ARC Blunders Lead to Association Liability

Architectural review committees play an important role for associations that strive to achieve consistent and pleasing aesthetics in their communities. But, as the saying goes, with great power comes great responsibility — and the irresponsible use of that power by an architectural committee can prove costly for its association.

As a recent case out of North Carolina illustrates, architectural committees must exercise their power reasonably or risk incurring significant liability for their associations. The committee’s missteps in the case resulted in the association being on the hook for about $265,000 in damages, including almost $68,000 in punitive damages.

The owners in the case wanted to build homes on their two adjoining undeveloped lots. The declaration for the community association required approval of building plans by the architectural control committee (ACC). Along with their plans, owners must submit a fully signed contract with a “Guild Builder” who has satisfied certain criteria.

The owners entered a contract with a builder that had previously been approved for two other construction projects in the community. They subsequently submitted plans four times, with the ACC denying approval each time. The ACC indicated that the plans didn’t meet the “desired architectural aesthetic.” As the court noted, the ACC wanted “custom” and “luxury” homes, but the ACC’s design guidelines didn’t use those terms.

“It became clear the ARC wasn’t really interested in approving,” says David Wilson, who heads up the South Carolina community association department at the law firm Black, Slaughter & Black, P.A.. “If you’ve got a builder that’s approved already by the HOA, it really shouldn’t take four or five times to get it right.”

To learn more about ARC’s mistakes, and how your clients can avoid them, read our new article: Architectural Committees Must Tread Carefully.

Best regards,
Matt Humphrey

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