A rather unusual community association decision was issued yesterday by the North Carolina Court of Appeals. Without question, the facts are rather convoluted and not of that much interest to other associations, but there’s one takeaway worth noting.
In Bilodeau v. Hickory Bluffs Community Services Association, Inc. et al., owners in a homeowners association were called to a hearing before the board pursuant to NCGS § 47F-3-107.1 for alleged violations of the declaration. The owners were fined, but during the pendency of a lawsuit about the hearing and fine a new board was elected, which immediately voted to cease imposition of any fines against the owners. Other owners, including past members of the board of directors that imposed the fines sued the association, the new board, and the homeowners at issue seeking an order to foreclose on liens against the owners’ property for unpaid fines. The newly elected board then voted to rescind and vacate any past fines against the homeowners.
While numerous questions were argued before the Court of Appeals, one was basically “can a board change its mind and rescind fines previously imposed on an owner”? Plaintiffs argued “no,” that once fines are imposed the board is without authority to rescind them under the association’s governing documents and must pursue a lien against the fined member’s property.
The Court of Appeals noted that generally “the power of an entity to take action inherently includes the power to alter or rescind such actions once taken.” The Court also referenced Robert’s Rules of Order Newly Revised (11th Edition), which by state statute governs HOA member and board meetings in North Carolina:
Rescind—also known as Repeal or Annul—is the motion by which a previous action or order can be canceled or countermanded. The effect of Rescind is to strike out an entire main motion, resolution, order or rule that has been adopted at some previous time.
As a result, the Court of Appeals found that “Even if the fines had been properly imposed . . . , the Board possessed the authority under the Planned Community Act and Robert’s Rules of Order to later rescind the fines.” While logic and common sense might suggest a board could later change its mind as to a prior violation or fine decision, Bilodeau is the first North Carolina court decision to hold that.
The entire Bilodeau opinion can be found by clicking on Bilodeau v. Hickory Bluffs.
South Carolina Community Association Work
I was recently asked if our homeowner and condominium association practice in South Carolina is significantly different than our practice in North Carolina. The short answer is no. Our firm has three attorneys licensed in South Carolina, two of whom are permanent in our Charlotte office. We represent HOA’s and condo associations in South Carolina in most everything, including litigation, governing document amendments, covenant and restriction violations, collection of dues and assessments, board/annual meeting controversies, community association mediation and arbitration, and resolving neighborhood disputes. If you have any South Carolina community association issues and need assistance, give us a call.