Chapter 6 THE COMMON ELEMENTS

• Jurisdiction: North Carolina

6 THE COMMON ELEMENTS

§ 6.01. In General

Most local governments require that a certain amount of land be reserved as "common elements," or land that is set aside for all the eventual owners in the community.¹ In both planned communities and condominiums, the association is the entity that is responsible for the upkeep and maintenance of the common elements. However, the location of the common elements and even the manner in which the common elements are owned vary significantly from the planned community to condominium. For planned communities, standard practice is for the common elements to be deeded in fee simple to the association.² In rare instances, a developer will contemplate the sale of amenities to an association at fair market value.³ However, in most instances, the conveyance involves no consideration. For condominiums, there is no deed as all the owners are deemed by law to have an undivided interest in the common elements.⁴ Further, while the idea of limited common elements is contemplated in the PCA, it is a far more common and prevalent feature of the condominium, raising a number of legal issues as to whose responsibility it is to maintain and whose responsibility it is to pay for such maintenance. An owner may not tack on their adverse possession of common elements to that of their predecessor in title to create a claim of ownership in the common elements.⁵

§ 6.02. Planned Communities

§ 6.02.01. Maintaining the Common Elements

One of the main functions of the planned community is to maintain the common elements.⁶ The PCA states that the association is responsible for causing the common elements to be maintained, repaired, and replaced when necessary and to assess the lot owners as necessary to recover the costs of such maintenance, repair, or replacement.⁷ Frequently, an association or its contractors may have to access a lot in order to get to portions of the common elements. To the extent the association has to cross a lot owner's lot to access the common elements to maintain them, the association has an easement for the purposes of doing so.⁸ Lot owners have a corresponding obligation to maintain their lot under the PCA.⁹

Common elements are defined under the PCA as "any real estate within a planned community owned or leased by the association, other than a lot."¹⁰ At a minimum, therefore, the planned community usually has to maintain property owned by it under the PCA as "common elements." However, the declaration often defines common elements to include not only land "owned" by the association, but also easement interests the association may own.¹¹ Landscape and sign easements, while not owned in fee simple by the homeowners association, can also be defined in the applicable declaration to be common elements.¹² In short, ownership is not the only pre-requisite to land being deemed "common elements."

While the association clearly owes a duty to its own members to maintain the common elements, the North Carolina Court of Appeals has held that no such duty extends to third parties on public roads damaged by adjacent landscaping maintained by a homeowners association.¹³ With respect to an association's duty to maintain the common elements to its members, other, jurisdictions have imposed liability on associations to their members for negligently failing to maintain the common elements.¹⁴ Since maintenance of the common elements is one of the main purposes for which the association is incorporated, the board should take its duty to maintain them seriously. The failure to properly maintain common areas can lead to liability for the association from the association's own owners. In Shadow Group, L.L.C. v. Heather Hills Home Owners Ass'n, 156 N.C. App. 197, 579 S.E.2d 285 (2003), for example, the Court of Appeals held that an owner had stated a claim for relief against her townhome association when the association failed to correctly make repairs to common areas, which exacerbated the flow of water into the owner's townhome.

Questions often arise about the liability of the association to owners for damage to property caused by tree roots or falling tree limbs. In North Carolina, the owner of land where a tree rests is responsible to adjacent landowners for any damage to an adjacent landowner's property arising out of an incident involving the tree where the owner knew or should have known of a dangerous condition of the tree. In Rowe v. McGee, 5 N.C. App. 60, 168 S.E.2d 70 (1969), the Supreme Court held "where a landowner knows that he has a tree on his property which is in a dangerous condition and which is likely to fall and injure the property of an adjoining landowner, he has a duty to eliminate such danger." It is unlikely an association could know of any danger posed by an underground root. However, with respect to diseased or obviously dangerous trees on common areas, an association has a duty to treat or remove them. Therefore, it is important for boards to work closely with their landscaper or arborist in assessing the condition of trees on common elements that could cause damage to surrounding structures.

In addition to maintaining BMPs, which are almost always on common elements, many communities have rivers and streams that meander through them. Rivers and streams constantly change — creating land and washing land away. Rivers and streams that flow in and out of the common elements and lots are generally not the responsibility of the association, absent the association making an unreasonable use of the river or stream. Associations are generally not responsible for taking extreme measures to prevent the "avulsion" of an owner's land just because a portion of the river or stream at one point ran through the common elements. The association is no more an owner of such body of water than are other upstream and downstream property owners.

§ 6.02.02. Damage to Common Elements and Lots

Like other property, if damage is caused to the common elements, the association may have recourse against the person(s) causing the damage.¹⁵ The PCA has a specific procedure for assessing damages caused by an owner to the common elements against the owner. The procedure only applies to owners in the community that damage the common elements.¹⁶ However, it has no application to owners from outside the jurisdiction of the community who cause damage to the common elements. Claims for damages to common elements caused by third parties who are not owners would be governed by common law.¹⁷

Under the PCA, if an owner damages any portion of the common elements, the association has two options: (a) it can direct the lot owner to repair the damage; or (b) the association can make the repairs itself and recover damages from the responsible lot owner.¹⁸ If the cost to repair the common elements (or the lot) is more than the amount established for small claims, then the liability of the owner is determined as "provided by law." In these cases, the common law for damage to property would govern. In North Carolina, an owner is entitled to recover damages for the loss he has sustained, if that loss was connected immediately with the act of the defendant.¹⁹

If the damage to the common elements is less than the amount established for small claims, then any aggrieved party (either the owner or the association) may request a hearing before an adjudicatory panel (if appointed) or the executive board itself if no such panel exists.²⁰ The panel (or the board itself) may assess liability for the damage against the lot owner or against the association not in excess of the jurisdictional amount established for small claims by N.C.G.S. § 7A-210.²¹ In the situation where damage is inflicted on a lot by the association's agents, this puts the board in the awkward position of having to assess damages against itself.²² If the damage is to the lot, the liability of the association may be offset by the lot owner against sums owing to the association (i.e., assessments), and if so offset, can reduce the amount of any lien of the association against the lot at issue.²³ The association's claim against the owner is deemed an assessment secured by lien under N.C.G.S. § 47F-3-116.²⁴

§ 6.02.03. Limited Common Elements

Limited common elements in a planned community means a portion of the common elements allocated by the declaration or by operation of law for the exclusive use of one or more but fewer than all of the lots.²⁵ This can be a deck, patio, porch or other structure that is affixed to the main portion of the dwelling. In fact, the object need not be affixed to the dwelling. The only requirement under the PCA is that the object in question be for the "exclusive use of one or more but fewer than all of the lots." Thus, a shared driveway or alley could be designated as a limited common element as well.

One of the distinguishing characteristics between a common element and a limited common element, is that all owners pay for the maintenance, upkeep and repair of the common elements, whereas the PCA allows for the declaration to compel only those owners who "exclusively" use limited common elements to pay for its maintenance, upkeep and repair. Further, while all owners usually have an easement over the common elements, less than all of the owners have a right to use the limited common elements. The PCA requires that the costs of maintenance, repair, or replacement of a limited common element shall be assessed as provided in N.C.G.S. § 47F-3-115(c)(1).²⁶ N.C.G.S. § 47F-3-115(c)(1) states that any common expense associated with the maintenance, repair, or replacement of a limited common element shall (to the extent required by the declaration) be assessed against the lots to which that limited common element is assigned, equally, or in any other proportion that the declaration provides. Thus, to the extent limited common elements exist that the association maintains, the costs of such maintenance is allocated to the owners who enjoy the...