Chicahauk Property Owners Advocates

This grassroots effort is presented by 100+ concerned Chicahauk property owners and growing!  

Thurman, Wilson, Boutwell & Galvin

Attorneys at Law

August 5, 2024

Chicahauk Property Owners Association, Inc.

c/o Karen Kranda, President

82 Poteskeet Trail, Southern Shores, NC 27949

karencpoa@gmail.com

Chicahauk Property Owners Association, Inc.

c/o Dave Stager, Registered Agent

5377 N. Virginia Dare Trail

Southern Shores, NC 27949

chicahauk@cpoaobx.org

Chicahauk Property Owners Association, Inc.,

I represent a group of concerned homeowners of the Chicahauk Property Owners Association, Inc. (the “Association”). This letter serves as a formal demand regarding the Association’s recent attempts to enforce provisions of the governing documents, specifically related to the provision set forth in Article III, Section 1(a) of the Amended Declaration and Restatement of Protective Covenants and Conditions recorded in Book 1871, Page 59 of the Dare County Registry (the “Covenants”).

The contested provision in question, Article III, Section 1(a), states: "Each and every building lot within the Chicahauk Subdivision shall be used only for single-family residential purposes. No building or structure, including guest houses and/or suites or ancillary or accessory structures, shall be erected, altered, placed, or permitted to remain on any lot without the prior written approval, in accordance with Section 3 of this Article, of CPOA. Only one single-family residence may be placed on any lot, and duplexes or multiple-family houses are expressly prohibited. No guest house and/or suites ancillary or accessory structures may be leased, rented, or sold separately from the main residence."

The Association, for the first time in its fifty-year history, is attempting to regulate property rights in regards to leasing. Specifically, it appears that the Association is trying to wield an overly broad interpretation of the following phrase: “No guest house and/or suites ancillary or accessory structures may be leased, rented, or sold separately from the main residence" (the “Contested Phrase”). This phrase contains no defined terms and it is subject to varying interpretations. The purpose of this letter is to notify the Association that any attempt to use the Contested Phrase to prohibit the rental of only a portion of a lot will be vigorously challenged. The Association would be prevented from this type of enforcement due to (i) the equitable concept of waiver, (ii) the ambiguity of the language in the phrase you are seeking to enforce, and (iii) the doctrine of absurdity.

The Association has completely failed to enforce this provision since its adoption in 2011. Moreover, rentals have been banned by the original covenants since 1974 and that restriction was never enforced. This long-standing lack of enforcement constitutes a waiver of the right to enforce the restrictive covenant as established by North Carolina case law. The principle of waiver is grounded in the notion that a party can lose a right by failing to enforce it over an extended period, leading other parties to reasonably rely on this inaction. The stated rule is that an acquiescence in violation of restrictive covenants amounts to a waiver of the right to enforce the restrictions when “changed conditions within the covenanted area are so radical as practically to destroy the essential objects and purposes of the scheme of development.” Williams v. Paley, 114 N.C. App 571, 578, 442 S.E.2d 558, 562 (1994) (citing Barber v. Dixon, 62 N.C. App. 445, 459, 302 S.E.2d 915, 918 disc. rev. denied 309 N.C. 191, 305 S.E.2d 732 (1983)) In Medearis v. Trustees of MPBC, 558 S.E.2d 199 (N.C. App. 2001), the Court ruled that where of the twelve

restricted properties, six were in “open and obvious violation” of the restriction attempted to be enforce, the non-enforcement constituted a waiver. Id. at 205. Here, 100% of the lots that have allegedly been in violation of the Contested Provision have not been enforced. Your attempt to do so now is barred by waiver.

In addition to waiver, the Association is barred from its proposed enforcement of the Contested Phrase due to the lack of definition and the existence of ambiguity in the language. The terms "guest house and/or suites ancillary or accessory structures may be leased, rented, or sold separately from the main residence" are not defined within the Declaration, rendering the language too ambiguous and undefined to enforce as the Association is attempting. In North Carolina, restrictive covenants are a special form of contract, and they are strictly construed to favor unrestrained use of real property. When interpreting restrictive covenants, doubt and

