What does Fiduciary Duty mean for directors and officers of HOA? Question: The directors and officers of a homeowners’ association (HOA) are said to have a “fiduciary duty” to the members of the association that they serve. What exactly does that mean, and what do those directors and officers need to be aware of? Answer: In basic terms, a fiduciary is someone entrusted to make decisions on behalf of another, in a relationship involving a confidence of trust. In …

Major changes for South Carolina HOA Laws This column was written by my law partner Cynthia Jones, who is licensed to practice in both North and South Carolina. There have been multiple attempts by the South Carolina Legislature over the years to enact laws concerning planned communities and homeowners’ associations (“HOAs”). Unlike North Carolina, until recently South Carolina had no laws for planned communities other than one pertaining to horizontal properties (condominiums). This year, legislation dealing with planned communities …

Looking for a new career? Consider Community Management! With the explosive growth of residential development over the last 20 years or so in the greater Charlotte region (and elsewhere), there has been a tremendous increase in the number of community and condominium associations, commonly referred to as “HOAs.” While the members of some communities choose to manage their HOA themselves, the vast majority hire professional management companies to handle the administrative tasks involved in running an HOA, which include …

To Serve or Not to Serve…alcohol at HOA planned event. This week’s column was written by my law partner Kimberly Sullivan, whose practice is focused on liability and insurance defense and risk management. Question:  Our HOA is planning a fall party at the community clubhouse, and we want to serve (but not sell) alcohol.  How can we minimize our risk? Answer:  Selling alcohol at a community party would require a license from the local ABC board. You are free …

Problems with Short-Term Rentals? Call a Town Hall Meeting. This column was authored by my colleague Allen Norwood.  Allen is a retired columnist and home editor for the Charlotte Observer.  He currently writes a column for the Observer’s weekly Home/Design section. If you’re concerned about short-term rentals in your neighborhood — and lots of you are, judging from my email inbox — it’s a good idea to call everybody in the community together for a meeting. No, not an official …

Can my HOA charge me for copies of financial records? Question:  I asked permission to review my homeowners’ association’s financial records for the past three years. I literally had to show the board where in the North Carolina statutes it said I had that right to these records before they would provide them to me. I understand that the law allows the HOA to impose a “reasonable charge” for producing and/or copying the HOA’s records for my review. However, …

Spotting and Stopping Fraud and Embezzlement in Your HOA This week’s column was written by my colleague Courtney R. LaLone, CPA, with LBA Haynes Strand, PLLC in Matthews, North Carolina. His practice focuses on financial and tax advice to community and condominium associations. Fraud and embezzlement can cause a homeowners’ association’s (“HOA”) board of directors a lot of time, money, and energy. So how can the board prevent potential fraud or embezzlement before it occurs? The solutions are simple but …

Can HOA board members be required to sign a Code of Conduct? Question:  Our HOA board has developed a code of conduct policy for board members. It specifically states that board members who violate it can be removed. Our bylaws include a specific process for removal of board members, based on a percentage vote of the members of the HOA. Can the board adopt a policy that conflicts with the bylaws? Answer:  I occasionally have HOA boards ask me to provide …

To Pay or Not to Pay. . . HOA fees Question:  I live in a subdivision with recorded deed restrictions that address the use of the property, but the restrictions have no provisions for the establishment of an HOA, maintenance assessments, dues, or fines. The developers recorded a letter of authority to the HOA that states that the homeowners “may” join the HOA.  The HOA has created bylaws that purport to automatically make every homeowner in the community a member, and …

What’s the difference between HOA officers and directors? Question:  The developer of our community has sold all of the lots and turned control of the homeowners’ association (“HOA”) over to the homeowners. The bylaws for our HOA refer to “officers” and also to “directors” and “the board of directors.” Aren’t they the same thing?  How are they elected? Answer:  Almost all HOAs are established as nonprofit corporations that are created under state law. For-profit corporations have shareholders, whereas nonprofit corporations have …