Supreme Court Casts a Shadow Over Architectural Committee’s Rejection of Solar Panels

Over a year ago, I blogged about the case of Belmont Association v. Farwig, where the Court of Appeals held that an HOA could restrict solar panels because they were an “improvement” to a residence, and improvements required prior architectural approval.

The Farwigs installed solar panels on the front of their house without architectural approval.  After several rounds of architectural review, Belmont Association found the Farwigs in violation of the architectural decision, and the association levied fines against the Farwigs.  The Farwigs refused to remove the solar panels, and the HOA sued, and the Farwigs countersued.  The trial court determined that Belmont Association was authorized to restrict the location of the Farwigs’ solar panels.  The Farwigs appealed to the Court of Appeals, which upheld the trial court’s decision in favor of the HOA; however, one of the justices submitted a dissenting opinion.

A dissenting opinion allows a party to automatically appeal to the North Carolina Supreme Court, and the Farwigs appealed.  The North Carolina Supreme Court threw shade on both the Court of Appeals and the trial court, both of which found in favor of Belmont Association when the Supreme Court held that restrictions prohibiting solar panels must be explicitly set forth in an HOA’s Declaration of Covenants, Conditions and Restrictions (CCRs).

Underlying this case is a statute intended to make it easier for owners to install solar panels as a matter of public policy.  The statute, entitled “Deed restrictions and other agreements prohibiting solar collectors,” is poorly worded.  The Supreme Court’s majority opinion, which is difficult to follow, likely results from trying to make sense of the statute, which the majority (perplexingly) says is clear.  I won’t try to summarize the majority opinion – principally because I don’t think I can – but I will distill it as much as I can.

The decision boils down to the following: CCRs that prohibit the installation of solar panels are acceptable under the statute, and an HOA can restrict the location of solar panels to areas not visible by a person standing on the ground; whereas, if the CCRs do not prohibit solar panels, decisions of an architectural committee or HOA which “have the effect” of prohibiting solar panels violate the statute.

There were two dissenting opinions that illuminate the Supreme Court’s difficulty deciphering the statute.  Ultimately, the dissenting opinions have no bearing on the outcome, although they shed light on the disagreement among the justices.

One area of the statute, which was not at issue in this case, is the final section of the statute which authorizes a judge to award a prevailing party with its attorney’s fees if that party prevails under the statute.  Given that this case could open the floodgates to claims against HOAs, you should consult with an attorney to discuss what types of solar panel restrictions are authorized under your community’s CCRs.

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