Home blues

Wells Lake When David Grimes moved to his dream property inside the Wells Lake subdivision in Cherokee County, he was hit with some pretty challenging disappointments.

“We had the worst internet service in the state of North Carolina,” he said with a laugh.

A second disappointment, and one experienced by many county residents, was the gnarly condition of some roads in the neighborhood. Grimes decided to tackle the Internet issue first.

“I knew that if we could get six people to sign up with Blue Ridge Mountain Electric Membership Corp., we could get fiber-optic internet lines,” he said.

Being new to the neighborhood, Grimes went to the president of his Property Ownership Association (POA), feeling confident that President Peter Ullman would want to get on board. However, Grimes said Ullman provided no support, not even providing him the names and numbers of neighbors who paid into the Wells Lake POA.

As a result Grimes, who is organically tenacious, got people signed up on his own. This is when the trouble started.

A large footprint

Grimes is one of about 74 million Americans (26 percent of the United States) who reside under a POA or Home Ownership Association (HOA). The Foundation for Community Association Research reports that in 2020, there were about 355,000 HOAs in the United States.

There were only about 10,000 HOAs in 1970. When the N.C. Planned Community Act passed in 1999, it was meant to lay out protections and oversight for homeowners living in HOA/POA divisions. However, Chapter 47F of the state statutes feels like a fragile thing, considering there is no other state or federal oversight governing the 25.9 percent of North Carolinians who live inside HOA/POA neighborhoods.

Like most new residents, Grimes was eager to get along with his neighbors and affect positive change for his community.

“We got fiber optics, and Pete liked that I got that done, so he asked me to be on the board,” Grimes recalled.

One for the roads

Their first order of business was the ongoing issue of poor road conditions. In fact, according to Ullman, road maintenance is the POA’s main focus.

“There are seven roads in Wells Lake, and their maintenance was one of the main reasons the POA was established,” Ullman said.

Grimes said it seemed like the only roads paved were ones leading to the POA board members’ homes. When asked how many roads were paved inside the division, Ullman said, “One. Old Evans Road is the main road and the most heavily used.”

Some of the neighbors wanted their roads paved, but Ullman said that wasn’t a POA priority.

“Most residents like dirt roads,” he said, adding, “Most people want gravel; this is the country.”

Ullman said if the cost of grading, graveling and rolling a road became cost inefficient, the POA would consider paving. Grimes was among one of several residents who wanted a paved road.

“You can’t pave a road because five residents think it should be paved,” Ullman said. “We are responsible for 168 people’s money. Paving a road for five residents is disproportionately a large expense. So the road was scheduled for maintenance, not paving.”

What’s underground?

Things in Wells Lake didn’t disintegrate all at once. Key pieces crumbled quietly until the ultimate loud collapse.

“They (POA) hired a guy to come here and fix the roads. In two weeks, the roads looked they were paved; we were doing backflips,” Grimes happily recalled.

There were a few snags, like some water drainage issues due to a small culvert drain, which the experienced road master – Bill Wilson – fixed free of charge. But for some unaccountable reason, Grimes said Ullman and the rest of the POA were miffed at these improvements.

“One of the board members came up here with a backhoe and undid everything Bill had done,” Grimes said, showing photos of what the culvert looked like before and after.

Ullman disagrees with Grimes’ account.

“The chairman of the Road Committee did go up there with a backhoe, but only to clean out a drainage ditch,” he said. Photos show most of the rocks around the culvert were moved.

Grimes saw things differently, including a lack of attention to details.

“In North Carolina, you have to call 811 to avoid hitting electrical or fiber optic lines, but they decided not to,” he said.

As a result, the backhoe dug up the new fiber optic lines, leaving Grimes and his neighbors without safe roads, water displacement management or high-speed Internet service.

By now, Grimes was properly peeved.

“They came up here, damaged our road and threw all this crap on my property,” he said.

Finding Ullman unresponsive, Grimes took the POA to small claims court.

“I saw real quick we were dealing with idiots,” he said.

