, the developer of her neighborhood, and will be until enough lots are sold, or until the year 2037, whichever comes first. Williams in a phone call with The N&O said she “will never turn the control over to the neighborhood until 2037.”
In the meantime, Addison said she and the other neighborhood residents have little-to-no power over any decision being made or how the neighborhood rules are enforced.
“What we would really like is for her to hand over the HOA to us, wipe her hands of it and let us handle it,” Addison said of Williams. “Because we all want to and are capable.”
Candice Blakeslee, who manages HOAs around the Triangle for homebuilder Taylor Morrison, said she tries to get homeowners involved with the board as early as possible.
“Because we don’t reside there, there’s definitely a division on who we are versus who they are,” she said. “The impression is often that once the builder or developer is completely done with the community, they walk away, but that’s their home. That’s their community. That’s where they live. And so there can be a disconnect because of that.”
Stephen Kendrick moved to New Hill’s Jordan Pointe neighborhood in 2019. The developer contracted a property management company to run the HOA. Three years later, they’re still building and Kendrick said it’s frustrating to feel like he doesn’t have a say given he’s paying $780 a year.
“We had no choice but to sign that contract,” Kendrick said. “It wasn’t like, ‘Oh, I’m gonna walk away from building a house because of this,’ but it was definitely disappointing. And they kind of have that leverage.”
‘Somebody has to pay attention’
Most homeowners who spoke with The N&O said they believe HOAs need more regulation and oversight from the state to hold them accountable and keep them transparent. There is currently no state agency that oversees HOAs in North Carolina.
The N.C. legislature passed the North Carolina Planned Community Act in 1999 to catch up with the exploding market for planned communities.
Hunter says the 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, the attorney, said. 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 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.
“It’s been pretty rare that people pay the tens of thousands of dollars in attorney’s fees it takes to get to the North Carolina Court of Appeals,” Galvin said of the relatively minor disputes people typically squabble with HOAs over.
Nonetheless, big cases involving HOAs still bubble up in court. In June, the N.C. Supreme Court sided with a Wake County family in a dispute with the Belmont Association over the installation of solar panels on their homes.
The state’s highest court ruled that a 2007 statute designed to protect access to solar protected the family since the neighborhood HOA covenants did not specifically restrict solar panels.
HOA presidents like Bickler and Greg Rosenfeld, who heads the Watermark Lake Norman Condominium Association in Cornelius, say their job is to avoid court while still enforcing the rules necessary to maintain their communities’ quality of life. And, at the same time, tamping down on the major neighborhood problems that threaten it.
“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.
“It’s possible if you don’t 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. We had to run off a couple of people, more than a few actually.”
Rosenfeld, a retired neurosurgeon who has been president of his board for the past year, also speaks of a balancing act — 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.”
This story was originally published August 10, 2022 6:00 AM.
