the past, home ownership typically involved a single-family
house with a yard. But today, due to increased prices
of single-family homes and changes in lifestyles,
many people either cannot afford or simply prefer
not to own traditional single-family homes. In response
to their needs, alternative forms of home ownership
have been developed. Among these are multifamily
housing complexes containing townhouses and condominiums
(often referred to as condos).
This page focuses
on questions frequently asked about purchasing and
owning a townhouse or condo. what are homeowners
associations? what are my responsibilities as an
owner of a condo or townhouse? what are the developers
responsibilities? These are some of the subject
areas addressed. The reader is cautioned however
that the legal aspects of condo and townhouse ownership
are too complex to be treated in detail in this
pamphlet. Therefore, prospective purchasers and
owners of condos and townhouses are advised to consult
their attorneys for specific guidance. [In addition,
for more information on restrictive covenants, homeowner
associations (HOAs) and HOA dues and charges, see
the Commissions publication, Questions &
Answers on: subdivisions and Planned Communities.]
Purchasing a Condo or Townhouse
Whats the difference between a condo and a
Condo unit owners own the inside
of their units. Townhouse owners own the complete
unit, including exterior surfaces and the land on
which the unit is built. Every condo or townhouse
development also has common areas of
the property (recreation areas, sidewalks, parking
lots, etc.). Condo owners share ownership of the
common areas with other owners, while common areas
in townhouse developments are usually owned by the
homeowners association for the benefit and
use of unit owners. Either way, owners typically
pay dues to a homeowners association to cover the
costs of maintaining the common areas, as well as
other common expenses.
Are there any other legal differences between condos
Yes. The creation, sale and management
of condos are governed by specific statutes (the
unit Ownership Act for condos created
before October 1, 1986 and the North Carolina
Condominium Act for condos created on or after
October 1, 1986). There are no specific statutes
governing most townhouses. However, townhouse projects
of more than 20 units and created on or after January
1, 1999 are covered by the Planned Community Act.
So are certain developments which volunteer to be
subject to all or a portion of the Act. Townhouses
that fall outside the Planned Community Act are
governed by the same general laws that govern single-
How will I know if there are restrictions on the
use of my condo or townhouse, and what those restrictions
in both condo and townhouse projects is subject
to certain restrictive covenants (deed restrictions).
These are usually embodied in a recorded legal document
called a declaration of Condominium
or declaration of Restrictive Covenants
which is recorded at the county Register of deeds
office. The declaration describes the nature of
the project and establishes rules and restrictions
governing the use of the units and common areas.
For example, the declaration may limit the property
to residential use, require that units be a minimum
size and certain architectural style, prohibit exterior
changes to the property, limit who can live in the
Will the closing attorney or real estate broker
furnish me a copy of the declaration, restrictive
covenants, and bylaws of the homeowners association?
Not necessarily. The closing attorney
does not have the specific duty to furnish these
documents, but will do so if you request them. If
a real estate broker is assisting you in your purchase
of a condo or townhouse, the broker may be able
to obtain a copy of these documents. But you may
want to directly consult your attorney and/or the
homeowners association as it is important
to get the most current version of the covenants
and restrictions. If a real estate broker furnishes
you a copy of the bylaws or covenants, you should
be aware that they may not be current, since they
remain subject to amendment by the developer or
Are there any special protections for condo purchasers?
Maybe. If you are considering the
purchase of a new condo unit, the developer (or
the developers agent) must give you a public
offering statement. This statement is prepared by
the developer and contains information about the
size of the development, the projected completion
date, the legal documents which govern the property,
and the projected common expense assessment.
It will also
inform you of your right to cancel the purchase
contract within seven calendar days following your
execution of the contract
. No public offering statement
is required to be given to you if you purchase a
condo created before October 1, 1986, a condo
which is not new, or a townhouse. And you have
no automatic right to cancel your purchase contract.
However, when purchasing any
pre-owned condo unit created on or after October
1, 1986, the seller must give you a resale
certificate. This statement sets forth the
monthly assessment for common expenses and any other
fees payable by the unit owner.
Im buying a new condo or townhouse in a development
that is still under construction. Does the developer
have to finish the development?
No. unless the developer has
specifically contracted to complete the development,
it can stop construction of new units at any time
and sell any remaining undeveloped portions of the
development (subject to applicable local and state
Does the developer have to provide promised amenities?
For condos created on or after October
1, 1986, the developer is required to file a plat
or plan showing any improvements (swimming pools,
tennis courts, club house, etc.) which are planned.
Each improvement must be labeled UuST BE BUILT
or NEED NOT BE BUILT. The developer
is required to provide only the amenities which
are labeled MUST BE BUILT. However,
the developer may not promote any amenities which
are labeled NEED NOT BE BUILT.
