Covid-19 has disrupted every facet of life across the United States and homeowners’ associations are no exception. While associations may face additional issues such as budget shortfalls in the not-too-distant future, Covid-19 is currently causing unique challenges with respect to the power to levy fines or suspend privileges or services for violations of the declaration of covenants, bylaws, and/or rules and regulations of the association.
Associations are governed by N.C. Gen. Stat. § 47F-1-101 et. seq., and, more specifically, by written declaration of covenants and related implementing rules and regulations which set forth the rights and obligations of both the association and the individual homeowner. One of the rights typically afforded an association is the right to levy fines or suspended privileges or services to enforce homeowner compliance with the various covenants and rules and regulations. Before any fine or suspension may occur, the association must provide the homeowner with notice of the violation and an opportunity to be heard and present evidence before the appropriate execute board or adjudicatory panel. This process is now facing new challenges during the ongoing Covid-19 pandemic.
To begin with, it should be noted that Covid-19 is likely to have little to no impact on whether an association issues the initial notice of violation. Once an association determines that a homeowner is in violation of a rule or regulation, that association is likely to issue a notice of violation as it would in the normal course of business. If the violation is well founded, the homeowner is likely to address the issue and the matter will be resolved. Enforcement of association rules and regulations becomes more complicated if the homeowner disputes the propriety of a violation, and a hearing must take place before the Association can levy a fine or suspend privileges.
Conducting an in-person hearing during the current pandemic are problematic at best. State and/or local laws currently limit in-person gatherings and, depending on the number of required attendees, may make it impossible to conduct a hearing at all. In the same vein, limiting attendees, and certainly witnesses, may open the door to claims of due process violations. Additionally, conducting an in-person hearing may require the presence of an immunocompromised individual. Depending on the specific circumstances, this may raise additional due process concerns and perhaps novel questions of legal liability. Given these legal and logistical hurdles, conducting an in-person hearing during Covid-19 is fraught with risk.
Even assuming an association can conduct a hearing safely and in compliance with applicable State and local laws, any decision at hearing to fine or suspend privileges or services may spawn additional litigation between the association and homeowner. Covid-19 may provide homeowners grounds to assert atypical legal arguments that inject additional uncertainty into the outcome of a case. For example, legal arguments seldom available in association-homeowner disputes such as impossibility, frustration of purpose, and illegality, may find new life during the Covid-19 pandemic. (although force majeure clauses have been a hot topic during Covid-19, such a clause is highly unlikely to be found in association rules and regulations) As Covid-19 potentially expands the legal arguments available in association-homeowner disputes, associations are left to weigh the risk of enforcing even the most egregious of homeowner violations.
The information in this post is not to be considered legal advice and it is not intended to create, nor does it constitute, an attorney-client relationship. The principles of contract law vary by jurisdiction and may be subject to different interpretations under different circumstances. Please contact an attorney who will analyze the facts, governing documents, and law applicable to your specific case.