Can HOAs spend money to fight rezoning projects nearby?

Q: Members of our community have been involved in a lawsuit over the possible installation of a solar-panel farm just outside the entrance to the community. We won the lawsuit based on the fact that 1) The solar farm would not be in “harmony” with the surrounding residential communities and 2) it would have a negative impact on home values. The owner of the property where the solar farm was proposed is now appealing the case. The litigation has been funded solely by volunteer homeowner contributions thus far, but we are wondering if our homeowners’ association could legally help defray some of the costs as the appeal progresses. At this point our HOA board is of the opinion that they cannot help us because the site of the dispute (the solar farm) lies outside our community. Can you offer guidance? A: HOAs are often engaged, willingly or unwillingly, in legal actions that affect real estate in or around the community – usually in the form of rezoning petitions or eminent-domain (condemnation) actions by local municipalities. I suspect that the lawsuit you mention pertains to a rezoning petition by the landowner.

The N.C. Planned Community Act, which applies to communities formed in 1999 or later, does not limit an HOA to participating in litigation only as to matters that lie within bounds of the planned community. Section 47F-3-102 of the Act states: “Unless the articles of incorporation or the declaration expressly provides to the contrary, the association may … institute, defend, or intervene in litigation or administrative proceedings on matters affecting the planned community.”

It seems beyond argument that the installation of a solar farm next door would “affect your planned community.” This statute, therefore, would allow your HOA to intervene in the rezoning proceedings if the HOA chose to do so. The inquiry does not end there, however. Whether your HOA can or should share some or all of the cost for the appeal also depends on what your community’s governing documents say about permitted uses of HOA assessment funds. Many declarations of covenants, conditions, and restrictions have a “catch-all” provision that allows HOA funds to be used for things that, in the discretion of the board, support the health, welfare and well-being of the residents and the community. There may also be provisions in your HOA’s bylaws that offer guidance on this issue.

If your CCRs or bylaws have similar language, and if the board of directors believes that spending association funds on the litigation is a prudent use of those funds, then there’s really nothing that would prohibit the board from doing so. If the CCRs and bylaws do not have any language that could reasonably be interpreted as authorizing such an expenditure, the board may want to consider proposing an amendment to the CCRs to allow it.

The amendment would have to be approved by a vote of the members, which would give the owners the ultimate say.

This column was originally published in the Charlotte Observer on March 3, 2015. © All rights reserved.

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