JurisdictionNorth Carolina

§ 3.01. In General

Many counties and municipalities have some form of ordinance or regulation that relates to common interest communities in some respect. The majority of these local ordinances deal with stormwater runoff, maintenance of private streets, insurance and making sure the legal documents for the association have adequate requirements for homeowners to pay assessments to the association. Some local ordinances are very specific in their application, going so far as to dictate exactly what the developer must put in its declaration with respect to membership in the association, the assessments which must be paid to the association and the remedies of the association for owners who fail to pay assessments. Other ordinances are less specific and, still others are silent altogether with respect to associations. Some ordinances are awkwardly drafted with obsolete references to the "Unit Ownership Act" or even the "conveyance" of common elements to a condominium association. Most local ordinances in North Carolina appear concerned with the long-term viability of stormwater control measures in subdivisions designed to mitigate the effects of increased impervious surfaces which come along with new developments. For instance, it is common in North Carolina for local governments to require a three party agreement between the developer, local government and homeowners association whereby the association escrows funds for future use in repairing and maintaining stormwater detention facilities or "BMPs."1 In the largest metropolitan areas in North Carolina, the creation of some form of formal homeowners association appears presumed, and if not, required. In less-populated regions, ordinances contain less detail about such entities, but they are no less prevalent.

Both the PCA and the Condominium Act prohibit local ordinances from "discriminating" against planned communities and condominiums. Neither planned communities nor condominiums can have requirements imposed on them that are not imposed on "a substantially similar development under a different form of ownership or administration."2 The Official Comments to this part of the Condominium Act describe the prohibition as follows:

The first sentence of this section prohibits discrimination against planned communities by local law-making authorities. Thus, if a local law, ordinance, or regulation imposes a requirement which cannot be met if property is subdivided as a planned community but which would not be violated if all of the property constituting the planned community were owned by a single owner, this section makes it unlawful to apply that requirement or restriction to the planned community. For example, in the case of a high-rise apartment building, if a local requirement imposing a minimum number of parking spaces per apartment would not prevent a rental apartment building from being built, this Act would override any requirement that might impose a higher number of spaces per apartment merely by virtue of the same building being owned as a planned community.3

The drafters appear to have had in mind curbing discrimination against a planned community or condominium in favor of an apartment form of ownership. Local ordinances change from year to year. Therefore, it is important for counties and municipalities to perform an "impossibility" analysis when enacting ordinances which could potentially impact planned communities or condominiums. The local governing body must ask itself, would this ordinance be impossible to comply with simply by virtue of the fact that the preferred method of development is a planned community or condominium? If the answer is yes, the ordinance is invalid. If not, then the ordinance is acceptable. As long as a local ordinance does not have a discriminatory impact on planned communities or condominiums, then both the PCA and the Condominium Act specifically allow local authorities to pass laws relating to planned communities and condominiums and no portion of the PCA and Condominium Act will be deemed to invalidate or modify any local law, ordinance, or regulation.4 In this chapter, some of the basic provisions in county and municipal ordinances for some of the more populous areas in the state are addressed. As many of these ordinances change frequently, the reader is advised to consult the ordinances of the particular county or municipality to ensure accuracy.

§ 3.02. State Subdivision Regulation Statutes

North Carolina cities and counties have the statutory power to regulate the subdivision of land within their territorial jurisdiction. With respect to cities, the subdivision regulation statutes are located in Part 2 of Article 19 of Chapter 160A of the North Carolina General Statutes.5 With respect to counties, the subdivision regulation statutes are located in Part 2 of Article 18 of Chapter 153A of the North Carolina General Statutes.6 The statute allows such regulations to be adopted as part of a unified development ordinance or as a separate subdivision ordinance.7 City and county ordinances may only regulate subdivisions within their territorial jurisdiction.8 If a subdivider fails to meet even one requirement in the ordinance, the plan can be denied.9 On the other hand, if the subdivider meets all the technical requirements of local ordinances, then the plan should be approved.10 Further, a developer may have a "vested right" to proceed with a development as planned and approved notwithstanding subsequent changes to zoning laws and ordinances.11 In other words, once a project is approved, subsequent changes to ordinances or zoning laws cannot be implemented to effectively revoke the approval — the developer has a vested right to develop as originally approved.

State statutes allow for a subdivision control ordinance to "provide for the orderly growth and development of the city; for the coordination of transportation networks and utilities within proposed subdivisions with existing or planned streets and highways and with other public facilities; for the dedication or reservation of recreation areas serving residents of the immediate neighborhood within the subdivision or, alternatively, for provision of funds to be used to acquire recreation areas serving residents of the development or subdivision or more than one subdivision or development within the immediate area, and rights-of-way or easements."12 Although counties and municipalities have broad authority to provide for the orderly growth and development within their jurisdictions, this power is not without limits. As the Court of Apeals has noted, "[c]ounties . . . have no inherent legislative powers. They are instrumentalities of state government and possess only those powers the General Assembly has conferred upon them."13 In Union Land Owners Ass'n v. County of Union, 201 N.C. App. 374, 689 S.E.2d 504 (2009), for instance, the Court of Appeals struck down an Adequate Public Facilities Ordinance (APFO) adopted by Union County that authorized assessment of voluntary mitigation payment (VMP) against developers to offset the impact on school capacity resulting from a proposed development. The Court of Appeals held that because the General Assembly has neither expressly nor impliedly authorized defendant to shift that duty using subdivision ordinances that impose fees or use similar devices upon developers of new construction, the County's adoption of an APFO exceeded its statutory authority.14

Most municipalities and counties have attempted to fulfill the objective of "orderly growth and development" within their jurisdiction by requiring (or at least allowing) common area to be deeded to an association, requiring owners to pay assessments to associations to maintain the common area and requiring associations to maintain stormwater facilities and devices such as BMPs. The Supreme Court of North Carolina has determined that the intent of the statute was to provide the benefit of recreational areas for the immediate neighborhood.15 Other cases in North Carolina have interpreted the statute in ways which clearly encourage and facilitate the proliferation of homeowners associations.16 The end result of this case law has been a massive shift of billions of dollars of obligations from local governments to private homeowners associations.

§ 3.03. County Ordinances Applicable to Common Interest Communities

§ 3.03.01. Wake County

The Wake County Unified Development Ordinance ("Wake County UDO") regulates homeowners associations in a number of ways. Article 8.25 of the Wake County UDO provides as follows:

If a property owners association is to be responsible for the maintenance and control of roads, open space, recreational facilities, or other common areas an facilities within a subdivision, that association must have legal authority to maintain and exercise control over the common areas and facilities, including the power to compel contributions from residents or property owners to cover their proportionate share of the costs associated with the maintenance of the common areas and facilities.

This is a fundamental concept amongst just about all associations — legal documents (typically, the declaration) compelling owners to pay assessments in order to maintain roads, open space and recreational facilities in the community (typically which are deeded to the association and defined as common areas).17 This concept is also embedded in a portion of the PCA which is applicable to both pre and post 1999 communities.18 Under the Wake County UDO, subdivision occupants must be ensured direct access to and use of an amount of the subdivision's open space equal to a minimum of ten percent (10%) of the area of the development site.19 Therefore, common area is assured and homeowners associations are almost guaranteed in residential subdivisions.

Under the Wake County UDO, all documents providing for the establishment of a homeowners association in Wake County must be submitted to the...

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