"Do not bite the bait of pleasure till you know there is no hook beneath it...." Thomas Jefferson

North Carolina statute G.S. 47F required that sellers of residential real estate make full disclosure of characteristics, conditions or problems that could adversely impact a subsequent owner. The applicable disclosure statement contained 21 specific categories - two of which dealt with lawsuits, proposed assessments and common area expenses. It can be argued that both the letter and spirit of this law were ignored in previous sales of property in the Ledges. Specifically, the lawsuit filed in October 2003 and decided by the North Carolina Supreme Court in August 2006 was not disclosed to numerous purchasers even though every seller had actual knowledge by virtue of being a party to the suit. Disclosure of such a lawsuit was required in Paragraph 18 of the applicable Disclosure Statement.

Anyone considering purchasing a home in the Ledges of Hidden Hills should be aware that the neighborhood is in transition from a small, upscale subdivision without amenities or common elements to a Planned Community connected to adjoining subdivisions by walking trails and a political class. The before-and-after differences are most obvious when comparing the original seven-page Declaration of Restrictive Covenants to the 13-page Amended and Restated Restrictive Covenants deemed by the North Carolina Supreme Court to be “unreasonable, invalid and unenforceable.” The original Covenants are written in plain language and include common sense enforceable restrictions. The tone is business-like but not condescending. The Amended Restated Covenants are an entirely different matter. Read this document carefully and have it reviewed by your attorney. Note the numerous references to common expenses, fees, special assessments, specific assessments, liens, rules and regulations, interest and attorney’s fees. The worldview of those who support this change is that these are the means necessary to protect property values.

What follows are issues a prospective purchaser or buyer’s agent should be aware of:

1. Are there currently “common area” expenses or assessments?

There is no communally owned property in the Ledges. Each lot owner is required to share the electricity expense of decorative lighting at the subdivision entrance. The annual charge for 2010 was $6.00 per lot.

2. Would the changes referred to in the Amended Restated Covenants result in “common area” expenses or assessments? If so, what would the annual cost be?

Yes, indeed. Section 3.6(a) specifies a non-inclusive list of common expenses, Section 3.6(b) adds yet-to-be-determined expenses agreed upon by (presumably) 2/3 of the property owners, Section 3.6(c) includes an unspecified amount of reserves and finally Section 3.6(d) defines common expenses to include interest, costs of collection, and attorney’s fees. An estimate of the annual assessment under this scenario has not been made generally available.

3. Are there currently Rules and Regulations enforceable by the imposition of fines?


4. Would there be under the Amended Covenants?

Yes. Section 9.2 grants the Board of Directors the authority to make, modify, repeal, and to enforce …. Rules and Regulations. The Board of Directors may charge an owner with violating the Covenants, Bylaws, or Rules and Regulations and state a remedy. Although the specific remedy is not enumerated, the Planned Community Act allows for the imposition of a daily fine enforced by the filing of a lien UNLESS such a remedy is specifically prohibited.

5. Have things changed in the community since the Supreme Court ruling?

The names and faces on the board are different but the underlying premise remains the same as evidenced in this July 30, 2010 letter. The issues raised are addressed in the order in which they appear:

a. Questions of applicability of the amendments? The North Carolina Supreme Court concluded that the amendments are …unreasonable, invalid and unenforceable.

b. As a matter of law (not at the board’s discretion) all property owners in the Ledges are members of the association. 

c. The original Restrictive Covenants are legally enforceable by any property owner(s) willing to pay the legal fees. This assures that a critical mass of neighbors is involved in the decision-making and that the alleged violation meets a necessary burden of proof.

d. If harmony and peace are your objective then refrain from the long-standing practice of dividing and demonizing your neighbors as in “participating” and “non-participating.” This attitude creates a toxic environment encouraging the concoction of one grievance after another.

e. The “voluntary fee” is chump-change affirming the point that it isn’t about the money. It’s reasonable that residents particularly along Sunlight Ridge would jointly arrange with someone to mow the portion of their property that abuts the pavement and benefit from the resulting economies of scale. However, this should be a private arrangement among the participants. Involving the association subjects all of us to potential liability and exposure to litigation.

f. The Restrictive Covenants do not require architectural approval of all exterior projects. Nor do they include a standard against which to measure compliance. The Supreme Court was able to determine the original intent of the parties as evidenced by the plain language of the Covenants. Their “spirit” is a moving target compliance with which is voluntary for those of us who respect the rule of law.

g. Respect is earned by individuals living freely and pursuing their own legitimate interests displaying the qualities of initiative, self-reliance and independence.

Reasonable people can differ about whether a centralized private government is the best way to protect property values. But two things are certain for those who consent to this change. First, assessments (a form of tax) will increase exponentially. Second, the rules will remain in flux to reflect an evolving community standard.