re: Homeowners Face Foreclosure After Developer-Run HOA Raised Monthly Fees to $2.5K

I can’t find the covenant itself, but if this social media post is accurate, holy shite, people who bought into this subdivision were just begging for trouble:

1. THE DEVELOPER'S PROPERTY IS EXEMPT FROM HOA ASSESSMENTS.

Article VIII, Section 12 of the original Declaration states:

"The following property shall be exempt from payment of the Base Assessments, Specific Assessments and Special Assessments:"

"(a) Any and all property owned by the Declarant."

If the developer owns 60 of approximately 80 lots, and those lots qualify for this exemption, the association's expenses may fall primarily on the remaining homeowners.

The developer could own most of the community without paying the assessments imposed on other owners.

2. THE DEVELOPER GETS MORE VOTES THAN HOMEOWNERS.

Article III, Section 3 of the Declaration gives the Declarant's Class B membership 3 votes for each Declarant-owned lot, plus 1 additional vote for every lot owned by someone other than the Declarant. Ordinary homeowners receive 1 vote per lot.

But Article II of the Bylaws gives the Declarant 15 votes per lot.

Which provision controls, and has this discrepancy ever been corrected?

3. THE 20% ASSESSMENT INCREASE LIMIT DOESN'T APPLY DURING DEVELOPER CONTROL.

Article VIII, Section 3 of the Declaration limits annual base-assessment increases to 20%, but only after developer control ends.

During developer control, that limitation doesn't apply. Article VIII, Section 4 also authorizes special assessments without establishing a fixed dollar cap.

4. DEVELOPER CONTROL CAN CONTINUE THROUGH 2029.

The Declaration establishes several conditions for ending the developer's Class B control, including a December 31, 2029 termination date.

Until control ends, the developer's weighted voting rights can leave homeowners with little practical influence over association decisions.

5. THE BOARD CAN AMEND THE BYLAWS.

Article IX of the Bylaws allows amendments by unanimous vote of the directors, subject to applicable law and the governing documents.

That gives a developer-controlled board substantial authority over the association's operating rules.

6. THE ARTICLES OF INCORPORATION NAME THE WRONG SUBDIVISION.

Article V of Exhibit A to Magnolia Cove HOA's Articles of Incorporation states that membership shall be governed by the restrictive covenants of Oak Ridge Farms Subdivision and Magnolia Cove's Bylaws.

Oak Ridge Farms?

These are Magnolia Cove's Articles of Incorporation, yet the membership provision refers to an entirely different development.

The Articles were signed by Aaron Guess on March 29, 2021, and filed with the North Carolina Secretary of State on April 8, 2021.

They also contain language associated with Section 501(c)(3) charitable organizations, including political activity restrictions and distribution of assets to charitable organizations upon dissolution. Similar language appears in the Bylaws.

Yet the Articles identify Magnolia Cove as a residential homeowners association, and the box identifying it as a charitable or religious corporation isn't checked.

These inconsistencies don't automatically invalidate the documents, but they raise questions about how carefully they were prepared.

7. THE DEVELOPER AMENDED THE COVENANTS TWICE IN LESS THAN A MONTH.

The First Amendment was recorded July 30, 2024. The Second Amendment, recorded August 23, 2024, expressly replaced it.

Both were executed by Aaron Guess on behalf of Magnolia Cove, LLC, under the developer's claimed unilateral amendment authority.

The First Amendment included substantial fines for certain violations (N.C.G.S. § 47F-3-107.1, limits HOA fines to $100 per violation). The Second revised the enforcement provisions, added references to notice and an opportunity to be heard, and addressed leasing, property maintenance, fees, and collections.

One provision deserves particular attention.

The Second Amendment restricts leasing rights following future sales or transfers by owners other than the Declarant. The developer is expressly excluded from that restriction.

The amendment also allows the association to restrict leasing by owners who are delinquent on assessments or violate governing documents, subject to its stated procedures.

8. THE AMENDMENTS EXPAND FINANCIAL AND ENFORCEMENT POWERS.

Article VIII, Section 2 of the Second Amendment authorizes service, collection, consulting, and administrative fees in amounts determined by the board. It also addresses late charges, interest, attorney's fees, and liens.

Article V, Section 4 allows the Declarant or association, under specified circumstances, to enter an owner's property, perform maintenance, and charge the owner for the work, including interest and certain expenses.

These provisions remain subject to applicable North Carolina law. Their inclusion in recorded covenants doesn't automatically establish that every charge or enforcement action is lawful.

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How in the frick did that pass? Changing the dues in any way would require a general meeting of our neighborhood in which a quorum is defined as requiring at least half of the lot owners, so in other words, good fricking luck

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It is common for HOAs to be fully controlled by the developer until the subdivision is completed. At that point it gets handed over to the homeowners to run it as they see fit.

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Avoid HOAs like the plague!

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This is like saying “avoid the stock market like the plague!”

- After investing in some stupid penny stock recommended by Ancient Tiger and losing your arse.


Not all HOAs are absurd or ridiculous. The neighborhood life isn’t for everyone.

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I've owned 7 houses, moistly new build and new constructions in new developments, and every time the developer had to relinquish association control after the development was completed and the HOA had bylaws established and filed with the state/parish(county).

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A lot of developments once its over 50% sold then residents take control

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How in the frick did that pass? Changing the dues in any way would require a general meeting of our neighborhood in which a quorum is defined as requiring at least half of the lot owners, so in other words, good fricking luck

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Developer still owns a lot of properties and gets a vote for each parcel.

HOAs are unelected bureaucracies with essentially limitless powers that have somehow become more powerful than the banking industry in the mortgage arena and are allowed to exist because they can do what an elected bureaucracy in any jurisdiction with a functioning government can do but an HOA can do it without any effort or political backlash. The number of potential buyers of any home in the US is shrinking due to mortgage rates and costs of housing but those located in HOA communities are seeing less and less interest and that trend is not going to stop until such time as they cease to exist. People are dumb but they ain't stupid. Buying a home that you can lose to foreclosure because your garage door stays up more than someone thinks it should or your trashcan can be seen from the home is and always was a insane idea...but folks liked the idea of telling other folks how to live and here we are. Now that folks are losing their homes telling others how to live ain't nearly as much fun.

Any area with a functioning government CAN enforce ANYTHING that a HOA can enforce. This requires 2 things, government employees will have to do what they were hired to do and elected officials will have to answer for abuses at the polls. HOAs exist to keep either of these from happening. That is the ONLY function they serve. Buyers are wising up and selling a home in a HOA community is getting harder and harder to do....only an idiot would willingly subject themselves to the whims of an unelected and completely unaccountable bureaucracy.

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Developer still owns a lot of properties and gets a vote for each parcel.

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Gets more votes for each parcel, according to the bylaws I've seen. Absolute insanity

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Only 14% of current owners in HOA communities nationwide are satisfied with their decision to buy in a HOA community.

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Do you have a citation on this number? I would like to see how the question was framed.

Hoa elections have consequences