## Facts

- Fairfield Harbour is a North Carolina property development governed by recorded restrictive covenants titled the Master Declaration.
- The Master Declaration created a development-wide “Recreational Amenities Charge,” giving the developer, Fairfield Harbour, Inc. (FHI), power to levy an annual fee set solely by FHI to fund operation, maintenance, repair, and upkeep of recreational amenities (including a golf course and related facilities) owned by FHI and made available to purchasers.
- The Master Declaration required property owners within Fairfield Harbour to be members of the Fairfield Harbour Property Owners Association, which maintained parks and common areas and provided members an easement for use and enjoyment of those areas.
- FHI later developed several time share communities within Fairfield Harbour and recorded additional restrictive covenants for those communities that included an obligation to pay amenity fees referenced in the Master Declaration.
- In 1993, FHI sold the recreational amenities to Harbour Recreation Club, Inc. (HRC). FHI and HRC recorded an additional covenant stating the amenities owner could collect amenity fees from time share units at 5.556 times the rate charged to Fairfield Harbour lot owners.
- In 1998, HRC and the defendant associations entered a settlement agreement resolving a dispute about time share amenity fees and barring HRC from charging time share units a higher fee than individual lot owners.
- In 1999, HRC sold the recreational amenities to Midsouth Golf, LLC (Midsouth). The purchase agreement referenced the Master Declaration and the 1993 covenants but did not reference the 1998 settlement agreement.
- Midsouth operated the amenities and also sold golf and social memberships to members of the public who did not own property in Fairfield Harbour.
- Until 2004, the defendant associations paid amenity fees at the same rate as individual lot owners. In 2004, Midsouth sued, asserting it could assess amenity fees against the defendants at 5.556 times the lot-owner rate.
- Defendants argued the amenity-fee obligation in the Master Declaration was a personal covenant (not a real covenant running with the land) and therefore not binding as a property covenant enforceable by Midsouth.
- The trial court granted partial summary judgment for defendants, rejecting Midsouth’s attempt to enforce the amenity-fee obligation against the associations on the theory that it ran with the land.

## Issues

1. Whether the Master Declaration’s recreational amenities charge constituted a covenant running with the land that could be enforced against the defendant condominium/time share associations.
2. Whether Midsouth, as purchaser of the recreational amenities and alleged assignee under the Master Declaration, could enforce the amenity-fee obligation against defendants.
3. Whether additional persons or entities were necessary parties whose absence prevented a valid judgment.

## Decision

- The Court of Appeals affirmed the trial court’s partial summary judgment for defendants.
- The court held that, as structured, the recreational amenities charge did not satisfy North Carolina requirements for a real covenant running with the land, including the “touch and concern” requirement.
- Because the covenant did not run with the land, Midsouth could not enforce it as a property covenant against the defendant associations, even if the Master Declaration purported to assign the developer’s fee-collection rights to the amenities owner.
- The court also rejected the argument that the case had to be dismissed or could not be decided due to absent necessary parties, concluding the named parties were sufficient to resolve the dispute presented.

## Legal Principles

- For a covenant to run with the land under North Carolina law, the covenant must satisfy traditional requirements, including intent to bind successors and a connection to the land commonly expressed through the “touch and concern” requirement.
- A recorded obligation to pay money is not automatically a real covenant; if the obligation functions primarily as a revenue device for the covenant holder—particularly where the amount is set unilaterally and is tied to the covenant holder’s financial “needs” rather than to a defined property burden/benefit—courts may treat it as a personal covenant that does not run with the land.
- A successor’s ability to enforce a declaration depends on the nature of the obligation being enforced. Assignment language may transfer whatever rights the original holder had, but assignment alone does not convert a non-running (personal) promise into a covenant enforceable as a property interest against later owners.
- A necessary party is one “so vitally interested in the controversy that a valid judgment cannot be rendered… completely and finally determining the controversy without [that party’s] presence.” If the court can grant complete relief between existing parties and the absent parties’ interests are not required to resolve the claims, joinder is not required.

## Conclusion

The Court of Appeals affirmed summary judgment for the condominium and time share associations, holding that the Master Declaration’s recreational amenities charge—set solely by the amenities owner and keyed to that owner’s current and future needs—did not qualify as a covenant running with the land; accordingly, Midsouth could not enforce the charge (including a higher multiplier rate) against the defendant associations as a real covenant, and no additional parties were required to decide the dispute.


Midsouth Golf, LLC v. Fairfield Harbourside Condominium Ass'n, Inc., 652 S.E.2d 378 (2007)