ambiguity are resolved in favor of the unrestricted use of property, so that where the language of a restrictive covenant is capable of two constructions, the one that limits, rather than the one which extends it, should be adopted, and that construction should be embraced which least restricts the free use of the land. Danaher v. Joffe, 184 N.C. App. 642, 645, 646 S.E.2d 783, 785-86 (2007). "Covenants restricting the use of property are to be strictly construed against limitation on use, and will not be enforced unless clear and unambiguous. This is in accord with general principles of contract law, that the terms of a contract must be sufficiently definite that a court can enforce them." Wein II, LLC v. Porter, 198 N.C. App. 472, 480, 683 S.E.2d 707, 713 (2009). The association’s attempt to use the undefined terms in the Contested Phrase to prevent owners from renting a room above their garage or rooms attached to their main house is not supported by a strict reading of the terms. Again, the ambiguity over what is meant by phrases like “suites ancillary” will be resolved in favor of the unrestricted use. Furthermore, the attempt to wield (for the first time in over 13 years) the Contested Phrase to allow a “guest house” and the main house to be rented together while prohibiting an owner from occupying the “main residence” (again, note that these terms are not defined in the Covenants) would result in an absurdity. The doctrine of absurdity states that [a] construction of a contract leading to an absurd, harsh or unreasonable result should be avoided if possible." Jarman v. TWIDDY AND CO. OF DUCK, INC., 889 SE 2d 488 (NC App 2023). Here, there is no practical difference in renting a “guest house” to renters and a “main house” to renters but prohibiting the rental of just a “guest house” when the humans in the “main house” happen to be owners and not renters. This absurd result of the Association’s interpretation and application of the Contested Phrase would be prohibited by the doctrine of absurdity.

In light of the above, we formally demand that the Association immediately cease any attempts to enforce the cited provision against our clients and any other homeowners who may be similarly affected. We also urge the Association to seek independent legal counsel to review the issues raised in this correspondence. We are hopeful that this matter can be resolved amicably without the need for litigation.

Please confirm receipt of this letter and provide a response regarding how you intend to proceed within ten (10) days of the date of this correspondence. Should you have any questions or require further clarification, do not hesitate to contact me directly.

Sincerely,

James P. Galvin

Thurman, Wilson, Boutwell & Galvin

Cameron Brown Building

301 S. McDowell Street, Suite 608, Charlotte NC 28204

Tel: 704-377-4164 Fax: 704-377-5503

This grassroots effort is presented by 100+ concerned Chicahauk property owners and growing! 

Documents on this CPOA topic.

This is relevant to every property owner in Chicahauk.  Whether you rent part of your property or not remains a moot point. You have a right to be aware of the rogue ways in which the CPOA operates. With over 550 properties, our community has roughly $400,000,000 of current valuation. A lawsuit will likely impact property values with your Board heading in a misguided direction, and unwilling to reach an amicable solution.

There are numerous rentals in our community and disclosure of some sort is required by law if you decide to sell your property one day (discouraging buyers is generally unacceptable practice). Unfortunately, many may have bought under an undefined notion and so we must analyze the 2011 amendment and the 200 sales in Chicahauk since then.

While it is perfectly legal for an HOA to restrict short-term rentals, we are unaware of any supporting evidence that an HOA can discriminate short-term rentals based on their model. In our community, the CPOA permits an absentee homeowner to rent their vacation home to many people/families and is fining the locals that live here the opportunity to rent a small room over the garage or some other part of their property. Yes, you heard that right.  The CPOA discriminates locals in favor of our precious of area investors!

As of March 2024, the Board of Directors has begun to enforce portions of our covenants and as a result, could bankrupt and dissolve the CPOA altogether.  Most do not support this idea (including us), but the CPOA is moving in a direction of no return and without transparency to justify their actions. We ask you to sign this petition to encourage the CPOA to reconsider the (recent) discrimination effort and repair the community damage caused by select homeowners before it goes to lawsuit which is where it is heading.

While many feel this is an absurd topic, the Board of Directors has made a decision to outright ignore the concerns and force others to take legal action as a last-ditch effort to preserve their criminal activities and exhaust those who disagree. 

We are questioning the covenant language in bold below be removed from the Chicahauk covenants as an absurd oversight. 

Section 1. Residential Use.

(a). Each and every building lot within the Chicahauk subdivision shall be used only for single-family residential purposes. No building or structure, including guest houses and/or suites or ancillary or accessory structures, shall be erected, altered, placed, or permitted to remain on any lot without the prior written approval, in accordance with Section 3 of this Article, of CPOA. Only one single family residence may be placed on any lot, and duplexes or multiple family houses are expressly prohibited. No guest house and/or suites ancillary or accessory structures may leased, rented or sold separately from the main residence.