Villazon v. Osborne (COA 24-912) 10/1/2025
CCR's, Shipping-Container Homes and Neighborhood Discord
Chris Burti, Vice President And Senior Legal Counsel

Restrictive covenant disputes often emerge where neighborly tensions run high. In Villazon v. Osborne, the North Carolina Court of Appeals addressed one such dispute arising out of the Ashe Lake community in Ashe County. What began as an argument over the use of a lakeside lot quickly escalated into sprawling litigation: claims and counterclaims for nuisance, libel, stalking, covenant enforcement, misrepresentation, and fiduciary breaches were raised, challenged, and narrowed over nearly two years.

At the appellate level, only the defendants, Osborne and Hamby, pursued review challenging three trial court orders:

1. The December 2022 dismissal of covenant-based counterclaims tied to a "nuisance" provision,
2. The March 2023 partial summary judgment order in favor of plaintiff regarding the use of steel shipping containers in the construction of her home, and
3. The January 2024 final judgment, following an eight-day jury trial, resolving all surviving claims.

The Court of Appeals, in a comprehensive opinion affirmed across the board, providing fresh guidance on three recurring covenant issues: (1) vagueness and enforceability, (2) interpretation of restrictions on "temporary structures," and (3) the scope of "residential purpose" and "parking" covenants. This case is significant because it highlights how courts construe restrictive covenants strictly in favor of landowners' free use, while also showing the limits of such freedom where neighbor complaints and poorly drafted covenants intersect.

The subdivision in question is governed by a set of restrictive covenants and four particular provisions became the focal points of the dispute. They were categorized by the Court as:

1. Nuisance Covenant (¶5): Prohibits "noxious or offensive activity" or anything that "may be or become an annoyance or nuisance to the neighborhood."
2. Prohibited Residential Structures Covenant (¶6): Bars use of any "structure of a temporary character, basement, tent, shack, garage, barn or other outbuilding" as a residence.
3. Residential Purpose Covenant (¶1): Limits lots to "residential purposes" unless otherwise designated by the original developer.
4. Parking Covenant (¶12): Requires necessary parking to be provided without obstructing road traffic.

The plaintiff moved into the subdivision in 2014 acquiring a series of lots and eventually constructed a home made from steel shipping containers, permanently affixed to a block foundation with decking. She also purchased Lot 177, a lakefront parcel, intending to build a dock, store kayaks, and use the lot for recreational gatherings. The subdivision?s POA approved her dock project, and she obtained building permits from the County. She later acquired the adjacent Lot 50 to address neighbor complaints about guest parking near Lot 177.

Defendants Osborne and Hamby purchased lots near Lot 177 in 2021 and relations between the neighbors deteriorated rapidly. Disputes included:

• Complaints about cars blocking roads near Lot 177,
• Alleged harassment and hostile encounters, often recorded on video,
• Signs and newsletters containing derogatory statements,
• Arguments over whether a shipping-container residence was permissible under covenants.

The feud escalated beyond covenant enforcement to allegations of libel, stalking, harassment, and misuse of POA authority.

The extensive procedural history can be summarized as follows:

1. Plaintiff's Complaint (Feb. 2022): Sought declaratory judgment that her use of Lot 177 complied with covenants, plus injunctive relief to restrain defendants' alleged harassment.
2. Defendants' Counterclaims (Apr. 2022): Alleged breach of the four covenants, libel per se, and requested declaratory judgment that plaintiff's structures/use violated restrictions. They also sued plaintiff's partner (Skinner) and two POA directors.
3. Motions and Rulings:

1. Dec. 2022 Orders: Trial court dismissed counterclaims based on the Nuisance Covenant as void for vagueness; dismissed stalking claim against Skinner.
2. Mar. 2023 Orders: Court granted plaintiff partial summary judgment, holding her shipping-container residence was not a "temporary structure." Denied most other summary judgment motions.
3. Nov. - Dec. 2023 Jury Trial: Jury rejected remaining claims, including libel and private nuisance. Court directed verdict for plaintiff on covenant claims relating to residential use and parking.

