Real Property – North Carolina Unit Ownership Act – Breach of Governing Documents

Homeowners’ association Plaintiffs may have been afforded certain rights as “members” by the Governing Documents, but since they did not plead that they are condominium unit owners, they lack standing to pursue their claim for violated of the North Carolina Unit Ownership Act.

Plaintiffs’ claim for breach of the North Carolina General Statute is dismissed with prejudice.

Plaintiffs brought an action asserting claims for breach of governing documents; breach of North Carolina General Statutes (N.C.G.S. §§ 47A and 55A); breach of fiduciary duty; and actions committed ultra vires. The Complaint also includes a request for preliminary injunction styled as a cause of action.

Among other things, Plaintiffs alleged that the condominium association Defendants failed to adhere to the conditions and obligations contained in the parties’ Governing Documents. Defendants cited Howe v. Links Club Condo. Ass’n for the proposition that pleading a claim for breach of contract requires more specificity than is evidenced in the Complaint. The Court disagreed. In Howe, the plaintiffs failed to allege that the agreement at issue was a binding contract to which the defendant was a party. The Complaint in the instant case does not suffer from the same shortcoming. Here, the Complaint identifies the contract at issue as the Governing Documents and then lists alleged breaches of that contract. Nothing further is required at this stage of the case. Accordingly, on this basis, Defendants’ motion to dismiss is denied.

Next, Plaintiffs alleged that Defendants violated Section 47A-20 of the North Carolina Unit Ownership Act by “fail[ing] to provide [Homeowners’ Association] members with financial records upon request . . . as well as failure to perform at least one (1) annual audit per year.” However, the statute, on its face, gives inspection rights only to “unit owners, their duly authorized agents or attorneys[.]” Plaintiffs may have been afforded certain rights as “members” by the Governing Documents, but they do not plead that they are condominium unit owners. Consequently, Plaintiffs lack standing to pursue this claim.

Lastly, Plaintiffs broadly alleged that Defendants’ actions violated Article 16 of Section 55A of the North Carolina General Statutes. While the Complaint does not specify which provisions of N.C.G.S. § 55A-16 Defendants allegedly violated, it appears from the recitation of alleged breaches that Plaintiffs contended that Defendants failed to allow them to inspect the Condominium Association’s financial records. The Deed conferred upon Plaintiffs the status of members of the Condominium Association “[w]ith regard to all matters dealing with and affecting the assessments concerning the . . . Community Facilities or the use or administration thereof[.]” Thus, Plaintiffs were contractually given the right to inspect certain records pertaining to the Community Facilities. Still, Plaintiffs are required to comply with Section 55A-16-02, and they failed to allege that they have done so.

Granted in part, denied in part.

Port Trinitie Homeowners Association Inc. v. Port Trinitie Association Inc. (Lawyers’ Weekly No. 020-043-25, 24 pp.) (Julianna Theall Earp, J.) 2025 NCBC 43. Sharp, Graham, Baker & Varnell, LLP, by Casey C. Varnell, for Plaintiffs Port Trinitie Homeowners Association, Inc., a North Carolina Non-Profit Corporation; and Jennifer Stump. Parker Poe Adams & Bernstein LLP, by Kevin L. Chignell and Jon Carlton McLamb, for Defendants Port Trinitie Association, Inc., a North Carolina Non-Profit Corporation; Charles Harris, Linda Whitestone, Amelia DeCourt, Timothy Campen, Chrissie Rankins, Nancy White, and Dennis Harvey, each in their individual capacity. North Carolina Business Court