North Carolina Armstrong v. Ledges (2006): HOA Declaration Amendments Must Be Reasonable

Quick Answer

In Armstrong v. The Ledges Homeowners Association, the North Carolina Supreme Court held on August 18, 2006 that amendments to a declaration of restrictive covenants "must be reasonable," even when the declaration lets owners amend by majority vote. The Court struck down an amendment that authorized broad assessments "for the general purposes of promoting the safety, welfare, recreation, health, common benefit, and enjoyment" of residents in a 49-lot subdivision with no common areas or amenities. The community was not subject to the Planned Community Act.

At a Glance

The Dispute

The Ledges of Hidden Hills, in Henderson County, was developed in 1988. Its plat showed forty-nine lots along two roads, designated as public roads maintained by the State, with no common areas or amenities. The developer's recorded declaration contained thirty-six restrictions (single-family use, setbacks, architectural controls) and said the covenants could be "amended" from time to time. It had no provision for dues or assessments. It anticipated a nonprofit homeowners association, mainly to take over architectural enforcement.

The developer later built a lighted entrance sign and added language to later deeds requiring pro rata charges for electric costs of street and entrance lights. The Court put each lot's share at about $7.20 per year. The association was incorporated in 1994, and its board adopted bylaws, later amended to add a lien, and in July 2003 to add late charges and fines of up to $150 per violation referring to the Planned Community Act. The association billed owners about $80 to $100 a year, including for mowing private roadside lots and snow removal on public roads.

The Armstrongs and others sued in October 2003 for a declaration that the Ledges was not a planned community and that the amended bylaws were unenforceable. In November 2003 a majority of members adopted an Amended and Restated declaration that required association membership, limited rentals to terms of six months or more, and authorized assessments, a lien after ninety days, and 12 percent interest. The trial court and the Court of Appeals upheld it, reasoning that the declaration allowed amendment by majority vote of owners.

What the Court Held

Amendments must be reasonable

The Court held that "a provision authorizing a homeowners' association to amend a declaration of covenants does not permit amendments of unlimited scope; rather, every amendment must be reasonable in light of the contracting parties' original intent." It explained that covenants are contracts and that "an amendment should not exceed the purpose of the original declaration."

How reasonableness is judged

A court "may ascertain reasonableness from the language of the original declaration of covenants, deeds, and plats, together with other objective circumstances surrounding the parties' bargain, including the nature and character of the community." The Court gave examples, noting that it may not be reasonable to retroactively prohibit rentals in a mountain community during ski season or in a beach community in summer, or to keep raising assessments in a retirement community of residents on fixed incomes. It also said restrictions are generally enforceable when clearly set forth in the original declaration, so a declaration may prohibit rentals from the start. A court must weigh "both the legitimate needs of the homeowners' association and the legitimate expectations of lot owners."

Application to the Ledges

The Court found the amendment granted "practically unlimited power to assess lot owners" in a small community whose plat and declaration showed no source of common expense other than the entrance sign electricity. It held the amendment "invalid and unenforceable." It quoted a Nebraska decision for the idea that the law "will not subject a minority of landowners to unlimited and unexpected restrictions on the use of their land merely because the covenant agreement permitted a majority to make changes."

Effect on existing and later owners

The Court wrote that an unreasonable amendment may be "invalid and unenforceable against existing owners who purchased their property before the amendment was passed," but that a court "may also find that the amendment is binding as to subsequent purchasers who buy their property with notice of a recorded amended declaration."

Powers outside the Act

For a community not subject to the Planned Community Act, "the powers of a homeowners' association are contractual and are limited to those powers granted to it by the declaration."

Why It Matters for Associations

• A majority vote is not the only test. In this case, an amendment adopted as the declaration allowed still failed because it was unreasonable.
• Look at the original bargain. The Court tied reasonableness to the declaration, deeds, plat and the character of the community.
• New financial burdens deserve scrutiny. The amendment struck down imposed open-ended assessments on a community that had none.
• The case predates current amendment provisions. The opinion discusses a non-Act community. Chapter 47F now has its own section on amendments (see G.S. 47F-2-117); we did not trace how the legislature or later courts have treated Armstrong, so confirm with counsel.
• Our reading: the case concerns amendments adding new powers and obligations. It does not say that every amendment is suspect.

Related North Carolina Law

• Wise v. Harrington Grove (2003)
• Bryan v. Kittinger (Court of Appeals, 2022)
• G.S. 47F-2-117: declaration amendments
• H.B. 444 (2025), pending, not law
• North Carolina HOA laws complete guide

Board Checklist

• Before proposing an amendment, compare it with the original declaration, deeds and plats and ask what the original bargain was.
• Be cautious with amendments that add open-ended assessments, new restrictions on existing owners, or sweeping powers.
• Document why the change meets a legitimate community need.
• Confirm the voting threshold and recording steps in the declaration and Chapter 47F or 47C.
• Have counsel review any amendment that adds a financial obligation.
• Disclose recorded amendments to buyers, since notice matters in the Court's discussion of later purchasers.

Frequently Asked Questions

Can an HOA amend its declaration however a majority wants?

Not according to Armstrong. Even where the declaration allows majority amendment, the amendment must be reasonable in light of the original intent.

Did Armstrong involve the Planned Community Act?

No. The parties agreed the subdivision was not subject to Chapter 47F.

What amendment did the Court strike down?

One authorizing broad assessments for the general purposes of promoting the safety, welfare, recreation, health, common benefit and enjoyment of residents, as the board might authorize.

Can an unreasonable amendment still bind anyone?

The Court said it may be invalid against existing owners but possibly binding on later buyers with notice of the recorded amended declaration.

Can a declaration ban rentals?

The Court said rentals may be prohibited by the original declaration, and discussed when later rental restrictions might be unreasonable.

Is Armstrong still good law?

We did not check later history. Confirm with counsel.

Where This Comes From

This page is based on the full text of the opinion (No. 640PA05, August 18, 2006) as published on FindLaw and on the published reporter text at the Caselaw Access Project, which confirms the citation 360 N.C. 547. We did not verify the parallel South Eastern Reporter citation, so it is omitted.

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed North Carolina attorney before acting.