4. Final Judgment (Jan. 2024): Entered in plaintiff's favor on declaratory relief and reflected jury verdicts.
5. Appeal (2024-2025): Defendants appealed three rulings:

1. dismissal of Nuisance Covenant claims,
2. partial summary judgment on shipping-container residence, and
3. directed verdicts on Residential Purpose and Parking Covenants.

On appeal the defendants argued the trial court erred in dismissing counterclaims tied to the Nuisance Covenant, asserting that "nuisance" is a recognized legal cause of action and thus not inherently vague. The Court of Appeals disagreed, relying on Steiner v. Windrow Estates HOA, 213 N.C. App. 454 (2011), which invalidated a covenant proscribing "offensive or noxious activity" as too subjective. The Court reasoned that covenant language must provide objective, enforceable standards and terms like "annoyance" and "nuisance to the neighborhood" are inherently subjective, dependent on individual perception. It reasoned that a private nuisance cause of action (between two neighbors) is distinct and more definite than a covenant prohibiting activities "annoying to the neighborhood" and as a result, the Nuisance Covenant was unenforceable due to vagueness, affirming the trial court's dismissal.

The second major issue in this appeal concerned whether the plaintiff's home, constructed from shipping containers, violated the covenant prohibiting "structures of a temporary character."

Defendants analogized to Young v. Lomax, 122 N.C. App. 385 (1996), where a covenant expressly prohibited mobile homes, and argued that containers are inherently temporary. The Court rejected this analogy determining that the covenant prohibits categories of structures (e.g., tents, shacks, barns), not building materials. It observed that the plaintiff's home was permanently affixed, inspected, and permitted concluding that welded containers on a block foundation with decking are materially different from a mobile home. The Court relied upon the well-established doctrine that restrictive covenants are construed strictly, and ambiguity favors the free use of land. In affirming summary judgment for the plaintiff, the Court concluded that the home was not a "structure of a temporary character."

The defendants claimed plaintiff's recreational use of Lot 177 (barbecues, dock use, kayak storage) was non-residential and that guest parking violated the Parking Covenant. At trial, the court granted a directed verdict for plaintiff, finding insufficient evidence that her activities violated either covenant and the Court of Appeals agreed finding that the directed verdicts were proper and no covenant violations shown because:

1. Recreational uses associated with family enjoyment of a lot fall within the ordinary meaning of "residential purpose."
2. Occasional guest parking did not establish a covenant breach, particularly after plaintiff purchased Lot 50 to alleviate concerns.
3. Defendants failed to present "more than a scintilla of evidence" to support their claims.

This case reinforces the Armstrong v. Ledges HOA, 360 N.C. 547 (2006) principle: restrictive covenants are strictly construed in favor of free land use. Ambiguities or vague terms cannot be stretched to impose limits not plainly expressed. The decision underscores that courts apply contractual definiteness standards to covenants. Much like a contract void for indefiniteness, covenants with terms too subjective for judicial enforcement.

Shipping-container architecture is increasingly common. Villazon makes clear that unless covenants explicitly address building materials or construction methods, courts will not infer prohibitions from general terms about "temporary structures." Drafting precision is crucial for HOAs wishing to regulate modern building styles. The Court also adopted a broad view of "residential purpose," consistent with cases allowing pools, gardens, and recreational amenities. Unless expressly barred, normal recreational uses tied to occupancy or family enjoyment are going to be determined to be permissible.

This Court of Appeals' decision illustrates how quickly neighborhood disputes can spiral into sprawling litigation, but it also provides valuable guidance on covenant interpretation.

• Vague covenants are unenforceable.
• Shipping container homes, if permanent, do not constitute "temporary structures."
• Residential purposes include reasonable recreational uses.
• Parking restrictions require clear, demonstrable violations.

For legal professionals, the case highlights both the pitfalls of poorly drafted covenants and the importance of tailoring enforcement actions to doctrines favoring free land use. Attorneys advising HOAs should view Villazon as a cautionary tale: without precise drafting, efforts to restrict modern housing or recreational uses will likely fail in court.