North Carolina Supreme Court Limits HOAs' Ability to Restrict Solar Panels

Here's the house in question: What do you think?

Today the N.C. Supreme issued its ruling in favor of the homeowners in the case concerning the HOA’s authority to prohibit solar panels on the front of a home via an architectural review decision as opposed to where such panels are specifically prohibited in the recorded restrictions for the HOA. The decision by the Supreme Court overruled both the trial court’s and the Court of Appeal’s decisions. The Court was divided 4-3 and the opinion includes strong dissents by three conservative justices including the Chief Justice. 

The case involved the interpretation of N.C. Gen. Stat. 20B-20, which generally prohibits unreasonable restrictions on the installation of solar collectors, but which contains a very specific exception in subsection (d) thereof allowing homeowners associations to prohibit solar collectors on the fronts of homes. That exception reads as follows:

(d) This section does not prohibit a deed restriction, covenant, or similar binding agreement that runs with the land that would prohibit the location of solar collectors as described in subsection (b) of this section that are visible by a person on the ground: (1) On the facade of a structure that faces areas open to common or public access; (2) On a roof surface that slopes downward toward the same areas open to common or public access that the façade of the structure faces; or (3) Within the area set off by a line running across the façade of the structure extending to the property boundaries on either side of the façade, and those areas of common or public access faced by the structure.

Seems pretty clear, right? In a somewhat tortured analysis, the majority determined that this language allows homeowners associations to prohibit front-facing solar panels only if the restriction appears in the association's recorded restrictions, and not if the prohibition is made by the association (or its architectural review committee, in this case) pursuant to its architectural review process, even if its architectural review is granted very wide latitude in the recorded documents, as it was in this case.

A number of liberal (North Carolina Attorney General Joshua Stein's office) and pro-solar-industry groups weighed in on the case by submitting briefs encouraging the Court to overrule the Court of Appeals, and it appears that the decision had an unenunciated policy basis behind it aimed at encouraging the use of solar power, which is admittedly the stated intention of the statute.

In our mind, the dissent (and the Court of Appeals) makes the better argument, and of course we are in general in favor of decisions which support rather than limit community associations' authority to determine what is best for their neighborhoods. But like it or not, the decision of the majority controls, meaning that HOAs now do not have authority to prohibit solar collectors on homes unless that authority is specifically set forth in the HOA’s recorded restrictions, or an amendment thereto - the decision cannot be simply based on the HOA's architectural review authority. The case is Belmont Association v. Farwig.

Contact us if we can assist your association in implementing its own enforceable restrictions and rules and regulations.

HOA transfer fees - are they enforceable in North Carolina? What about in South Carolina?

WSOC-TV interview re HOA transfer fees

We were pleased to be featured on today's WSOC-TV news in an investigation by reporter Scott Wickersham about HOA transfer fees. You can watch the report here: South Charlotte HOA charges substantial fee to leave neighborhood

We could write pages about the topic, but suffice it to say that for any North Carolina HOA or condominium created on or after July 1, 2010, transfer fees, meaning any fee paid to the HOA or anyone else, are prohibited except for from the first purchaser from the developer. 

While HOAs or condominiums created prior to that date are excluded from this prohibition, any HOAs considering enforcing a transfer fee by lien or other legal action should take great care and consult with their attorneys first.

Fees paid to the HOA or the HOA's management company for closing certifications or payoff letters are NOT considered transfer fees as long as they do not exceed $200 (plus an additional $100 rush fee if needed within 48 hours.)

In South Carolina, transfer fees are NOT regulated and are purely a matter of your HOA's recorded restrictions. You have read those, right?

As always, you need to get involved in your HOA and be aware of not only where its money is going, but also where it is coming from - it could be from you when you go to sell your home. All associations are required to have an annual meeting, and in North Carolina, additionally are required to have an annual budget meeting where the budget for the upcoming year is reviewed with the members. 

Avail yourself of these opportunities to be aware of where the association’s funds come from and where they go! Get involved in the budget process so you are not surprised when charges may become due at closing.

At closing, buyers and sellers can only be made to pay what they have legally agreed to pay as between the two of them. The closing attorney works for them. Subject to the terms and conditions of the purchase agreement between the parties, the closing attorney should not put anything on the final closing statement which is objected to by either party.

Folks buying or selling homes need to review the closing disclosures carefully and as far ahead of time as possible! Be prepared to delay closing if necessary until your concerns regarding what you are being charged at closing are satisfied. This means not having movers scheduled at the home for the same day that closing is scheduled, for example. Sellers in particular have little bargaining power at the closing table, and even more so if there are movers moving their furniture out the front door at the same time they are reviewing the closing documents for the first time.

We represent HOAs and condominium associations throughout North Carolina. We DO NOT represent homeowners in disputes with their HOAs. Please contact us if we can be of service to your HOA.