Last month, the North Carolina Court of Appeals issued its opinion in the case of Alexander v. Burkey, 894 S.E.2d 291 (2023).
The Court of Appeals' opinion upheld the ability of condominium associations to determine in their covenants the maintenance requirements for limited common elements and to assess unit owners for the cost. It also reaffirmed that, in a condominium, ownership and maintenance are starkly different precepts, such that ownership allocations and maintenance obligations may differ.
Alex Dale of Ward and Smith, P.A. represented the Community Associations Institute in the case. The Community Associations Institute appeared with court approval as an amicus curiae (friend of the court). The Community Associations Institute is an international organization dedicated to providing information, education, resources, and advocacy for community association leaders, members, and professionals with the intent of promoting successful communities through effective, responsible governance and management.
The Community Associations Institute has more than 43,000 members, including homeowners, board members, association managers, community management firms, and other professionals who provide services to community associations. The Community Associations Institute is the largest organization of its kind, serving more than 74.1 million homeowners who live in more than 355,000 community associations in the United States.
The Court's opinion in Alexander tracked the Community Associations Institute's position in the case. The case involved the Courtyards of Huntersville, which has an atypical condominium structure. Rather than a "stacked" condominium, with each unit separated by a horizontal boundary, the Courtyards of Huntersville consists of 51 free-standing residential units, which look like patio homes.
The dispute in Alexander had resulted in two appeals, with the Court's December 2023 opinion following an amendment by the community to the condominium declaration. The Court's opinion gave the following takeaways, which are instructive to condominium developers, condominium associations, and condominium unit owners:
- Developers have options when forming a condominium community. The structure of a condominium can vary, even to the point of the community looking more like a planned community with single-family lots. The community will still be a condominium, and it will be administered under the laws governing condominiums.
- A condominium association may be given the responsibility to repair and maintain limited common elements. Generally, a condominium's common elements consist of community spaces, including lobbies and pools. A "limited" common element is a type of common element but one that is used by fewer than all members of the community. Limited common elements may include balconies, patios, or parking spaces. Given that limited common elements are a subset of the condominium's greater common elements, the Court's conclusion that an association may maintain and repair limited common elements is a logical outcome. Even so, the opinion solidifies that a condominium association can carry the responsibility to maintain limited common elements.
- The declaration of restrictive covenants determines the duty to maintain limited common elements. It is not dictated by the structure of the condominium. The maintenance responsibility comes from the restrictive covenants.
- The maintenance responsibility for limited common elements can be shifted based on the will of the community through a validly adopted covenant amendment. The vote required for this amendment would be based on the percentage required in the declaration for an amendment.
- Shifting the maintenance responsibility for maintaining and repairing limited common elements among the association or individual unit owners does not require a unanimous vote. Generally, the North Carolina Condominium Act requires unanimous approval of amendments that shift the allocation of undivided interests in the common elements or in the common expenses. A covenant amendment as to the party responsible for limited common element maintenance is not such an amendment. Likewise, a change in maintenance responsibility is not a reallocation of a limited common element among the owners. While this may seem obvious, that distinction between ownership allocations and maintenance responsibilities is highlighted in the opinion, so there can be no confusion moving forward.
- The Official Comments to the Uniform Condominium Act remain persuasive guidance to North Carolina appellate courts on the interpretation of North Carolina Condominium Act provisions mirroring the Uniform Condominium Act.
The result of the opinion was a resounding victory for the condominium association. "I am pleased with the outcome of this decision," Dale said. "It confirms that communities can continue to chart their own path. Communities can amend their covenants as they deem in the best interest of the condominium. This is consistent with the self-governance that the North Carolina Condominium Act contemplated."
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