The North Carolina Supreme Court has recently retained the case of Riverpointe Homeowners Association v. Mallory to consider certain constitutional issues raised with the Planned Community Act.  Specifically, the Supreme Court will consider arguments from the homeowner in this case that the powers granted to communities in Act, including fining, are unconstitutional as applied to communities formed prior to the effective date of the  Act.

          The Supreme Court issued an order on 27 August 2008 in which it retained review of the constitutional issues raised in the homeowners appeal. The issue of retroactive application of the Act has already been decided favorably for homeowners associations by the North Carolina Court of Appeals in the 2007 case of Reidy v. Whitehart. 

The Virginia Graeme Baker Pool and Spa Safety Act (“Act”) was passed by Congress and signed into law in December 2007.  The Act is named after Virginia Graeme Baker, the granddaughter of former Secretary of State James Baker, who died in a hot tub in 2002.  The Act applies to condominium, townhome, and homeowners’ associations who have pools.

The purpose of the Act is to promote safety of pools and spas and help prevent drowning, especially of children.  The Act establishes a federal pool and spa drain cover standard, a state pool safety grant program and an education program to inform the public of methods to prevent drowning and entrapment.  The Act applies to “public pools and spas” which includes those open to the public generally, whether free or for a fee and those open exclusively to: (1) members of an organization and guests, (2) residents of a multi-unit apartment building, apartment complex, residential real estate development, or other multi-family residential area; and (3) patrons of a hotel or other public accommodations facility.  The Act is intended to apply to community association pools and spas.

Under the Act, by 19 December 2008, public pools and spas must be equipped with anti-entrapment devices or systems.  Generally speaking, every “public pool and spa” with a single main drain, other than an unblockable drain, must be equipped with at least one of the following devices:  (1) safety vacuum release system which ceases operation of the pump, reverses the circulation flow, or otherwise provides a vacuum release at a suction outlet when a blockage is detected, (2) suction-limiting vent system with a tamper-resistant atmospheric opening, (3) gravity drainage system that utilizes a collector tank, (4) automatic pump shut-off system, or (5) device or system that disables the drain. 

              For a copy of the new law, please click here.

The Supreme Court recently ruled in the case of Winding Ridge v. Joffe that a single family use restriction in a set of restrictive covenants was a structural limitation as opposed to a restriction on the type of occupancy permitted within a dwelling.  The Supreme Court ruling overturns a July 2007 Court of Appeals case which had held that a group of baseball players were in violation of the usage restriction and prohibited the students from occupying the residence unless they were related by blood or marriage or otherwise structured in the same way as a traditional view of an American family.  Judge Geer dissented in the Court of Appeals case and maintained that the restriction was instead, a structural limitation, as opposed to a usage limitation.  In her dissent, Judge Geer wrote, “I would hold in this case that the restrictive covenant, as drafted, is only a limitation on the type of structure that may be placed on the property and not a restriction on the type of occupancy permitted within the dwelling.”  The case was appealed to the Supreme Court where the Supreme Court reversed the Court of Appeals majority decision and adopted Judge Geer’s dissent.

The Court of Appeals has overturned a judgment in favor of a Haywood County developer who sued property owners for collection of assessments. The plaintiff was a developer in the Lake Junaluska development and brought suit against certain individual lot owners within the Lake Junaluska development. Some of the defendant lot owners’ deeds contained restrictive covenants which granted the developer the right to assess for certain service charges. When the defendants refused to pay the relevant assessments, plaintiff brought suit. The defendant owners argued that the restrictive covenants did not specifically set out an affirmative obligation to pay any money to the developer or anyone else. The trial court disagreed and entered judgment in favor of the developer.

On appeal, the Court of Appeals cited a line of appellate cases dating back to 1980 which held that covenants that impose affirmative obligations on property owners are strictly construed and unenforceable unless the obligations imposed are “in clear and unambiguous language” and “sufficiently definite” to assist courts in their application. Applying this line of cases, the Court of Appeals ruled that the restrictions in this case were not “reasonable” and “sufficiently definite.” As a result, the Court of Appeals reversed the trial court’s ruling in favor of the developer. Unique to this decision was the fact that this case involved a developer and not a homeowners’ association seeking to use the assessments sought to be collected.

The North Carolina legislature has recently enacted N.C.G.S. §22B-20, effective October 1, 2007, which has a limited effect on a homeowners association’s authority to regulate placement of solar panels on single family dwellings. The intent of the statute, generally, is to encourage the use of solar resources and to discourage homeowners associations from making the installation of solar technologies so cost prohibitive as to effectively discourage homeowners from using this alternate form of energy. The new law applies only to detached single-family residences - there are no restrictions on how a townhome or condominium association can regulate the installation of solar panels (including disallowing same). Generally speaking, a homeowners association may prohibit solar panels completely if they are visible on the house’s facade or slope of roof that is facing any area open to common or public access. The new law also provides that if not visible from the street of common areas, the homeowners association may still regulate the location and screening of the solar panels, as long as reasonable use of the solar panels can be made.

Community Association Practice Group

The Court of Appeals has recently ruled that the application of the Planned Community Act, specifically, the fining provisions in G.S. §47F-3-107.1, can be constitutionally applied to pre-1999 communities, and such application is not a violation of the contracts clause of the constitution. In the case of Reidy v. Whitehart Association, 648 S.E.2d 265 (N.C. App. 2007), a homeowner brought suit against his homeowners association contending that the fines imposed by the association on the homeowner for the homeowner’s failure to follow the architectural approval process, was an unconstitutional violation of the contracts clause and a deprivation of the homeowners procedural and substantive due process rights. The Court of Appeals rejected all the homeowners’ arguments and affirmed the trial court’s order granting injunctive relief to the association and imposing fines of $25 per day against the homeowner.

Community Association Practice

On 17 July 2007 the North Carolina Court of Appeals handed down two decisions dealing with the interpretation of single family use restrictions found in community restrictive covenants.

In the case of Danaher v. Joffee and Winding Ridge Homeowners Association v. Joffe, the Court of Appeals held that certain university students encouraged to live together by their baseball coach were not a single familyfor purposes of the restrictive covenants governing the community. The restrictive covenants of the community in the Joffe cases provided, in part, no building shall be erected, altered, placed or permitted to remain on any lot other than one single family residence and its customarily accessory buildings and uses. (more…)