A blog I wrote in 2016 (HOA’s: Follow Your Bylaws & Proper Parliamentary Procedure) examined two opinions from the NC Court of Appeals about HOA/condo board decisions. The short takeaway from those cases for associations? FOLLOW THE RULES.
A new case from the Court of Appeals issued today (June 19, 2018) again examines the requirements of an association board to take lawful action. In Homestead at Mills River Property Owners Association, Inc. v. Hyder et al., a Henderson County association brought a lawsuit against a successor developer due to a fight over Common Area. The case is lengthy (40 pages!) but here’s a quick summary of the takeaways:
- The Declaration and Bylaws are contractual. If they contain a provision that requires certain steps be taken before filing a lawsuit, such as a vote of the membership, those conditions should be followed.
- Association boards must follow certain basic principles of governance (i.e., board decisions should be properly made through a vote, minutes, etc).
In Homestead at Mills River, the Court found “no evidence tending to show the present action was ever authorized either (1) by a majority vote of Plaintiff’s directors present at a meeting, or (2) in a writing signed by all directors.” There were also no minutes of a Board meeting in the court record. According to the Court, “[b]ecause the evidence does not show Plaintiff’s Board approved this action, either by a majority vote of directors at a meeting or in a writing signed by all directors, we conclude the action was not properly authorized as required by Plaintiff’s bylaws, and Plaintiff therefore lacked standing to prosecute the action.”
To read the entire opinion, visit https://appellate.nccourts.org/opinions/?c=2&pdf=36317.