This case is an unpublished opinion of the North Carolina Court of Appeals and as such it does not constitute controlling legal authority. While citing such cases is generally not favored, citation may be permitted by an appellate court under the appellate rules. It is being discussed here because the issue in question is frequently at play in planned communities these days. The defendant Homeowners Association, et al appealed the trial court's finding that an amendment to a restrictive covenant that barred short-term rentals was unreasonable as applied to the plaintiffs or their properties and the Court of Appeals affirmed the order.

Basically, the facts were that the neighborhood:

"...developed as a quiet residential area with large lots, limited entry, and privately maintained narrow roads, was initially governed by restrictive covenants ("Restrictive Agreement") recorded in 1992. This agreement, pre-dating modern rental platforms like Airbnb and Vrbo, established a comprehensive framework of covenants and restrictions to preserve the character of the subdivision, including the type, location, and number of dwellings, minimum square footage, and prohibitions on various commercial and disruptive activities. The Restrictive Agreement also prohibited "commercial, business, or trade venture, manufacturing establishment, factory, apartment house, multi-unit dwelling or house or building to be used for a sanatorium or hospital of any kind, or at any time, use or suffer to be used, any house or building erected thereon for any such purpose." Additionally, it stated that "[n]o office serving the public may be maintained within the Subdivision" and expressly prohibited "noxious, obnoxious, noisy, unsightly, or otherwise offensive objects or activities."

In December 2019, the defendants passed an "Amendment to the Restrictive Agreement" ("2019 Amendment") to clarify and enforce rental policies, requiring rentals to be no less than ninety days unless part of an owner-occupied lot, where thirty-day rentals were permitted. The Amendment defined "Leasing" as "regular occupancy of a Lot by any person other than the Owner for which the Owner receives any consideration or benefit, including a fee, gratuity, or emolument." It also provided that:

Lots that are not the primary residence of a homeowner may be rented only in their entirety; no fraction or portion of the Lot may be rented. No transient tenants may be permitted. No Lots may be subleased. All leases must be for a term of at least ninety (90) days.
. . .
If a Lot is owner-occupied, a portion of the Lot may be rented (for example- a room, a basement, or another portion of the home). All leases must be for a term of at least thirty (30) days.

The defendant Association determined after a hearing that the plaintiffs violated the 2019 Amendment. As a result, the plaintiffs sought a declaratory judgment to invalidate the 2019 Amendment and the trial court ruled in their favor, declaring that the 2019 Amendment was "unreasonable, invalid, unenforceable, and with no binding effect on the plaintiffs or their properties." The defendants appealed the order contending that the restrictions contain provisions:

"...concerning the type, location, and number of dwellings that could be constructed, the building material that could be used, and a prohibition on 'commercial, business, or trade venture . . . of any kind, or at any time, to use or suffer to be used, any house or building erected thereon for any such purpose.'"

The defendants also objected to the trial court's summary judgment order in favor of the plaintiffs, insisting that it could also allow future owners of Plaintiffs' properties to conduct short term rentals despite the recorded amendment that prohibits it. The plaintiffs argued that barring short-term rentals was unreasonable in light of the original covenant, contending that they should be strictly construed in favor of the free use of land. They also contended that the defendants waived the issue of future enforcement of the prohibition against subsequent owners on appeal because never raised it at the trial level.

The opinion runs through a fairly standard analysis with appropriate citation relying heavily upon the unreasonableness doctrine as set out in Armstrong v. Ledges Homeowners Ass'n, 360 N.C. 547 (2006) to affirm that the covenants were unreasonable. The Court also relied upon Russell v. Donaldson 222 N.C. App. 702 (2012), where the Court of Appeals determined that "prohibiting business and commercial uses of the property, does not bar short-term residential vacation rentals."

The Court might well have taken note of the North Carolina Supreme Court's pointed comment in Armstrong where it said:

In so doing, we echo the rationale of the Supreme Court of Nebraska in Boyles v. Hausmann, 246 Neb. 181, 191, 517 N.W.2d 610, 617 (1994): "The law will not subject a minority of landowners to unlimited and unexpected restrictions on the use of their land merely because the covenant agreement permitted a majority to make changes in existing covenants." ... This Court will not permit the Association to use the Declaration's amendment provision as a vehicle for imposing a new and different set of covenants, thereby substituting a new obligation for the original bargain of the covenanting parties.

Significantly, the opinion dodged the issue of prospective enforcement of the amendment. The appeal was purportedly the first time the defendants raised this issue. They contended that the 2019 Amendment should apply to the plaintiffs personally rather than to their properties in perpetuity. Citing Westminster Homes, Inc. v. Town of Cary Zoning Bd. of Adjustment, 354 N.C. 298 (2001) the Court refused to consider the issue. To clinch the refusal the opinion states:

Furthermore, this matter is nonjusticiable as it has not happened. "The courts have no jurisdiction to determine matters purely speculative, enter anticipatory judgments . . . deal with theoretical problems, give advisory opinions. . . provide for contingencies which may hereafter arise, or give abstract opinions." In re Wash. Cnty. Sheriff's Off., 271 N.C. App. 204, 208, 843 S.E.2d 720, 723 (2020) (cleaned up).

As this court has applied in this case and the Supreme Court succinctly stated in Armstrong, such amendments are unenforceable. It may be inferred that even when procedurally proper, they are not enforceable as against subsequent purchasers.