## Facts

- A developer created a 49-lot residential subdivision with lots on public roads and no meaningful common areas or amenities.
- The recorded declaration restricted lots to single-family use, imposed architectural controls, and contemplated a homeowners’ association, but did not authorize routine dues or assessments.
- Later instruments addressed only a small pro rata charge for electricity for a lighted subdivision sign (about \$7.20 per lot annually).
- The homeowners’ association adopted bylaws asserting broader assessment and lien powers and began billing owners approximately $80–$100 per year for expanded expenses.
- While owners’ litigation challenging the bylaws was pending, a majority of members adopted an amended declaration that materially expanded the association’s powers and expressly authorized broader assessments.
- The parties agreed the subdivision was not governed by North Carolina’s Planned Community Act (Chapter 47F).

## Issues

1. Whether an HOA in a non–Planned Community Act subdivision may amend restrictive covenants to add broad assessment authority and expanded powers when the original declaration did not contemplate such obligations.
2. Whether the amended declaration was valid and enforceable against dissenting lot owners under common-law limits on amendment power.

## Decision

- The North Carolina Supreme Court reversed the Court of Appeals and the trial court’s summary judgment for the HOA and remanded.
- The court held that amendments to a declaration of restrictive covenants must be reasonable.
- Applying an objective reasonableness inquiry, the court determined the amended declaration was invalid and unenforceable to the extent it imposed unreasonable burdens or fundamentally altered the original covenant scheme.

## Legal Principles

- Even when a declaration permits amendment by a specified vote, the amendment power is limited by an objective reasonableness requirement.
- Reasonableness is assessed from the declaration, deeds, and plats, together with objective circumstances surrounding the parties’ bargain, including the nature and character of the community.
- An amendment cannot destroy the subdivision’s general plan of development or impose materially new and burdensome servitudes inconsistent with what purchasers reasonably could have anticipated under the recorded instruments.
- In communities not governed by the Planned Community Act, common-law servitude principles constrain private majority rule over covenant amendments.

## Conclusion

The court limited HOA amendment authority by requiring objective reasonableness tied to the original recorded scheme and community character, and it rejected an amendment that substantially expanded assessment obligations in a subdivision whose original declaration and physical structure did not contemplate significant ongoing common expenses.


Armstrong v. Ledges Homeowners Ass'n, Inc., 360 N.C. 547, 633 S.E.2d 78 (N.C. 2006)