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NC court upholds HOA dues collected for a clubhouse the HOA does not own

NC court upholds HOA dues collected for a clubhouse the HOA does not own
North Carolina · Courts

NC court upholds HOA dues collected for a clubhouse the HOA does not own

A North Carolina association may assess and collect dues that it is contractually required to hand to a developer, for an amenity the association does not own and that sits outside the subdivision. The Court of Appeals so held on May 6, 2026, reversing summary judgment that had gone to the homeowners.1

One correction first, because it is circulating widely. At least one practitioner commentary described the May 2026 Myers decisions as a pair of unpublished opinions. That is wrong as to the one that matters. COA25-701 is published and precedential. Its companion, COA25-698, is unpublished, as is a related opinion, In re: Myers, COA25-550. Anyone writing about “the unpublished Smoky Mountain ruling” is describing the wrong case.

The arrangement at issue

Smoky Mountain Country Club in Swain County is a planned community governed by a 1999 declaration and by Chapter 47F. The declaration obliges owners to pay “Clubhouse Dues” to the property owners' association, which is in turn contractually required to remit them to the developer. The clubhouse is outside the subdivision and is not association property.

The obligation is drafted to be unconditional. It is “absolute… and shall not be dependent on such Owner's actual use” of the facility.

The association itself went through Chapter 11 bankruptcy; the confirmed plan is funded from assessments on lot owners. The Myerses refused to pay and won at trial, where the court held the clubhouse dues invalid.

What the Court of Appeals held

Reversing, the court held:

  • The owners agreed to be bound on purchase. Both deeds conveyed the lots expressly subject to the declaration, which carried the Clubhouse Dues Agreement.
  • The association is authorised to assess and collect the dues under the declaration and under the Planned Community Act.
  • The covenant to pay is a real covenant running with the land — enforceable against the properties themselves, not merely a personal obligation of whoever signed.

The court rejected the trial court's conclusion that Chapter 47F and the Nonprofit Corporation Act barred collecting dues benefiting a third party's profit, following its own earlier decision in Conley's Creek Ltd. Partnership v. Smoky Mountain Country Club Property Owners Ass'n, 255 N.C. App. 236 (2017).

Separately — and this part favoured the owners — the court held they did have standing to seek declaratory relief under G.S. 1-254 as owners subject to the challenged covenant. The case was remanded for the trial court to determine the amount owed.

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Why this reaches far beyond one country club

The structure at issue — an association obliged to collect for an amenity owned by someone else — is not unusual in North Carolina, and it is the exact fault line running through the state's most-covered HOA disputes.

Union County homeowners in one subdivision were billed a monthly amenities fee plus a claimed initiation fee for a pool, clubhouse and tennis courts owned by the builder and located a mile outside the neighbourhood; the builder later offered an opt-out after press coverage. A Catawba County community saw dues rise steeply with the developer also serving as association president and a promised pool never built. In each, the legal question underneath the grievance is the one Myers answers: can the declaration make an owner fund a third party's asset?

On this authority, in North Carolina, yes — where the declaration says so. The qualifier is the whole of the owner's protection, and it is a drafting question decided long before anyone bought a house.

What it changes for owners, boards and buyers

For owners: non-use is not a defence, where the declaration makes the obligation absolute and independent of use. Nor is the fact that the money leaves the association. And because the covenant runs with the land, it binds successors regardless of what they understood at closing.

For boards: an association in this position has less discretion than owners often assume. Where the declaration obliges collection and a separate agreement obliges remittance, a board that stops collecting is not exercising judgment on behalf of members — it is breaching the instrument it administers, and exposing the association to the third party. This decision makes that position harder to argue, not easier.

For buyers and closing attorneys: this is the practical takeaway. An estoppel or resale statement showing a regular assessment does not reveal whether part of it is a pass-through to a developer for an off-site amenity, whether the obligation is absolute, or whether the amenity can be closed without affecting the charge. Those answers are in the declaration and in any referenced amenity agreement, and Myers is the reason to read them rather than the ledger.

The limits of the decision

Two, and both matter.

First, it is declaration-specific. The court's reasoning runs through what this 1999 instrument says: that the deeds conveyed subject to it, that it authorises the assessment, that the obligation is absolute and use-independent. A community whose declaration lacks an express amenity-dues obligation is not covered by this holding, and the general Chapter 47F assessment power is not a substitute for one.

Second, review has been sought. Owners' counsel filed a motion to reconsider on the day of decision, which was denied, and has petitioned the North Carolina Supreme Court for discretionary review. No disposition of that petition appears in the Supreme Court's published filings through today.2 Until the Supreme Court acts, Myers is binding Court of Appeals authority — but it is authority with a petition pending against it, and anyone relying on it for a long-horizon decision should know that.

The legislative counterpoint

It is worth setting this decision beside what the General Assembly did and did not do in the same period.

Senate Bill 378, which passed the Senate 47–0 in May 2025, would have capped managing-agent contract terms and barred fine-contingent manager compensation, but it contained nothing addressing developer amenity pass-throughs. Neither did House Bill 444, nor Senate Bill 1047. The reform agenda in North Carolina has concentrated on fines, foreclosure and records; the structural question of who an association may be required to collect for has not been on the legislative table at all.

What to watch next

The Supreme Court's disposition of the discretionary-review petition. A grant would put the question of third-party amenity dues before the state's highest court for the first time; a denial leaves Myers as the controlling statement of North Carolina law on it.

Also worth tracking: whether the 2027 long session produces any disclosure requirement for amenity pass-throughs at resale. That is the narrow, cheap fix available to a legislature that has repeatedly failed to pass broad reform, and nothing prevents it being proposed.

Related North Carolina HOA Topics

← All North Carolina HOA Topics

  1. Myers v. Smoky Mountain Country Club Prop. Owners' Ass'n, No. COA25-701, North Carolina Court of Appeals, filed 6 May 2026 (published slip opinion)
  2. The Assembly NC, 'Dues and Don'ts', June 23, 2026 — reporting the motion to reconsider and the petition for discretionary review
  3. Myers v. Smoky Mountain Country Club Prop. Owners' Ass'n, No. COA25-698 (unpublished companion opinion, 6 May 2026)

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