SHERRILLS FORD, N.C. — Homeowners in the Magnolia Cove neighborhood said they are running out of options after their HOA board raised fees to $2,500, years after some neighbors complained about the developer who they say controls the board.
The board initially wanted to increase the monthly fees to $7,500 but voted on a $2,500 increase.
According to the association, more than 20 homeowners sued the HOA and some of its officers in early 2024. The association says the homeowners’ claims were either voluntarily dismissed or dismissed by the court. It also says a jury later found some of the homeowners liable for defamation and awarded monetary and punitive damages.
The HOA says defending the lawsuits resulted in significant legal expenses, which are now the largest item in its budget.
Some homeowners told Channel 9’s Dave Faherty they can’t afford the amount and also can’t sell their homes because of the high fees.
They said the board is run by the developer, who they said owns most of the homes in the neighborhood.
One owner told Faherty by phone that it’s only a matter of months before he’ll be forced out.
“There has to be HOA reform,” the homeowner said. “It’s insane that they have this much power to take everything that you have worked for over fees.”
The association says those legal expenses and unpaid assessments led to the current assessment of $2,500 per month. It says the nonprofit HOA does not profit from the assessments and uses the money to pay community expenses.
Homeowners said the developer, Aaron Guess, runs the HOA board because he owns most of the properties in Magnolia Cove.
Channel 9 first investigated Guess in 2022.
Neighbors complained to Action 9 that he didn’t deliver on promises, including a pool, lawn service and mailboxes.
In 2023, North Carolina’s General Contracting Board suspended his license for failure to disclose certain information when he renewed.
At the time, his attorney attributed the suspension to a corrected clerical error.
Guess appealed and got his license back.
In Magnolia Cove this week, the HOA board originally wanted to raise monthly fees to $7,500.
They said the increase was necessary to pay for legal and collection costs from owners who haven’t paid.
They ultimately decided on the $2,500 amount.
Guess has his supporters, including a couple who are leasing and hoped to buy a home here.
“We just don’t like the wedge that’s been driven between us,” said resident Duane Johnson.
“They started a fight. They lost,” said resident Paige Johnson. “They don’t like the outcome and now they think everyone else needs to pay their dues.”
The board says assessments could decrease once the legal expenses end and past-due accounts are paid.
The North Carolina Attorney General’s Office said there are no statutes limiting how much an HOA can raise fees each year.
Faherty emailed Guess and visited his home but has not heard back.
Full statement from Magnolia Cove HOA:
Recent news stories and social media posts about Magnolia Cove have presented an incomplete and misleading picture. They have portrayed a group of homeowners as having been maligned or mistreated by sudden, unexplained assessment increases while omitting the court outcomes that explain why those costs exist.
More than twenty owners sued the Association and certain of its officers in early 2024. The Association did not initiate the litigation. The homeowners’ claims were unsuccessful; none of them reached the jury. They were either voluntarily dismissed by the homeowners or dismissed by the Court. In response, counterclaims were asserted for defamation and related claims. In Catawba County case 24CVS000633, a jury returned unanimous verdicts against certain of those owners for defamation, including substantial monetary damages and punitive damages. Judgment was entered in 2026. A further jury trial is scheduled for next year solely to determine the amount of punitive damages attributable to civil conspiracy.
Defending the homeowner-initiated claims has produced large legal expenses. Those legal bills are now the single largest item in the Association’s budget. The responsibility for paying those bills rests with the owners.
At the same time, there have been years of widespread delinquency. Most lots in the community are behind on their assessments. Unpaid assessments do not vanish; the cost is carried by the owners who do pay. The current assessment level of $2,500 per month is the direct result of those two facts: the cost of defending the lawsuits that owners brought and lost, and years of widespread delinquency. The Association is a nonprofit.
It does not profit from assessments. Every dollar collected is used to pay the community’s actual bills.
Many of the owners now speaking publicly as aggrieved residents are the same parties who filed the lawsuits and who the courts found against. Presenting them solely as having been maligned or mistreated, while leaving out the jury verdicts, the judgment, and the resulting legal costs, is not accurate. It creates the false impression that these owners are being taken advantage of when the public record shows the opposite.
No one on the Board wants assessments at this level. When the legal costs from these cases end and the past-due accounts are paid, the assessments can come down. Until then, the bills have to be paid by the owners.
The court file is public. Owners with questions about Association records may submit a written request to magnoliacovehoa@outlook.com.
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