Annual assessments for homeowners associations should be calculated to satisfy the budget and are shared equally among the homeowners pursuant to the allocations set forth in the declarations. Special assessments can also be passed pursuant to the declarations for larger or unexpected items, such as capital improvements or catastrophic damage. The better practice is to maintain and fund reserves for known large future expenses, such as painting, parking lot repair, new condominium roofs, etc. Other assessments can be limited to a few or a single homeowner where damage or expense is done to a common element that only a limited number of homeowners have access to, such as a firewall, or where a common element is damaged by the negligent or intentional acts of a homeowner. Late fees not to exceed $20 per month or 10% of the unpaid assessment can be imposed on unpaid Assessments.
Fees for services, collections, consulting or other administrative tasks cannot be levied against homeowners unless it is specifically set forth in the declarations. Fees also cannot be assessed in a home sale as a “transfer fee” although the HOA can charge a reasonable amount for any recordation and preparation of documents requested to close the home sale. Legal fees can be assessed under the Acts for any lien put on the property for failure to pay assessments, fees or fines, provided written notice is given.
Fines are also allowed for the violation of the declarations, bylaws or rules and regulations as long as they are reasonable and the homeowner has been provided notice and given an opportunity to be heard on the issue. In addition to fines, the HOA can limit or remove access to common elements, such as a swimming pool or clubhouse, for violations.
--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.
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