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Lawmakers slow to crack down on abusive homeowners associations

RALEIGH — In a year when North Carolina legislators have been especially busy, their lack of action regarding one issue is fairly remarkable.

Since January, Republicans who control the state House and Senate have seemingly been trying to make up for, in a single year, a century-long absence of power.

They’ve been especially active when it comes to legislation affecting property rights, whether involving city annexations or government condemnations.

So what’s one to make of their inaction on an issue — abusive homeowners associations — that seems to generate more complaints by homeowners than annexation and condemnation combined?

Two bills filed in the House would regulate abusive practices by homeowners associations. One of those bills grew out of recommendations from a bipartisan study group that met during the last two years.

Yet legislators appear likely to study the problems arising from homeowners associations for another year or two before contemplating any real action.

Property rights, it would seem, are important when they conflict with rules of local government. It’s another matter when they conflict with the de facto mini-governments called homeowners associations, the homebuilders who set them up and the lawyers and management companies who make money off of them.

Conflicts arising out of these associations are growing because, as the state’s population increases, more and more neighborhoods come with restrictive covenants. Homeowners associations are created to enforce the covenants and provide for the common needs of residents. It is estimated that 18,000 homeowners associations now exist in the state.

Some of those conflicts end in foreclosure proceedings, at times after a few hundred dollars in late dues turn into thousands of dollars in fines and late fees.

One Raleigh homeowners association started foreclosure proceedings against 23 different homeowners, some owing as little as $115 in late association dues. In Granville County, foreclosure proceedings began against a homeowner even though she had documentation showing that she had paid her dues.

Another homeowners association imposed fines and ordered a Wake County homeowner to make $18,000 in renovations because of the home’s trim, despite having approved the design.

Representatives of homeowners associations say that these cases aren’t typical.

But The Wilmington Star-News found 125 foreclosure proceedings begun by homeowners associations between 2008 and 2010 in New Hanover County alone.

One bill filed in the House would simply ban foreclosures on liens based on unpaid dues and late fees.

The other bill – the one that grew out of the two-year House study – would open up association records, set time limits and notification requirements for when liens can be exercised and give members more control over association governance. Some of the changes would only apply to new homeowners associations, a recognition that undoing existing contractual arrangements might prove unconstitutional.

As innocuous as the second bill sounds, it looks as if it will go nowhere this year.

Being for property rights must only be a good thing when you make the right people mad.

Scott Mooneyham writes about North Carolina politics for the Capitol Press Association.

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