Neighbors' covenants could lose some clout

Bill reins in rules for homeowners

When Jeannie Seanor put an 87-foot jasmine arbor behind her home in the River Ridge subdivision in southeast Raleigh, she knew little about the power of homeowners associations.

Then her subdivision's association began fining her $15 a day for refusing to remove the unapproved structure.

Seanor racked up more than $1,100 in fines before taking down the arbor in March. She said she paid them after learning that, under state law, the association could put a lien on her home and eventually foreclose if she didn't pay.

"If you read the power they have, it's scary," said Seanor, 40, who has put her family's home up for sale.

The issue of overbearing homeowners associations has gotten the attention of state legislators, who are expected to pass a bill this week that would limit those groups' power.

Under the bill, the associations could no longer foreclose on a homeowner for violating community rules or for attorney fees the association incurs in seeking repayment. Such action could occur only if a homeowner failed to pay the association's dues.

The law also would reduce the amount an association could fine a homeowner from $150 a day to $100 a day.

The legislation rises from homeowner association disputes in Charlotte, including one involving a homeowner's right to display the American flag.

"The vast majority of homeowner associations are doing a good job and being fair to homeowners," said Rep. Jennifer Weiss, a Cary Democrat and lawyer who co-sponsored the bill. "But there's not a lot of accountability, and some potential for abuse."

Disputes proliferate

As planned communities sprout across the Triangle, more people are living under covenants that dictate what they can and can't do with the exterior of their property. Many homeowners are drawn to communities with homeowner associations because they ensure continuity within a neighborhood and help protect property values.

There are more than 13,000 such associations in North Carolina and about 2,200 in the Triangle, according to Homeowner Associations of North Carolina.

Such numbers create ample opportunity for disputes between homeowners and the association boards of directors, which are charged with enforcing covenants.

Tina Frazier Pace has been practicing homeowners association law in the Triangle for six years. She said her caseload has increased 300 percent over the past four years.

Pace said she didn't think the new law would affect her much, since 90 percent of the cases she handles involve a failure to pay dues. She said only about 2 percent of her cases end in foreclosure, as many homeowners eventually go on payment plans to repay debts.

Pace said homeowner associations represent all owners and must deal with individuals who refuse to pay dues.

"HOAs aren't the mean guys," she said.

The latest attempt to make the associations more accountable comes after legislators recently expanded the number of associations that can assess fines.

Edward Link is the treasurer of the Parkway Unit Homeowners Association, which represents 1,700 homes in Cary. Until a recent law change, Parkway could not assess fines on homeowners because it is an older community built in the early 1990s.

Fines motivate

Link said the ability to levy fines has been a big help in getting homeowners to change their behavior.

He said fining a homeowner $150 a day is outrageous, but he said using more moderate monthly fines is an effective way to protect property values within a community.

"If we don't push people more than we have in the past to take care of the exterior of their homes, people are just going to look at newer homes," he said.

The new law also would forbid homeowner associations to ban or regulate the flying of the state or national flag up to 4 feet wide and 6 feet long -- unless the development's covenants prominently state the rules.

"If you're going to limit the right to display the flag, you'd darn well better say it up front," Weiss said. "The result probably will be that they won't do it."

Openness mandate

Other changes in the law would require associations to let members speak at board meetings, to let homeowners see the association's financial records and meeting minutes -- as many associations already do -- and to follow the latest version of Robert's Rules of Order.

Pace said she doesn't think associations have a problem with disclosure.

"There are really no secrets in homeowners associations," she said. "I don't think that's really an issue."

As for Seanor, any legal changes will come too late for her. But she hasn't given up her fight with River Ridge.

Seanor took her homeowners association to small claims court to recoup her losses. She has an arbitration hearing with the organization's attorney this morning.