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Recent HOA Case a Good Reminder in North Carolina & South Carolina

At Black, Slaughter & Black we keep track of legal trends and recent case law that impacts our HOA and condo clients.  Although it is a case out of Virginia, the decision in Sainani v. Belmont Glen Homeowners Association, Inc. highlights three important themes that HOAs in North Carolina and South Carolina should be aware of:  (1) there is a difference between rules and regulations and restrictive covenants, (2) the specific wording in covenants matters, and (3) HOA and condo boards must create restrictions that are clear and unambiguous.

First, there is a distinct difference between rules and regulations that govern common area and restrictive covenants that govern individual owners’ property.  In general, any HOA or condo may regulate activities upon the common area by creating reasonable rules and regulations.  Things such as pool rules would be a good example.  Any board of directors may create reasonable rules to govern what happens at the pool.  However, to control what happens on an owner’s property would require specific authority in the community’s covenants in order to do so.  

Second, the specific wording of restrictive covenants is important.  In Sainani v. Belmont Glen, the HOA created rules and regulations that attempted to prohibit seasonal decorations on individual homeowner property by regulating the dates and time of day during which owners could display decorative lighting.  There was no similar restriction in the HOA’s covenants.  The only relevant restrictive covenant the HOA had provided that “[n]o exterior lighting on a Lot shall be directed outside the boundaries of the Lot” and that exterior lighting “which results in an adverse visual impact to adjacent Lots, whether by location, wattage or other features, is prohibited.” 

The Court found that this restrictive covenant was inapplicable because it merely prohibited directing exterior lighting outside the boundaries of the lot and causing any “adverse visual impact to adjacent Lots, whether by location, wattage or other features.”  In addition, the rules and regulations that the HOA developed to control seasonal decorations didn’t mention “adverse visual impact” at all nor did they regulate the “location, wattage or other features,” of the decorations.  Instead, the seasonal guidelines attempted to regulate the dates and the time of day during which residents could display decorative lighting. The guidelines thus went beyond the scope of the exterior-lighting covenant and the court would not enforce them.   

Third, to be enforceable, restrictions must be clear and unambiguous.  If they are, then courts will construe them according to their plain and ordinary meaning.  Ambiguity occurs when a restrictive covenant is reasonably susceptible of more than one interpretation.  Where that is the case, the legal presumption is that any doubts are to be resolved in favor of the free use of the property.  To make sure that restrictive covenants are well-drafted, we always recommend asking an attorney familiar with drafting restrictive covenants to assist in the process.

This case is a good example of how HOA and condo boards must be aware of the differences between restricting common area versus individual owner property.  It is also a good reminder of the importance of drafting good covenant language in order to ensure that they are later determined to be enforceable. 

Content provided by David Wilson of Black, Slaughter & Black, PA. Article was originally posted here.