NC HOA CC&R's versus Rules & Regulations?

MarkA7 (North Carolina)
Posts: 1

Posted:

I'm a HOA board member in a North Carolina community.

A couple of years ago our board was invited to an education night to learn more about how HOAs should operate. During this event one lawyer addressed the group and explained that CC&R's, filed with the county, should mention or reference "rules & regulations" to make the connection between them more clear and lend some added enforcement ability to the "rules & regulations." I haven't been able to find any website to verify this advice.

So what's my issue? Here's an example:

Our CC&Rs are silent on garbage cans. We all have one - some green, some pink. There are two or three waste companies who serve our neighborhood so some subset of garbage cans are on the street two or three days a week. Our CC&Rs don't mention any "rules & regulations" but a document does exist. That document says, "Garbage/Trash: All garbage and trash shall be kept in containers and stored in garages or backyards concealed from view except on garbage collection days when it shall be placed on the street or driveway for collection. Containers are to be brought in and placed out of view the same day after collection." One board member has decided to routinely walk the community and report garbage cans they can see from the street. Other board members either don't care or are unwilling to enforce this rule - especially when many of these homeowners have been storing their containers in the same place for many years.

The "rules & regulations" document also attempts to restrict street parking and limit speeds to 25 mph even though the street is owned by the state and has a posted 35 mph limit.

Is our "rules & regulations" document usable and enforceable?

Can we force everyone to store their garbage cans in their garages?

(Yes I realize this garbage can thing is pretty petty. I agree. I'm trying to make sure the board I'm on is not put in a position where we need to defend ourselves in court over garbage cans.)

TimB4 (Tennessee)
Posts: 21,062

Posted:

Mark,

Welcome to the forum. Please note that I am not an attorney and I do not work in the legal profession. I am simply offering advice based on the information in your posting, my experiences, and my interpretation of any research I have done.

Typically the authority to create rules and regulations is within the Articles of Incorporation, the Bylaws. Sometimes it is within the CC&Rs. In the past, this used to be fine.

Lately, some courts are taking a stricter interpretation of the CC&Rs and applying standard contract law to that document. What this basically means is that if the document is silent on an issue (creating rules & regulations for example) then this shows intent not to grant such authority.

In Virginia, the cases that reference this interpretation actually not only dealt with rules and regulations but the authority to impose fines. These cases are:

Unit Owners Ass'n of Buildamerica v. Gillman
Fairfax County Redevelopment and Housing Authority v. Shadowood Condominium Association, et al.
Samir R. Farran, et al. v. Olde Belhaven Towne Owners Association

The key argument in all of those cases is that the Association exceeded it's authority (aka ultra vires)

Since Association authority actually comes from the CC&Rs and since neither the Articles of Incorporation nor the Bylaws may be in conflict with the CC&Rs, having the authority to create rules and regulations in those documents, may be interpreted by the courts as actually being in conflict. Due to this interpretation, and again referencing Virginia, many legislatures are adopting statutes that grant such authority to the Association (as the CC&Rs may not be in conflict with State statutes).

It could be that there are actual NC cases that indicate similar rulings as the VA cases or it could simply be that the attorney was being honest and having the language within your CC&Rs (vs. another governing document) will help in defending such rules if challenged through the courts.

As to your more direct questions:

Is our "rules & regulations" document usable and enforceable?

In my opinion, that is the wrong question. The answer to your question would be: yes they are enforceable until someone with applicable authority (i.e. the courts) rules that they are not.

The better question would be: Would our enforcement of our rules and regulations be upheld if challenged in a court of law?

The answer to this will actually depend on applicable State statutes, the language in all of your governing documents and any applicable case law (case law from outside your State may not be considered except as a courtesy by the court). Unfortunately, you may need to spend some money and get a legal opinion from your Association attorney.

Bottom line is, until someone within the Association challenges the rule in court, the Association is free to enforce it. Mind you, there may be repercussions if the Association doesn't have the authority and it is in the best interest of the Association to only enforce those things they truly have the authority to enforce. However, until challenged, each Board can make its own decision (be it right or wrong).

Can we force everyone to store their garbage cans in their garages?

Possibly. However, it may come under a different section of the CC&Rs. For example: our Association specifies that the Association (via the Architectural Committee) shall assure that the property shall always be maintained in a manner: (i) providing for visual harmony . . . If your CC&Rs has similar language, an argument could be made that storing trash cans so they can not be seen from the street or sidewalk on non pickup days provides for visual harmony.

Another possibility is that the Association could consider not storing trash/recycling containers out of view on non-pickup days is considered a noxious (harmful) activity due to sanitation concerns. Most CC&Rs have some sort of language prohibiting noxious or offensive activities on a lot.

It should also be noted that most CC&Rs give the Association the authority to enforce the covenants but does not require them to do so. Therefore, each Board can make its own decision. They just need to be sure to apply that decision fairly and equally to all members.

Hope this helps,

Tim

TimB4 (Tennessee)
Posts: 21,062

Posted:

Mark,

This webpage from HOA-USA has some applicable case law from NC.

BODINE v. HARRIS VILLAGE PROPERTY OWNERS ASSOCIATION INC

Richard Steiner andTina Steiner | v. Windrow Estates Home Owners Association, Inc

Hope this doesn't make it more confusing.

Tim

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By TimB4 on 05/15/2014 8:36 PM

Hope this doesn't make it more confusing.

I'm afraid it did.

Bodine v. Harris Village dealt with the operation of an Architectural Review Committee, which was required by the CC&R's.

Steiner v. Windrow Estates involved a dispute over whether Nigerian Dwarf Goats are household pets (permitted by CC&R's) or livestock (not permitted). The court held that they were pets.

Neither of these cases really addresses Mark's issue, which is that his board is apparently trying to create rules and regulations where the CC&R's do not give the board that authority.

Bodine does contain some discussion about the North Carolina Planned Community Act. It would be best to start with that as it appears that the legislature did grant boards of directors certain powers that may not be explicitly stated within their CC&R's. It is not clear to me but it looks like the act may be found at N.C. Gen.Stat. § 47F-1-101 (2009), et seq.