Lake Norman & Mooresville

Owners of homes vs. HOAs

One Lake Norman resident is raising awareness about the lack of regulation on homeowner associations in the state after his association moved to foreclose on his home last month.

The trouble began for Jim Lane when he planted pansies in a neighborhood common area near his Gilead Ridge home, which is a violation of association rules.

Citing the neighborhood's covenants and restrictions, the HOA began fining Lane $100 a day.

The HOA foreclosed on Lane's house because his unpaid fines now total more than $7,000. Lane has responded by suing the neighborhood association for mismanagement.

"They're using the laws to get rid of someone they don't like," said Lane. "We do not expect this to be settled outside of court."

Michael Hunter, the attorney for Gilead Ridge, said he could not comment on the pending litigation. (Hunter writes a column about homeowners' associations and the law that often runs in The Charlotte Observer's Home section.)

Lane has also created a website,, to raise awareness.

"There's a complete absence of a regulatory system. If there is an issue, the homeowner has no recourse whatsoever," he said.

The N.C. General Assembly recently passed legislation related to homeowners associations around the state.

House Bill 165 says foreclosures of HOA liens can only be filed once the unpaid HOA fines are more than 90 days past due. In addition, the HOA's board must authorize the foreclosure. That law takes effect Oct. 1.

The General Assembly has also asked the N.C. Real Estate Commission to create a disclosure form that would be provided by sellers when homes are bought.

This form would give home buyers information on how to contact the HOA, what services the HOA provides, any unpaid fees owed on the lot, any pending suits involved the HOA or the lot, and any fees that the HOA might charge in relation to the sale of the lot.

The General Assembly also directed a legislative committee to study HOA foreclosures that involve liens for unpaid assessments. Lake Norman real estate agent Charleen Newsome acknowledged the reputation that homeowners associations have for being tyrannical and harassing.

"We really need to do some screening if we don't do a lot of regulation because these are people's lives at stake. These are people's homes," she said.

Still, Newsome added the original intent of homeowner's associations was to protect homeowners.

"They're an asset because they keep everything conformed as far as what homeowners can do," she said. "That keeps the neighborhood looking very nice."

That conformity helps protect property values, she said.

The tradeoff might come when an overzealous homeowner association no longer makes you feel comfortable living in your own home, she said.

Homeowner associations can become even more aggressive about enforcement during hard economic times, said Kieran Shanahan, chairman of the N.C. Property Rights Coalition in Raleigh.

For instance, as more people foreclose on their homes, a higher proportion of any given neighborhood becomes bank owned.

"The bank's not going to pay those (HOA) dues," he said. "The HOA isn't collecting the revenues that they anticipated so they become more aggressive about enforcement and collecting fines."

Lane noted during a recent 12-month period, Gilead Ridge's HOA sent 1,800 violation letters to residents.

There are about 430 homes in the Huntersville neighborhood.

Since most HOA boards consist of volunteer residents, Shanahan said some HOA boards have reputations for showing favoritism toward friends in the neighborhood or failing to enforce codes uniformly throughout the neighborhood.

A reasonable solution - especially for larger neighborhoods - would be to hire a third party to handle financing and enforcement, he said.

"Good fences make good neighbors," he said. "The proverbial fence is having a professional association."

Still, for small neighborhoods, it might not be cost-effective to hire a third-party, said Shanahan.

To prevent friction with one's homeowner association, both Newsome and Shanahan urged potential buyers to read the neighborhood's covenants and restrictions thoroughly.

"People need to be aware of them before they buy their home," said Shanahan. "They need to understand that they're unilaterally agreeing to be bound by those terms."

Added Newsome: "It is what it is. You're either going to take it or you're not."

As Lane has learned, the consequences of not being on the same page with your homeowner association could end up costing thousands in fines or court fees.

"It's not about me and my pansies and the foreclosure anymore," he said. "I want to bring awareness to all of the homeowners who are being hijacked by their homeowner's association."