The Power of the ARC
As reported recently in the CAI Law Reporter, the end of 2017 saw a number of state courts rule on the powers of architectural review committees (or “ARCs” for short).
In CB Investments v. Murphy and Weber v. Board of Directors of Laurel Oaks Association, the Wisconsin Court of Appeals and the Pennsylvania Commonwealth Court, respectively, held that a tree house and a mailbox were “structures” requiring architectural approval under the communities’ governing documents. In McVicker v. Bogue Sound Lot Club, the South Carolina court of Appeals held that the HOA’s ARC did not have the authority to require a construction bond (or fee) for ARC approval of a construction project. And in Cynar v. Barth, the Supreme Court of North Dakota held that the community’s ARC was not required to halt construction of an owner’s pool house that obstructed the neighbor’s view.
What do all of these cases have in common? In each, the courts simply resorted to an analysis of the powers of the ARC contained in the communities’ governing documents. In McVicker, for example, the court held that the so-called bond requirement of the ARC was illegal where the governing documents did not require or expressly authorize a bond or any other fee to be imposed on the applicant.
From their review of the governing documents, three of the courts had to interpret the meanings of certain disputed terms. In CB Investments and Weber, the courts had to apply a dictionary definition of “structure” in the absence of a clear definition in the governing documents. As a result, the courts concluded that a tree house and Mickey Mouse mailbox fell within the purview of the ARC. And in Cynar, the court applied the definition of “nuisance” contained in the governing documents to conclude that the obstructed view at issue was not subject to ARC intervention.
What lessons can we draw from these new cases? First, the touchstone of all ARC action should be the governing documents. Governing documents vary quite a bit, which means that ARC powers also vary greatly from one community to another. Members of an ARC, and anyone overseeing its actions, should be well aware of the specifics applicable to their community.
Second, the governing documents may be full of ambiguities that may potentially lead to disputes. Because ARC standards and responsibilities aren’t always clear or intuitive, and because ARC related projects often reflect a significant investment on the part of the owner, highly contentious disputes over ARC decision making are very common. Community Associations should therefore consider a resolution for rules pertaining to the ARC. Such rules can clarify ARC powers to hopefully prevent misunderstandings and unnecessary disputes.
Finally, in any post about ARC responsibilities it is important to emphasize how critical it is for ARC process to be followed every time and for decisions of the ARC to be consistent and impartial. The failure to enforce ARC standards over time can lead to difficulties enforcing certain provisions and standards in the future. Moreover, picking and choosing those against whom ARC requirements are enforced can lead to claims of discrimination. Consistent documentation of ARC decisions is one step toward eliminating these risks, particularly as ARC members rotate on an off the committee.
The attorneys at Barker Martin are happy to help your community with any ARC related issues. Please feel free to email or call if you have any questions. Thank you.