Harmony Taylor & David Wilson
In a case of wide-reaching impact, the North Carolina Supreme Court on Friday, June 17, 2022, issued its decision in Belmont Association, Inc. v. Farwig. An earlier blog discussed the factual background and decision from the Court of Appeals in detail.
By way of brief summary, the homeowners in this case installed solar panels on the front facing façade of their roof without approval and the homeowners association commenced fines. Nothing in the declaration explicitly regulated solar collectors, but the association, pursuant to its general authority over architectural matters and aesthetics, refused to allow their installation on the front roof.
The trial court ruled in favor of the association. The homeowners appealed. The NC Court of Appeals affirmed the trial court’s judgment and held that the statute allowed the association to deny solar panels in this case because the installation on the front roof was visible by a person on the ground. The Court of Appeals decision contained a dissent, giving the homeowners an automatic right of appeal to the North Carolina Supreme Court. Many assumed that the Supreme Court would uphold the Court of Appeals decision, but in a surprise ruling it sided with the homeowners, reversed and remanded the case to the trial court for it to enter summary judgment for the homeowners.
The Supreme Court’s analysis focused on statutory construction. The Court held that restrictions that effectively prohibit solar installations are invalid. The Court held that there are two exceptions.
The first exception appears in the statute itself and allows an association to prohibit solar installations in three general areas: on the façade of the home, on front roof surfaces, and in the front yard. Despite this language, the Court held that because there was no specific prohibition against solar installations in the declaration, the Association could not take advantage of this exception.
The second exception is even more difficult to quantify. It allows an Association to prohibit a solar installation if that prohibition does not “have the effect of preventing the reasonable use of a solar collector.” Here, the Court held that the association’s decision to deny the solar panels on the front roof did have the effect of preventing the reasonable use of a solar collector and granted summary judgment in the homeowners’ favor.
It is clear that the Supreme Court struggled with this decision because three justices not only disagreed with the majority’s decision but authored two separate dissenting opinions explaining their disagreement with the majority. However, the decision of the majority stands and will guide community associations going forward. What does this mean for your community?
- For North Carolina communities not subject to N.C.G.S. 22B-20, the association can continue to regulate solar panels pursuant to its general architectural review authority. These communities can exercise their architectural authority to allow, prohibit, or allow with limitations on placement.
- For North Carolina associations that are subject to the statute, authority to regulate solar panels has changed. If the Declaration specifically addressees restrictions on solar collectors, the association can prohibit solar collectors in the areas outlined in the statute. If, however, the declaration only contains general architectural oversight authority, then the association cannot prohibit solar collectors from being installed on the front facing facades of homes if that regulation would prevent the reasonable use of a solar collector. What does this mean? In most cases, it will likely come down to whether the association’s rule reduces the efficiency or usefulness of the solar panels. A homeowner likely can be asked to verify this reduction in efficiency. We do not yet have any clear direction on how much of a reduction in efficiency is reasonable. Is it 10%? 20%? Other states have statutes that outline what that reduction may be, but there is no guidance at this point.
This decision from the Supreme Court is brand new and we are still considering how it will impact specific communities in North Carolina. If you have questions about how this decision may impact your community, please feel free to contact any of our experienced community association attorneys.