3/21/24: TENSION BETWEEN NEIGHBORS IN CHICAHAUK: CPOA ANNOUNCES INTENT TO START FINING HOMEOWNERS FOR RENTING ACCESSORY DWELLING UNITS.

A recent letter to Chicahauk residents from an attorney representing the Chicahauk Property Owners Assn. (CPOA) informing them that CPOA will be levying stiff fines against owners who use their property for other than “single-family residential purposes” has the social media site Next Door abuzz today with confusion, anger, suspicion, and a lot of concern.    

The March 13 letter, written by attorney Louis J. “John” Hallow, III of Hornthal, Riley, Ellis & Maland—the same law firm that represents the Town of Southern Shores—puts CPOA members on notice that after March 31, CPOA will begin imposing fines of $100 per day for violations of a protective covenant that prohibits the erection or placement of “guest houses and/or suites or ancillary or accessory structures” on a lot in the subdivision, without prior written approval.

The letter, a copy of which The Beacon obtained, quotes from Article III, Section 1, “Residential Use,” of the CPOA’s Amended Declaration and Restatement of Protective Covenants and Conditions, for the restriction that:

“Only one single family residence may be placed on and [sic] 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.”

So Chicahauk homeowners can neither build guest houses, suites, or accessory structures, nor rent such structures—if they do indeed build them. The current version of these restrictions dates back to 2010, which is the last time the CPOA covenants were revised.

Although in this age of Airbnb rentals, homeowners are increasingly renting out rooms, suites, and other accommodations in their primary residences, the language of the CPOA covenant clearly applies to what are customarily called accessory dwelling units (ADU), not to rental spaces within homes.

ADUs are commonly understood to include guest houses, granny flats, in-law units, cottages, apartments above detached garages, and other secondary dwellings that share the same building lot as a larger, primary home, but not the same structure. They may be attached to a house or garage or stand alone. They may be rented by the homeowner, but they cannot be bought or sold separately.

To put the CPOA covenant into a larger context:

**The Town of Southern Shores does not permit accessory dwelling units, except those that are temporary family health care structures, which, e.g., an elderly parent or his/her caregiver may occupy (See Town Code sec. 36-168(5).)

The Town, however, does allow “accessory structures with living space” in all of the zoning districts except for the RS-10 residential district, Deputy Town Manager/Planning Director Wes Haskett confirmed with us today. RS-10 is the high-density residential district, such as where Pelican Watch is located.  

We have always found this distinction between ADUs and “accessory structures with living space” to be confusing.

“From a zoning perspective,” Mr. Haskett explains, “someone can live in an accessory structure with living space, and they can be rented, but it can’t have all of the elements that make up a dwelling unit.”

This has meant in the past that accessory structures in Southern Shores cannot have ovens and other cooking appliances. A hot plate is all right, but we think microwaves are forbidden. (To be verified later.)

**The North Carolina State Legislature may be on the verge of passing a bill that would require all local governments to allow the development of at least one accessory dwelling unit for each single-family detached dwelling. The N.C. House passed the bill, H.B. 409, last year. The Senate equivalent, S.B. 374, passed a first reading in the N.C. Senate in 2023, but it has stalled in committee. (The General Assembly’s sessions last two years; the 2023-24 session ends July 31.)

This pro-builder state legislation has bipartisan sponsorship and is touted politically as a means to provide affordable housing. The Town of Southern Shores Planning Board and Town staff are well aware of H.B. 409/S.B. 374, but Mr. Haskett could not tell us more than we already know.

H.B. 409, which critics claim would undesirably increase real estate density and congestion, has exceptions for HOA restrictive covenants and historic properties.

Southern Shores Town Code section 36-94 provides that only one “principal building” and its “customary accessory building” may be erected on a lot in town, except as otherwise authorized, such as with the temporary family health care structure.

A “customary accessory building,” according to Code section 36-202(b)(2), which applies to the RS-1 single-family residential district where most homeowners live, includes, but is not limited to, swimming pools, tennis courts, and garages, “provided no dwelling unit is located in the accessory structure.”  

Got it? We honestly don’t. How many violations regarding accessory structures do you think exist now—or have occurred—in Southern Shores, outside of Chicahauk? Guest houses, sometimes used as quarters for domestic employees, were once common on the oceanfront lots that front on Ocean Blvd. How many exist today?

LONG-STANDING TENSION AMONG HOMEOWNERS  

The Beacon is aware that there has been tension between individual homeowners, including some CPOA Board of Directors members, about ADU rentals in Chicahauk, as well as Airbnb rentals in people’s homes. We do not know the specifics, but we do know that such tension is not exclusive within the town to just the Chicahauk subdivision.

We have heard the Town Planning Board grapple with how to regulate ADUs, assuming that the N.C. legislature will open the floodgates, and can attest that members generally do not view them favorably.

