What Community Associations Should Know From HOA Attorneys – Real Estate and Construction

Maintenance, repairs, upkeep, and enforcement of rules are all
in a day’s work for a community
association – now one of the most common
housing arrangements in North Carolina.

To date, nearly 27% of the state’s population lives in some
type of single-family home, townhome, or condominium development
governed by a homeowners’ association, also known as an
HOA.

With its explosive growth and abundance of housing options, from
new affordable homes to multimillion-dollar gated neighborhoods,
the Triangle has become a hotbed for these types of planned
communities. In response, the firm recently announced a dedicated
team to help new and established association
boards of directors and managers in Raleigh, Durham, Chapel Hill,
and surrounding areas navigate the challenges of running an
HOA.

The Triangle Team consists of litigator Amy Wooten, business and
community association attorney Madeline Lipe, real estate
attorney James Todd, and
creditors’ rights attorney Thomas Wolff. Each has a
unique perspective to serve and guide a community association in
all stages of development and through all types of disputes and
conflicts.

I recently asked my colleagues to share the one thing that is
most important for HOAs to know. Here’s what they had to
say:

“I’d say that one of the most important things for
community associations to know and appreciate is that risk
management is key!”

 – Amy Wooten, Litigation
Attorney

It is critical that community associations take a proactive
approach to manage risks that they may encounter for many
reasons.  One of those reasons is that proactive risk
management can mitigate the chances of litigation being initiated
against a community association or better position the community
association to defend itself when litigation ensues.  It can
also better position a community association to handle the
financial hardships and other stressors that often arise when a
community association finds itself in a position where it is the
party that needs to initiate litigation.  In short, a
community association’s risk management strategy should include
erring on the side of seeking legal guidance and counsel early on
when a potential dispute or legal concern arises.  Doing so
will require the community association to invest in legal
fees.  However, it’s been my experience that those dollars
are well spent more often than not.  Whereas, skipping that
investment, among other negative consequences, tends to result in
community associations incurring substantial legal fees that
could’ve been avoided or significantly reduced had they been
proactive in seeking counsel.

“When faced with a community association question, the
starting point is almost always the same… start with the
governing documents.”

– Madeline Lipe, Business and
Community Associations Attorney

A community association’s governing documents (declaration,
articles, and bylaws) provide the foundation for understanding the
role of the community association.  The community
association’s purposes will be set forth in its governing
documents, which, together with the applicable North Carolina
statutes, outline the association’s responsibilities, define
owners’ rights and obligations, and generally set forth the
framework of the community.  Accordingly, it is important to
know what the governing documents say so that there is an
understanding of the association’s authority, obligations, and
limitations. 

“Community Associations are empowered, guided, and
constrained by the real estate covenants that create their
communities.” 

–James Todd, Real Estate
Attorney

It’s essential that community associations understand the
authority and limitations contained in their covenants.  We
frequently come across community associations that have been
operating a certain way “for as long as anyone can
remember” without understanding why.  We can help analyze
and amend the covenants – whether it’s a review of decades-old
covenants that don’t serve the current needs of the community
or proposed amendments to align the covenants with a long-standing
practice.  A community association’s covenants are the
framework in which it operates – we can help ensure that
framework matches the needs of your community
association.”

“One of the most critical things to remember when
dealing with delinquent accounts is to take action early and be
consistent when enforcing a homeowner’s payment
obligations.”

– Thomas Wolff, Creditors’
Rights Attorney

It can be much easier for homeowners to cure their arrears when
it is still manageable and relatively low.  Reaching out
early, and being willing to work out a reasonable payment plan, can
help avoid larger issues before they develop.  However, there
will always be those accounts that may prove troublesome and
ultimately require legal assistance.  In those instances, it
is still important to reach out to the association’s legal
counsel to take swift action in order to preserve its right to
repayment and place a lien on the delinquent homeowner’s
property. In most cases, the lien will cover not only the past due
assessments, interest, and other charges but also the
association’s legal fees. Acting quickly helps place the
association in a prime position for repayment and makes the growing
debt hard to ignore for the homeowner – especially if they
want to sell or refinance their property. By acting early and
dealing with delinquent accounts consistently, an association can
help increase its chances of recovery.

Not every conflict in a community association may need an
attorney, but having qualified legal representation can go a long
way to ensure the health and maintain peace within your HOA. Our
Triangle Team, backed by our full service, state-wide Community Associations
Practice, is ready to assist your community
association needs.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.