## Facts

- Figure 8 Island is a private residential development in New Hanover County, North Carolina; all lot owners are members of the homeowners’ association (HOA) and subject to restrictive covenants and bylaws.
- The covenants (as made applicable to all lots) required owners to pay annual assessments set by the board and permitted additional assessments; any assessment for “new capital improvements” over $60,000 required majority approval of voting members.
- A 1993 amendment added “channel dredging; beach renourishment” as authorized purposes for annual assessments.
- By 1999, New Hanover County, the HOA, and other entities participated in planning a project to relocate Mason Inlet and use the dredged sand to renourish Figure 8 beaches; the project contemplated ongoing maintenance dredging.
- The HOA proposed a special assessment to fund the project and circulated ballot materials describing the cost and anticipated long-term dredging (including a multi-decade maintenance horizon).
- A majority of voting members approved the special assessment.
- A property owner sued for declaratory relief, alleging the vote, the assessment, and the HOA’s agreement with the County were ultra vires and invalid because Mason Inlet was not expressly identified in the covenant text or maps as a community waterway subject to assessment-funded dredging or maintenance.
- The trial court granted summary judgment for the HOA and the County and denied the owner’s motion; the owner appealed.

## Issues

1. Whether the restrictive covenants authorized the HOA to levy a special assessment for Mason Inlet relocation and long-term dredging/maintenance even though Mason Inlet was not expressly named in the covenants or shown as a designated area on the maps.
2. Whether the assessment and the HOA’s related contract with New Hanover County were ultra vires or otherwise invalid.
3. Whether summary judgment was proper where the dispute turned on interpretation of undisputed governing documents and undisputed approval procedures.

## Decision

- The Court of Appeals affirmed summary judgment for the HOA and New Hanover County.
- The court held the covenants’ assessment authority for “maintenance and improvement of waterways,” including “channel dredging” and “beach renourishment,” covered the Mason Inlet project.
- The court rejected the argument that the HOA’s power was limited to only those waterways specifically labeled in covenant maps or text.
- The court found the special assessment was approved in the manner required by the covenants for high-cost capital improvements.
- Because the HOA acted within its covenant-based and corporate powers, the agreement with the County implementing the project was not ultra vires.

## Legal Principles

- Restrictive covenants are interpreted to effectuate the parties’ intent as expressed in the written language, considered in context of the development’s overall scheme; unambiguous language is given its plain meaning.
- Covenant language authorizing assessments for general categories of work (e.g., waterways maintenance, channel dredging, beach renourishment) may permit projects affecting related features even if a specific feature is not named, absent a clear textual limitation.
- When covenants require member approval for assessments exceeding a stated threshold, compliance with that voting requirement validates the assessment unless a cognizable defect (such as fraud or material concealment) is shown.
- Summary judgment is appropriate when there is no genuine dispute of material fact and the case turns on legal interpretation of undisputed governing documents and undisputed approval procedures.

## Conclusion

The court upheld the HOA’s member-approved special assessment and related agreement with the County, concluding that broad covenant authority for waterways maintenance, channel dredging, and beach renourishment permitted funding an inlet relocation and long-term dredging project even though the inlet was not specifically named in the covenants.


Parker v. Figure “8” Beach Homeowners’ Ass’n, Inc., 170 N.C. App. 145, 611 S.E.2d 874 (N.C. Ct. App. 2005)