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Armstrong v. Ledges Homeowners Association, Inc.

633 S.E.2d 78 (2006)

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Armstrong v. Ledges Homeowners Association, Inc.

Supreme Court of North Carolina

633 S.E.2d 78 (2006)

Facts

In 1988, Vogel Development Corporation (Vogel) developed a subdivision named Ledges. Ledges includes 49 property lots set along two public roads, but contains no other common areas or amenities. Vogel recorded a Declaration restricting the lots to single-family residential use, putting architectural controls in place, and providing for the establishment of a homeowners’ association. The Declaration did not contain any provision for the collection of dues or assessments. After Vogel began selling lots, he installed a lighted sign at the entrance, which required ongoing payment of a utility bill. Accordingly, Vogel included language in subsequent sale documents allowing the homeowners’ association to assess pro rata charges for the utility bill. Later, the board of directors of the Ledges Homeowners’ Association (Association) (defendant) adopted by-laws to allow the Association to collect assessments for common expenses and to put a lien on the lot of any owner who failed to pay an assessment. The pro rata share of the annual electrical bill for the community sign was approximately $7.20 per year. However, the Association billed the property owners $80-$100 per year for a range of expenses. In July 2003, the board amended the by-laws again, greatly expanding the Association’s powers and duties. In August 2003, the Armstrongs and the Moores (plaintiffs), both Ledges homeowners, asked to terminate their Association membership. In October 2003, the plaintiffs sued the Association and several homeowners (defendants) seeking a declaration that the amended by-laws were unenforceable. In November 2003, a majority of Association members adopted an Amended Declaration, which differed significantly from the original Declaration and authorized the assessment of fees for additional common expenses. The plaintiffs amended their complaint to claim the Amended Declaration was invalid and unenforceable. The trial court and the appellate court both found the Amended Declaration was valid and enforceable. The plaintiffs appealed.

Rule of Law

Issue

Holding and Reasoning (Wainwright, J.)

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