Association Answers

Do HOAs have an expiration date?

May 17, 2013 

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    Gelgud

    Re-edited for Raleigh by ctm

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Q: We live in a 15-year-old neighborhood with a homeowners association. What is the “life span” of an HOA? Is there an automatic “expiration date” or does the HOA have to be dissolved through legal action?

A planned community is formed when a developer records a declaration of covenants, conditions and restrictions (CCRs) for the community.

The CCRs are binding on everyone who purchases a lot in the community. They usually contain an array of rules and regulations, including architectural and landscaping requirements as well as restrictions on pets, parking, commercial vehicles, the use of common areas and innumerable other subjects.

CCRs also often contain provisions for the formation of an HOA that will manage the common areas and enforce the CCRs.

An HOA is formed by filing Articles of Incorporation with the secretary of state. The duration is typically perpetual. In general, CCRs can run for whatever duration the developer determines.

Most CCRs contain a provision, usually near the end, that specifies the duration of the CCRs and how they may be amended to be shortened or lengthened.

CCRs are usually drafted to be enforceable for a fixed number of years, typically about 25, and they renew automatically for successive periods (typically 10 years) unless a certain percentage of the lot owners vote to amend the CCRs or terminate the planned community.

The N.C. Planned Community Act, which covers planned communities formed in 1999 or later, requires the vote of 80 percent of the homeowners to terminate a planned community unless the declaration specifies a higher percentage.

If a planned community is terminated in this manner, there would be no further need for an HOA, and the HOA should be dissolved by filing the appropriate paperwork with the secretary of state.

Commercial vehicle parking

Q: Our HOA documents say, “No commercial vehicles shall be permitted on any lot, unless kept in an enclosed garage.” Exactly what constitutes a “commercial vehicle”? Does that include a standard pickup truck with a company logo on the door or regular sedans that are wrapped in advertising?

This is a common question, and it is one for which there is not a standard answer.

Many HOAs have restrictions on the parking or storing of “commercial vehicles.” Some have very specific definitions for the term based on the vehicle’s type, size, weight, number of axles, attached equipment, logos and signage. Other CCRs, like yours, have no such definitions, which can make enforcement problematic.

The best way to deal with the ambiguity is to amend your CCRs to add specific definitions of the types of vehicles to be covered by restrictions aimed at commercial vehicles.

I understand, however, that the process of proposing and obtaining owner approval for an amendment can be burdensome. The second best method would be for the HOA’s board of directors to adopt, by resolution, a definition that the HOA will apply in interpreting and enforcing the CCRs.

The N.C. General Statutes, in the chapter on motor vehicles, has some specific definitions based largely on gross vehicle weight, but these definitions are intended for interpretation under the motor vehicle laws and do not apply to HOAs.

The statutory definition for “commercial vehicle,” for example, only includes vehicles weighing more than 26,000 pounds, or vehicles used for transporting hazardous materials or 16 or more passengers.

This narrow definition would not include many vehicles that most people would consider to be “commercial vehicles,” so I would encourage your HOA to either amend your CCRs or formally adopt a definition by board resolution.

Attorney Michael Hunter represents community and condominium associations for the Charlotte firm of Horack Talley. Email questions to home@charlotteobserver.com.

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