"Are you SURE they can do that?" -- The Powers of a Homeowners Association

The standard powers of a HOA under N.C.G.S. Chapter 47C and 47F are fairly broad and usually consist of the enumerated powers contained in those statutues, including:

• Adopt and amend bylaws and rules and regulations;
• Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from lot owners;
• Hire and discharge managing agents and other employees, agents, and independent contractors;
• Institute, defend, or intervene in litigation or administrative proceedings on matters affecting the planned community;
• Make contracts and incur liabilities;
• Regulate the use, maintenance, repair, replacement, and modification of common elements;
• Cause additional improvements to be made as a part of the common elements;
• Acquire, hold, encumber, and convey in its own name any right, title, or interest to real or personal property, provided that common elements may be conveyed or subjected to a security interest only pursuant to G.S. 47F-3-112;
• Grant easements, leases, licenses, and concessions through or over the common elements;
• Impose and receive any payments, fees, or charges for the use, rental, or operation of the common elements other than the limited common elements and for services provided to lot owners;
• Impose reasonable charges for late payment of assessments, not to exceed the greater of twenty dollars ($20.00) per month or ten percent (10%) of any assessment installment unpaid and, after notice and an opportunity to be heard, suspend privileges or services provided by the association (except rights of access to lots) during any period that assessments or other amounts due and owing to the association remain unpaid for a period of 30 days or longer;
• After notice and an opportunity to be heard, impose reasonable fines or suspend privileges or services provided by the association (except rights of access to lots) for reasonable periods for violations of the declaration, bylaws, and rules and regulations of the association;
• Impose reasonable charges in connection with the preparation and recordation of documents, including, without limitation, amendments to the declaration or statements of unpaid assessments;
• Provide for the indemnification of and maintain liability insurance for its officers, executive board, directors, employees, and agents;
• Assign its right to future income, including the right to receive common expense assessments;
• Exercise all other powers that may be exercised in this State by legal entities of the same type as the association; and
• Exercise any other powers necessary and proper for the governance and operation of the association.

          The powers themselves are mostly exercised by the HOA’s Board of Directors. Other than elect its members, amend the declarations or bylaws, or determine the qualifications and terms of the directors, the Board is empowered to exercise all the powers of the HOA. The directors typically elect the officers of the HOA. The directors and officers have a legal fiduciary duty to act in good faith and loyalty to the HOA.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678.

Comments

[Mary T]

Hello. Our HOA for a 2nd property we own (lake)has a low annual assessment (only $50 per year). The HOA had annual meeting Memorial Day weekend and voted to impose a $20 per month late fee. They historically have withheld access to amenities (i.e. can't pick up key to boat ramp until annual assessment paid so we usually don't pay until we are heading to lake in summer). I was out of town for a good part of May - July. I sent my annual payment of $50 but while I was out of town in July they sent a letter that indicating that late fee would be effective on 7/21 (my check was mailed on 7/19 and cashed on 7/29 by the HOA). It seems that there should be some limits on percentage per month of late fees, particularly if $20 reflects 40% of the total assessment! I also think there should be an implementation period since the annual meeting historically has very low attendance there should be a longer period of time to communicate to homeowners, etc. The HOA cashed my check my $50 check a week after the $20 fee was imposed Must I now pay the $20 late fee? What is considered a reasonable 'implementation period' for implementing late fees.

[Bradley Coxe]

Under the statute they can charge $20 per month or 10% of the assessments unpaid, whichever is GREATER. You'll have to review your declarations to see if there is any limitation for your HOA. If they try and withhold privileges for nonpayment, they should have those procedures for imposition of fines or suspension of privileges should also be in the declarations. If not, they are still required to provide a hearing before the Board or a committee that has been set up for that purpose.