In a decision issued today (February 1, 2022), the North Carolina Court of Appeals examined several issues that associations deal with regularly—budget ratification, owner attendance at board meetings, rules governing board meetings, and association records requests. Nothing in the decision is groundbreaking, but the findings of the court may provide comfort that your association practices are proper (or may suggest you need to make some changes).
Almason v. Southgate on Fairview Condominium Association, Inc. et al. is an “unpublished opinion,” which means the decision is not controlling legal authority and should not be cited in other cases. However, even unpublished opinions give a sense of the Court’s thinking as to specific issues and how subsequent courts may rule.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 Almason, the owners in a condominium subject to the NC Condominium Act (NCGS 47C) had numerous complaints against their association and its board members, including:
- There was no quorum present for the budget ratification meeting.
- There was no motion, second or vote to ratify the budget at the member meeting.
- The board was not allowing owners to attend sufficient board meetings.
- Board rules limiting owner attendance at board meetings to 15 minutes were unreasonable.
- Board policy prohibiting owners from recording board meetings violated the Bylaws.
The NC Court of Appeals decided all these issues in favor of the Association.
Appellate cases are detailed and fact specific. However, here are some takeaways:
- Budget Ratification. Regardless of language in bylaws, all planned communities created after January 1, 1999 and all condominiums must follow the statutory budget ratification process. Those statutes specially provide that no quorum is necessary for the meeting. And no vote to “approve” the budget is necessary in that the budget will be ratified unless a majority of all the owners in the association vote to reject the budget. So the budget can be ratified in three ways: (1) no motion is made to reject the budget, because members are fine with it; (2) a motion is made to reject the budget, but the motion does not receive a vote of a majority of all owners in the association, so the budget is ratified; or (3) not enough owners show up at the meeting to constitute a majority of the entire membership (with so few owners present, there is no way the budget can be rejected).
- Owner Attendance at Board Meetings. There are statutes governing owner attendance at board meetings that apply to all condominiums and all planned communities. “At regular intervals, the executive board meeting shall provide [owners] an opportunity to attend a portion of an executive board meeting and to speak to the executive board about their issues and concerns.” The owners in Almason argued that a policy allowing owners to only attend three board meetings per year was unreasonable. The Court noted that the Bylaws did not require the board to allow owners to attend a certain number of meetings, and that the phrase “regular interval” could even mean “attendance at one Board meeting between annual meetings.”
- Rules Governing Attendance at Board Meetings. In Almason, the Association had a board policy that owners were permitted to attend 15 minutes of a board meeting, which the owners argued was arbitrary. As noted above, the statute governing owners attending board meetings states that owners have a right to attend “a portion” of such board meetings. The Court held that the Board’s 15-minute limit complied with the Association’s bylaws and statute.
- Owners Recording Board Meetings. In Almason, the Association had a board policy prohibiting the recording of Board meetings by owners in attendance. The owners argued there was no basis for such a policy in statute or the bylaws. However, the Court noted that association membership and board meetings are governed by Robert’s Rules of Order Newly Revised (12th Edition), and that Robert’s permits a deliberative assembly to make and enforce its own laws. As a result, the board “had the inherent authority to enact and enforce rules for its meetings and that those rules would apply to owners attending those meetings.”
- Records Request. In Almason, the owners made certain records requests pursuant to statute and took the position that the Association had failed to produce those records. The Association noted that it has produced records in its possession and that the additional records being requested did not exist. Owners’ position was that “it is not credible that no minutes exist for these months.” The Court held that owners “presented no evidence that such records actually exist to contradict the [Association’s] testimony the Board does not keep such minutes.” The takeaway here is that while an association has an obligation to turn over certain documents to owners upon request, the documents have to actually exist.
With such a long opinion (16 pages), it’s always best to read the actual case if you want to know how it might impact a different association. And then talk to an attorney about your specific facts. The Almason decision can be found here: https://www.nccourts.gov/documents/appellate-court-opinions/almason-v-sgate-on-fairview-condo-assn-inc-0.
For any HOA/condo meeting questions, contact one of the community association attorneys at any of Law Firm Carolinas’ five offices.