Court was the first crumbling. Grimes felt tied to a tight leash, while the POA attorney seemed free to roam.

“It was a waste of time,” he said. “I was given five minutes to make my presentation, but it took 20 minutes with the other attorney interrupting.”

In the end, Grimes lost the case. But not his determination.

HOAs have broad powers

Grimes’ failure in court was not unusual. A POA or HOA wields much more power than many residents realize.

u First, Chapter 47F (3-21) allows the association to recoup court costs and lawyers fees if the resident loses in court.

u Second, if Grimes was unable to cover those fees or, indeed, any resident fell behind on their standard monthly association fees, he or she can be subject to foreclosure. The execution of this alarming provision (3-116) is left up to the discretion of individual association boards.

u Third, there remains the implied insult of, at a loss, having to pay the attorney’s fees twice – once through membership dues, then again through a court order.

Grimes was disappointed by the court loss, but by then he was a man on a mission. He knew there was money budgeted for street repairs in the association’s account, he just didn’t know the amount.

Each POA/HOA collects monthly dues, and that money is meant to cover the costs of maintenance and improvements. The Wells Lake POA charges $260 for a house lot and $130 for land lots.

The national average rests between $200 and $300 monthly, so the Wells Lake community was within reasonable range. And with 115 homeowners and 65 property owners within the association, they had money for improved roads.

In a rare nod to homeowner protection over protecting the power of the HOA itself, state statute Chapter 47F requires a level of transparency in financial matters. Section 3-118 states, “All financial and other records, including records of meetings of the association and executive board, shall be made reasonably available for examination. If the bylaws do not specify particular records to be maintained, the association shall keep accurate records of all cash receipts and expenditures and all assets and liabilities.”

Lack of transparency

Grimes felt like he was unable to examine such records, which was the second crumbling.

“At the meetings, we’re given a one sheet piece of paper stating how much money is in the kitty,” he said. There was no accounting sheet for how much was spent on what project.

On the other hand, Ullman said he is proud of the way his POA handles the financial disclosures.

“We mail out the budget before the annual meeting,” he said. “We show the balance in the beginning and the balance at the end. For each budget line item, we show how much was spent.”

However, the financial record doesn’t show all the expenditures in detail.

“It doesn’t make any sense to report every check written.,” Ullman said. “Most people don’t want or need to know. If they ask, we will provide that information but, logically speaking, we don’t got into that kind of detail.

“Many people don’t pay attention to the financials, but the ones that do, we’re not hiding anything.”

Making changes difficult

Grimes, feeling that the leadership of his POA obstructed improvements, attempted to oust Ullman from the being president.

“We tried to get Pete out of power,” Grimes said. This would be his final defeat.

Chapter 47F does allow for property owners to vote out an executive board member (3-103):

“Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners, by a majority vote of all persons present and entitled to vote at any meeting of the lot owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant.”

However, 3-103 does not provide guidance on dismantling intimidating boards, especially when that board is made up of people who decide things like the permissibility of architectural changes to personal property, or which roads get paved. Meaning that within the current system, the powerless are meant to challenge the powerful to affect change.

There is no instruction in the state statute on voting out leaders with temerity or incompetence. Grimes was unsuccessful in his quorum.

“We got a dozen people to sign a petition but, one by one, they were intimidated and removed their names from the list,” he said.

Ullman points to this defeat as proof that the majority of homeowners want his leadership.

“It’s the vocal minorities that make up the fuss, not the mainstream,” he said. “If the mainstream was unhappy, things would change.”

Attorney Jonathon Dickerson, an associate at J.C. White Law Group in Chapel Hill, said the POA/HOA discussion is an important one in North Carolina. Referring to his firm’s website, he wrote, “As a nonprofit, all (HOA) board members, officers and directors have a duty to act in good faith, with loyalty to the members of the association and within the scope of their authority.”

However, until the state provides oversight and relief to those suffering under POA/HOAs that run inefficiently or ambiguously, “the scope of their authority,” as Grimes has learned, can be both deep and damaging.