According to Mr. Hallow’s letter, the CPOA Board of Directors notified Association members last September by letter that it would begin imposing fines for violations of the “Residential Use” covenant. Unaware of this, we wrote on Dec. 11-12 about a CPOA meeting to discuss a review of the covenants and bylaws and the drafting of a membership survey.  

We spoke then to CPOA president, David Stager, who told us that the purpose of the meeting was to “gather” questions for a survey to be sent to CPOA members regarding whether to “change or adjust” Association covenants.

Judging by the comments on Next Door today, we conclude that no such survey was done.

“A board operating from less of a dictatorship, one who genuinely wants to have a FAIR CONVERSATION would benefit us all,” Kiirsten Farr of Chicahauk Trail writes in a lengthy Next Door post that summarizes many of the objections to the new enforcement action taken by the CPOA Board of Directors.

“The drama and unnecessary tension amongst community members this is causing when we’ve had such a dream sense of community for decades,” she continues, “is incomprehensible.”

Writes Dan Lester of Trinitie Trail: “My problem here is that one person had an issue and now it has consumed money and a lot of stress for people. Before making it a legal problem, the process should have been to evaluate whether it was time to make an adjustment to the covenants.”

Judd Snapp of Spindrift Trail acknowledges on Next Door that “our property unfortunately started all of this.” He describes how he and his wife went to “great lengths” to save trees on their lot and to design a house that they believed captures the “Outer Banks look and feel.”

Mr. Snapp’s objection to clear-cutting is not shared by all in Chicahauk, however, as he describes in his Next Door post being told by the “current Chicahauk ARB” (Architectural Review Board head) at a meeting that “he has no right to tell new construction owners that they can’t cut down all the trees on [their] lot.”

In fact, section 9 of Article III of the CPOA’s covenants is designed to do just that. It prohibits property owners from disturbing, removing, or destroying existing “vegetation” during construction without first getting express written consent from the CPOA, which can deny them permission.

CPOA’S PROPOSED FINES ARE EXCESSIVE

But the CPOA Board of Directors is not interested in preventing clear-cutting or in preventing other covenant violations. It is focused on rental ADUs and has brought out the heavy fire.

Per Mr. Hallow’s letter, CPOA will begin enforcing violations of this “Residential Use” covenant  after March 31: The Board of Directors, the attorney writes, “will properly notice and call a special meeting . . . to hold a hearing to determine whether a violation . . . has occurred, and if so, whether a lot owner should be fined or if planned community privileges or services should be suspended.”

Mr. Hallow cites N.C. statute for the Association’s authority to take this punitive action.

The allegedly “violating lot owner,” he explains, will be given notice and an opportunity to present evidence at the hearing, at the conclusion of which the Board will either announce a decision or defer decision-making to a later date.

Per a decision make by the Board on March 7, Mr. Hallow writes, fines will be $100 per day, for each day the violation continues. This penalty is comparable to what the Town of Southern Shores levies for zoning violations. According to the State statute cited by Mr. Hallow, $100 is the most severe fine the CPOA could impose.

N.C. General Statutes sec. 47F-3-107.1, which is part of the N.C. Planned Community Act, actually states that a homeowners association may impose a fine of up to $100 for “each day more than five days after the decision that the violation occurs.” Mr. Hallow does not qualify the potential fine imposed by the CPOA, and, therefore, it exceeds the penalty authorized by the State act.

The CPOA’s declaration of covenants also does not give notice to members that they may be subject to stiff fines and the suspension of community privileges if they are found to have violated a covenant. It also does not prohibit the CPOA from imposing them.

We agree with those homeowners who believe that the CPOA Board of Directors has gone too far. The CPOA should have made an effort to discuss the underlying issues of its enforcement action and to hire a professional mediator, rather than a lawyer, to resolve community conflicts. Cooler heads should have prevailed with reasoned problem-solving. Pitting neighbor against neighbor is never a good approach.  

The most recent version of the CPOA covenants is nearly 15 years old now and reflects rule-making decisions made decades ago. Radical changes in technology, in market value of Outer Banks property, in the U.S. and the local economies, and in contemporary lifestyles and personal needs, to name just a few variables, have occurred since 2010, and homeowners associations’ governing rules have to keep pace. In updating covenants, CPOA leaders must listen to the many voices in the community, not just to the voices that they want to hear.  

Where was the CPOA Board when accessory dwellings were built many years ago? Why has it allowed these dwellings to be built and rented and failed to enforce the covenant?

We also question why one of the Town’s attorneys is involved in this community dispute. The CPOA and the Town are separate entities, with differing interests. If, in fact, Chicahauk homeowners are paying Dare County occupancy taxes on their accessory rentals, the Town of Southern Shores is benefiting.

It is well-established law that local laws supersede homeowners associations’ rules and regulations, but HOA rules may be more restrictive. As noted above, the Town Code allows accessory structures with living space as long as they are not dwelling units. They also may be rented.

We trust the conversation that began on Next Door today will continue and will grow to include the entire community of Southern Shores.

By Ann G. Sjoerdsma, 3/21/24