Quick Answer
In McVicker v. Bogue Sound Yacht Club, the North Carolina Court of Appeals held on December 19, 2017 that an association could not require a $250 construction bond with an architectural application when its covenants and the Planned Community Act did not authorize it, and that fines imposed for refusing to post the bond were unlawful. The court reversed summary judgment for the association. One judge dissented.
At a Glance
| Item | Detail |
|---|---|
| Case | McVicker v. Bogue Sound Yacht Club, Inc., No. COA17-447 (N.C. Ct. App.), published |
| Court | North Carolina Court of Appeals; opinion by Judge Tyson, Judge Stroud concurring, Judge Hunter dissenting |
| Filed | December 19, 2017 |
| Outcome | Reversed and remanded for summary judgment for the owners |
| Subject | Authority to require a construction bond; fines under G.S. 47F-3-102(12) |
| Reporter citation | Not verified; we cite by docket number |
The Dispute
Owners in the Bogue Sound Yacht Club subdivision in Carteret County hired contractors in October 2013 to cut trees and clear brush on their own lot. They did not seek approval from the Architectural Control Committee. The association sent a violation notice demanding that work stop until the proper application and a "$250 Refundable Construction Bond" were submitted. The work finished the next day.
The owners later offered to submit the application but refused the bond, saying neither the covenants nor the law authorized it. The association would not accept the application without the bond and sent a hearing notice. After a board hearing, it gave a seven-day deadline to submit the application and bond, warning of a $100 per day fine for 30 days. The owners paid the bond under protest on or about December 10, 2013, and the association approved the application after the fact and returned the bond. It still assessed $1,400 in fines, later reduced by 25 percent to $1,050.
The owners sued for a declaration that the association did not follow the Act's fine procedures and had no authority to impose the bond. The trial court granted summary judgment to the association. The Court of Appeals had earlier dismissed a first appeal as interlocutory.
What the Court Held
The association had no authority to require the bond
The court noted the community was created before January 1, 1999 and so is subject to particular sections of the Act. It applied North Carolina's rule that restrictive covenants "clearly expressed may not be enlarged by implication or extended by construction," and that doubt is resolved in favor of unrestricted use. The covenants authorized "reasonable fees for the use of the Common Areas" and required only plans and specifications with an architectural application. They said nothing about a bond. The court also noted the covenants separately gave the association a procedure to repair common area damage from construction and assess the owner. It held the association had "no express or implied authority" to require the bond, and that no language in the Act granted that power either.
The fine was unlawful
The association fined the owners only for not posting the bond. The court said the fine was not authorized because the bond requirement was not, and that imposing it was "plainly not reasonable" under G.S. 47F-3-102(12). It said that even assuming proper notice and hearing, the fine was unlawful.
Mootness and the dissent
The court rejected the argument that the refund of the bond made the issue moot, saying the bond authority was intertwined with the fine and, alternatively, was capable of repetition yet evading review. Judge Hunter dissented. He would have treated the bond issue as moot and read the complaint as challenging only the fine procedure, and he would have found the two notices met G.S. 47F-3-107.1.
Why It Matters for Associations
- Fees and deposits need a source. Our reading: an architectural deposit, bond or fee should be traceable to the recorded declaration or a statute, not just a board policy.
- A fine is only as good as the rule behind it. A fine for violating an unauthorized requirement was unlawful, even if the hearing steps were followed.
- Documents are read strictly. Ambiguity is read in favor of the owner's use of the lot.
- Limits of the case. It was decided on its covenants, and one judge dissented. The court assumed without deciding that the association could require applications for yard work. We did not research later history.
Related North Carolina Law
- G.S. 47F-3-107.1: fines and suspension hearing
- G.S. 47F-3-102: association powers
- Wise v. Harrington Grove (2003)
- Schwartz v. Banbury Woods (2009)
- North Carolina HOA laws complete guide
Board Checklist
- List every deposit, bond and fee tied to architectural review and note its source in the documents.
- Remove or amend requirements that have no documented authority.
- Never fine solely for refusing a requirement the documents do not support.
- Follow the declaration or G.S. 47F-3-107.1 steps for any fine hearing.
- If damage to common areas is the concern, use the repair-and-assess procedure in the documents.
- Have counsel review architectural guidelines before adopting new costs.
Frequently Asked Questions
Can a North Carolina HOA require a construction bond?
In McVicker, the court held this association could not, because its covenants and the Act did not authorize a bond. Other communities' documents may differ.
Were the fines upheld?
No. The court held the fines for not posting the unauthorized bond were unlawful.
Was the case decided by the Supreme Court?
No, by the Court of Appeals. We did not research whether further review was sought.
Did the court say the notice and hearing were deficient?
The majority did not rule on that. It assumed proper notice for the sake of analysis.
Why did the association return the bond but still fine?
It said the bond was not submitted within its seven-day deadline. The court treated the bond requirement itself as unauthorized.
Does the pre-1999 date matter?
The court said the community was created before January 1, 1999 and is subject to particular Act sections.
Where This Comes From
This page is based on the full text of the opinion in No. COA17-447, including the dissent, as published on Justia, and the North Carolina Judicial Branch opinion listing. We did not verify subsequent history or the official reporter citation.
How APM Helps
Association Property Managers provides remote HOA and condo management for associations in North Carolina, starting at a flat $99/month per community with no per-door fees or long-term contracts. See remote management in North Carolina, browse every North Carolina state-law guide, or request a free proposal, delivered within three business days. Laws and licensing rules differ by state, and we confirm the requirements for North Carolina when we build your proposal.
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.
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