About 25% of NC residents live in a development where restrictive covenants are enforced by a homeowners’ association (HOA). Nationwide, about 60% of recently-built single-family homes are in communities with HOAs. Covenants may include things like having mailboxes alike to acceptable fencing materials to acceptable outbuildings. Covenants often allow the HOA to approve or deny applications for exterior improvements to homes based on what the HOA finds attractive or harmonious with other properties, which is subjective. Although things are changing, many HOAs have historically been resistant to solar panels, particularly those placed on roofs that can be seen from the street. Solar installers have educational materials to help homeowners navigate HOA approval. They point out that modern solar panels camouflage or blend with roofs much better than models from years ago.
Whether an HOA can deny panels facing the street recently came before the NC Supreme Court in the case of Belmont Association v. Farwig, 2022-NCSC-64. It interpreted NC General Statute Section 22B-20. The Farwigs installed solar panels on their southern roof exposure, facing the street, without HOA approval. The HOA ordered the panels removed for aesthetic reasons, offering to allow moving them to a section of roof not visible from the street. The problem was that placement on any side except the south would make the panels much less effective. Panels facing east or west produce about 20% less electricity, and those facing north produce about half the electricity of south-facing panels. To overcome that, more panels must be installed, making the system much more expensive. The Farwigs refused. The HOA began to fine them, and then sued.
It is important to note that the covenants in the Belmont case did not mention solar panels. They had general language that the HOA could approve or deny requests for any “improvements” to the exterior of a home based on aesthetics.
The NC Supreme Court interpreted the statute to mean that:
· An HOA cannot completely forbid solar panels.
· An HOA may not use general language about the aesthetics of improvements to regulate solar panels.
· A community’s covenants may narrowly regulate the location of solar panels to keep them off street-facing or common-area sides of the roof if the panels are visible to someone on the ground and if the restrictive covenants expressly include that limitation. The thinking here is to give home owners, particularly new buyers, fair warning. This provision in the statute does mean that in some subdivisions, homeowners on one side of the street can have affordable, efficient solar panels and those on the other side of the street cannot.
Restrictions on solar panels have led to grassroots “green revolt” movements in some subdivisions to amend the covenants to make them more solar friendly.
Other states have passed laws to curtail HOA power over solar panels. Indiana passed a statute allowing a property owner whose solar panel installation was denied by the HOA to override that decision by getting petition signatures from at least 65% of the properties in the subdivision. Illinois’ law allows HOAs to require changing location of the panels, but only if the loss of efficiency by moving the panels is less than 10%. The NC House passed a similar bill in 2021 with bipartisan support, but it failed to pass the Senate. Growing public interest in solar energy may in time prompt changes in statutes and at the planned community level.
Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough. She can be reached at (919) 732-7300 and email@example.com.