For townhouses (and for condos
created before October 1986), no law requires developers
to provide promised amenities. However, if the developer
fails to provide a promised amenity, a property
owner may file a civil suit based on the developers
should be especially cautious when purchasing a
condo or townhouse unit in a development that is
Who is responsible for maintaining my condo or townhouse?
Owners are responsible for maintaining
the interior of their units; and townhouse owners
may also be required to maintain their doors, windows,
and the crawl space under their units. The homeowners
association is typically responsible for maintaining
all common areas and the exterior of buildings.
The association pays for this maintenance from homeowners
dues, assessments, and other charges.
What is a homeowners association?
A homeowners association is
an organization of the property owners in a development,
subdivision or neighborhood that manages and maintains
the common areas (open spaces, recreational areas,
tennis courts, pools, etc.) for the benefit of the
owners and over time. You should find out who has
the authority to establish fees and assessments,
whether there are any limits on the amount that
can be charged, and the financial stability of the
association. Are there sufficient dues/reserves
to pay for larger expenditures in the future? Are
there any pending or proposed assessments of property
owners?. You are less likely to be shocked by fee
increases if you have read this information prior
to signing a purchase agreement.
Can an owner avoid paying assessments for the common
expense of the property?
A: No. All owners
of condos (including the developer) must pay their
share of common expenses. The same would also be
true of townhouse owners if there is a clear and
definite statement in the restrictive covenants
specifying the purpose of the assessment and the
authority of the homeowners association to
collect the assessment.
Can the homeowners association tell me what
I can and cannot do on my own property?
To some degree. The law allows you
great freedom to tailor the use of your property
to your particular lifestyle. However, this freedom
is not unlimited and is subject to certain restraints.
A homeowners association (or the developer)
may be authorized by the declaration to adopt bylaws
or other rules and regulations which may govern
your conduct. This can substantially affect your
ability to use your property. It could even restrict
your ability to rent your unit to others.
Before you purchase a townhouse
or condo, you should carefully read the rules governing
the project and consult your attorney if you have
What should I do if I disagree with the associations
If a dispute arises between you and
the association over any of the associations
rules, it may be necessary to resolve the matter
in court. Just because a provision appears in the
bylaws or rules does not automatically mean that
it is enforceable. But in most cases, a rule will
be upheld by the courts if it is considered reasonable.
You may try to change the rules.
Any change in the bylaws or rules and regulations
of the homeowners association requires approval
by the members of the association or its executive
board. Each homeowner is entitled to vote.
What happens if I do not abide by the restrictive
covenants, bylaws, or rules and regulations?
In any condominium or townhouse development,
an owner or the association may seek relief in court
against another owner who violates the associations
covenants, bylaws, rules or regulations. In addition,
owners in some condominiums and townhouses may be
fined by the association in accordance with either
the Planned Community Act or the Condominium Act.
These Acts give associations fining authority over
the owners of condominiums created on or after October
1, 1986, the owners of townhouses created on or
after January 1, 1999, and owners of older condominiums
and townhouses whose associations have properly
subjected themselves to portions of the applicable
Even if an association has the
right to impose a fine, no fine can be imposed until
the owner is given notice of the alleged violation
and an opportunity to defend against the charge
at a hearing before the executive board of the association
or a panel designated by the board. Once a violation
is found and not corrected, the association may
impose a fine up to $100.00 per day for each day
the violation continues. And, if the owner fails
to pay the fine and other charges assessed, the
association can file a lien against the property
of the offending owner and then sell the unit through
a foreclosure process.
Some problems may not be addressed
by the covenants, bylaws, or rules and regulations.
In such cases, you may have to contact a local law
enforcement official or your own attorney for assistance.
What if I dont pay my dues, assessments, fines,
or other changes?
If an owner fails to pay dues, fines,
assessments or other lawfully imposed charges, the
owners property is subject to foreclosure
by the homeowners association (even if the owners
property is fully paid for).
Can the homeowners association employ a management
company to assist in managing my condo or townhouse
Yes. A homeowners association,
through its executive board, will often employ a
management company to take care of maintenance,
collect dues and assessments, and carry out other
day-to-day responsibilities of the homeowners
The members of the associations
executive board and the staff of management companies
are NOT required to be licensed by the N.C. Real
Estate Commission or any other state agency so long
as their management activities do not involve the
sale or rental of units. However, licensed real
estate brokers who manage homeowners associations
must adhere to the N.C. Real Estate License Law
and related rules. This includes keeping the collected
funds of others in a trust account, and maintaining
records of all collections and disbursement of these
Can the homeowners association do anything
about a developer who is causing problems in the
If the developer is still in control
of the association, it is unlikely that the association
will be able to effectively take action against
the developer; however, the individual homeowners
may be able to take legal action against a controlling
developer. If the developer is not in control, the
association can treat the developer just as it would
any other homeowner.