Chapter 15 ARCHLTECTURAL CONTROL

• Jurisdiction: North Carolina

15 ARCHLTECTURAL CONTROL

§ 15.01. In General

Whereas use restrictions are objective limitations on what one can do with one's property, architectural control is focused on the subjective procedural process a homeowners association uses to control new construction. Architectural control is the means and processes by which an association maintains control over what is constructed on property subject to the declaration and recorded covenants for the association.¹ It is the way the plan and scheme of development initially set out by the developer is maintained in the years during and subsequent to developer control and turnover.² Today, it is also a process that can protect the environment and how various intricate stormwater systems function over lots and common elements. The concept of "architectural control" is not something new in the United States. For decades, developers have placed restrictions in covenants requiring approval from the association before a change is made on a lot. As one court has noted,

It is no secret that housing today is developed by subdividers who, through the use of restrictive covenants, guarantee to the purchaser that his house will be protected against adjacent construction which will impair its value, and that a general plan of construction will be followed. Modern legal authority recognizes this reality and recognizes also that the approval of plans by an architectural control committee is one method by which guarantees of value and general plan of construction can be accomplished and maintained.³

Architectural committees exist and are active in condominium associations; however, the majority of cases dealing with architectural committees involve improvements in single-family detached communities. This makes sense, because owners in planned communities have more control over their lots, which are visible to the entire community, whereas owners of condominiums are limited in what they can do to their units or to limited common elements, which are not obvious to the entire community or are outside the owner's control.⁴

Pre-approval of house plans and improvements in residential subdivisions is nothing new in North Carolina and there are a number of appellate cases on the subject.⁵ However, the wording for such restrictions and the manner in which the pre-approval process is carried out has changed considerably over the last 60 years. Older pre-approval procedures were added to restrictions contained in deeds, not declarations. This was problematic, however, because oftentimes such restrictions merely established personal covenants that ended on the death of the grantor.⁶ Over time, however, common practice has become to lodge detailed pre-approval procedures in recorded covenants, which run with the land and are binding on all present and future lot owners in subdivisions. Today, architectural control is usually achieved by a committee of owners who are appointed by the board of directors.⁷

In some respects, the architectural committee is the most important committee in a common interest community. The committee generally serves at the pleasure of the board and can be appointed and removed at the discretion of the board. Architectural committees are extremely important in planned communities where they are, in essence, the arbiter of the plan and scheme of development. However, it is ultimately the responsibility of the board to appoint a committee and make sure the committee is functioning consistent with the association's governing documents. In other words, the committee, once appointed, is not something the board can simply forget since the governing documents usually obligate the board to appoint and maintain a committee in the first place. As the Official Comments to the Model Nonprofit Corporation Act point out,

Section 8.25 limits the role of board committees in light of the competing policies: on the one hand, it seems clear that appropriate committee action is not only desirable, but is also likely to improve the functioning of larger and more diffuse boards of directors; on the other hand, wholesale delegation of authority to a board committee, to the point of abdication of director responsibility as a board of directors, is manifestly inappropriate and undesirable.⁸

Due to a board member's ongoing fiduciary duties, the board should take care to make sure the architectural committee is doing its job and serving the function for which it was created. Architectural committees rule on a host of changes ranging from landscaping changes to the construction of new homes and everything in between.⁹ Whether and the extent to which an application has to be submitted to the committee, depends on the specific language of the declaration. With broadly worded declarations, almost all significant improvements, modifications or changes to a lot will need pre-approval from the committee.

Architectural control is mostly a creature of the declaration. There are almost no statutes or regulations requiring an owner to get approval of the association or its architectural committee before making an improvement to one's lot or home, although the Nonprofit Act does have a few procedural rules for committees of nonprofit corporations that would extend to architectural committees in incorporated associations.¹⁰ Therefore, if the declaration does not require approval from the association before an improvement is made, owners are generally free to make changes to their lots without approval (provided such improvements are otherwise consistent with the declaration).¹¹ In some cases, a homeowner may be subject to two different architectural control provisions in two declarations — one for its sub-association and one for the master association. Therefore, it is important to consult all applicable declarations.

Architectural control provisions can be broad and sweeping. Since it is usually axiomatic based on the legal documents that an owner cannot build on common elements, architectural control is generally a concept associated with improvements on lots, not common elements. Another fundamental hallmark of architectural control provisions is that they usually grant wide latitude to the architectural committee to reject plans that are believed to be inconsistent with the plan and scheme of development. Of necessity, such decisions are subjective, but nevertheless enforceable by North Carolina courts. Another common provision in declarations is a timeline for architectural committees to make decisions. For instance, the declaration may require the architectural committee to make a decision on an application within 30 days. The intent of such provisions is to prevent an architectural committee from "filibustering" an application by not accepting or rejecting it, which could lead to situations where expensive improvements are made under great uncertainty by the owner, or any owner would be deprived from the benefit of proceeding with certainty that its planned improvements are acceptable. It is clearly preferable to have a time limit for such applications that works to the benefit of both the association and the owner by providing certainty and a clear time within which proposed improvements will be considered by the association. When a time limit is in the declaration, the repercussions for a committee failing to respond within this time period vary — in some instances, the proposal is deemed denied, in others it is deemed approved.¹² Thus, it is critical to consult the specific wording of the declaration as soon as an application is received to make sure the committee convenes, considers the application and responds in a timely manner.

Unlike use restrictions, which are normally more objective requirements and limitations on what can be done on a lot, architectural control focuses instead on a process — the application, review of the merits of the application and its consistency with surrounding structures, and a decision on the application. In this regard, it is similar to the process one must go through with a local government when applying for a variance to zoning restrictions. Because any number of improvements can be proposed, and because the decision is necessarily subjective, it is common for associations to adopt architectural guidelines that aid owners in knowing what sorts of improvements will generally be acceptable in the community.¹³ Such guidelines, while not typically recorded, are invaluable tools for aiding owners in planning projects and submitting applications to architectural committees. Importantly, the guidelines themselves are not what are enforced per se when litigation arises over an architectural committee's decision. Rather, it is usually the procedural requirement for pre-approval embedded in the recorded covenants that is enforced by the court. Nevertheless, an improvement that is objectively inconsistent with the guidelines is compelling evidence usually that the change is not consistent with the community's plan and scheme of development and a committee's decision was made in good faith. Occasionally, however, covenants will authorize the board or architectural committee to promulgate guidelines about the appearances of lots that may be objectively enforced.¹⁴

Section 1 - Architectural Control Example 15-1

No exterior construction, alteration, addition, erection or landscaping of any nature whatsoever shall be commenced or placed upon any part of the Community, except such as is installed by Declarant, or as is approved in accordance with this Section, or as is otherwise expressly permitted herein. No exterior construction, addition, erection, alteration or landscaping shall be made unless and until plans and specifications showing at least the nature, kind, shape, height, materials, color, texture and location shall have been submitted in writing to and approved by an Architectural Control Committee (ACC).

Section 1 - Architectural Control (continued)

The ACC may be...