In a decision issued today (March 19, 2019), the North Carolina Court of Appeals examined the issue of proper architectural committees and their decisions.
Makar vs. Mimosa Bay Homeowners Association is an “unpublished” opinion from the NC Court of Appeals. That means that the decision is not controlling legal authority and should not be cited in other cases. However, even unpublished opinions give a sense of the Court’s thinking as to specific issues and how subsequent courts may rule. In short, the decision in Makar follows other recent appellate decisions that associations should act properly, follow corporate formalities, and do what the governing documents say.
In Makar, the Declaration provided that “Any Architectural Review Committee appointed by the Executive Board shall consist of at least 3 members.” The Makars purchased a home in 2012 and subsequently constructed a wooden fence without seeking association approval. When notified of the requirement that any construction be approved by the Architectural Review Committee (ARC), the Makars submitted an ARC application asking to keep the fence. The ARC denied the request. The Makars were subsequently fined and their property liened.
As with any 18-page appellate decision, there are a number of facts and issues. However, some of the more relevant points of this case are as follows. First, the Court noted that restrictive covenants can be “legitimate tools of developers,” but that they are “not favor[ed] by the law, and they will be strictly construed to the end that all ambiguities will be resolved in favor of the unrestrained use of land.” That is, if there is vagueness in the language of a Declaration, that vagueness will be construed against the drafter. Second, the Court also noted that a homeowner in a community association can only be required to do what the Declaration requires. (As an example, a homeowners association may not require the payment of construction bond if there is no express or implied authority to acquire a bond as part of the ARC process.)
The Makar facts were clear that the Declarant was to appoint ARC members for a certain time. The court noted that only plural forms were used to for the ARC, including “members,” “persons,” “owners” and “non-owners.” With this background, the Court noted that the Makars’ ARC application was not denied by a committee of three, but by an employee of the Declarant. As to both the architectural application and the subsequent fine, there was a “sole decision-maker.” The Court stated:
“It is abundantly clear from the record that at all times relevant to this case decision-making authority on behalf of the ARC rested with no one other than Frieze [an employee of the developer]. Indeed, as far as the Makars’ application was concerned, Frieze was the ARC and the ARC was Frieze. Such an arrangement in which Frieze served as the sole decisionmaker for the ARC is not permitted under the Declaration.”
Because the Makars did not receive a response from a “valid” ARC within the time limits prescribed by the Declaration, the Court found their fence to “be deemed permissible.” Further, since the fence was approved, any fines or liens imposed by the Association were improper as not authorized.
Here are some takeaways:
- Restrictive covenants should be clearly and unambiguously drafted. If not, they should be amended.
- Follow the language of the Declaration as to ARC appointment.
- Even during a period of Declarant control, if the Declaration provides for an ARC there should be a properly-appointed ARC.
For the full Makar opinion, visit https://appellate.nccourts.org/opinions/?c=2&pdf=37466
As to any specific situation with your association, circumstances matter and different facts can lead to different results. For assistance with any specific ARC issues or Declaration language, contact one of our community association attorneys in our Greensboro, Charlotte, Triangle or Coastal offices.