FAQs Chinquapin Buy-Out Agreement 12.15.2025

posted by Martha Dobson on behalf of the Chinquapin HOA Board This is also under the HOA tab/Board Minutes.

Chinquapin Buy-Out Agreement

Frequently Asked Questions from the Community

 

1.    Why did the board sign the agreements?  Because after months of investigation & consideration, we felt it was in our best interest to preserve the community and protect our property values and complete our goal of gaining control of the entire community.

2.    What’s it mean if the vote doesn’t pass?  The trading post will be sold, there will be houses built next to the outpost, and we suspect the maintenance facility will be sold as well. We would need to figure out another place for our equipment storage and/or will have to do a turn key maintenance contract  with an external company.  We investigated that avenue early in the process and our initial bids were over twice our current budget. Finally, the Tee Pee Village and Shop area will not transfer and we will continue to have the loan liability for the equipment.  Fortunately, many other assets and greenspace have already been transferred. Those will be retained.

 

3.    Why is the number $3.4M? That was Mark’s initial asking price for the three properties. We took the approach to negotiate additional items of value to be included in the deal through the developers agreement that he originally planned to keep and/or sell. Our initial thought prior to appraisal was that the trading post and land next to Outpost would actually be able to be sold easily for his asking price. The maintenance shop area we were less sure about. In the end, we think this is our best deal.

 

4.    What are the taxes on the property? As an HOA, we are “not for profit” and are tax exempt so no property taxes are owed. We must and have already submitted the tax exemption applications to Jackson County on almost 20 parcels for 2026. Prior to transfer, the property was owned by Chinquapin LLC and the property tax was paid by the developer.

 

5.    How will the properties transfer at the closing? There will be a typical real estate closing on the purchased properties and a quick claim deed transfer on the other property transferred at no cost. Mark has already transferred a majority of the property listed in the developer agreement to the HOA.

 

6.    Is the Master Development Agreement being adhered to by Mark - specifically the green space? We investigated that avenue and question first by meeting with the county and reviewing the historical documents as the community changed developers. The county had actually allowed the Carltons, prior to Waterfront, to include the conservancy in meeting the green space requirements even though we think incorrectly. The county therefore was not an avenue for recourse. Mark believes he has absolutely complied with the Green space requirements. Mark actually believes he has exceeded the requirements. The county provides no option for pushback for us on Mark. There was one parcel that he sold that we considered greenspace. It was sold to an adjoining landowner and also property owner in Chinquapin. It will remain green space so we decided not to challenge it. We think there could be an issue, but are not confident, is it our best course of action to pursue this legally? According to North Carolina law, legal recourse is not a strong course of action.The Declarant can legally make changes throughout the development process. We had legal help in answering these questions all along the way.( see formal legal opinion) After investigating, we chose to negotiate to achieve our key objectives.

 

7.    It seems we should have been more aggressive legally to protect our interest. Could we have not filed a legal claim to contest what should be green space or common areas either by marketing, use or upkeep?  We evaluated a more aggressive approach by seeking legal opinion informally and also by formal engagement early in the process.That opinion letter is in the documents. We investigated various suggested avenues for claim of property. We could not find enough evidence to present a solid legal argument on a number of avenues and the law was not in our favor. The legal opinion was clear. The property owned by Chinquapin LLC in question was clearly theirs to sell or do as they pleased. We made the judgement that a confrontational approach would potentially lead to more damage to the community and less ability to attain our goals. While seeking legal recourse might allow discovery and identifying areas where we could recover money, it would be very costly and take a long time. If we were successful, we would likely only gain monetary compensation but not the property we were desiring to retain. In addition, the negative PR impact on the community would be felt in decreased property values, difficulty in selling property and a long term reputational hit that would take years to recover.

 

8.    The premium that is over the appraised value for the assets - how was it determined? The price was what was Mark’s asking price for the 3 properties. It was what he thinks they are worth. He actually didn’t offer the land next to the Outpost initially, but we negotiated with him to agree to sell it to us rather than develop it. The appraisals were not available until later in the process. We had already negotiated significant properties to transfer at no cost and the appraisals allowed us to negotiate the last few parcels included in the deal.

 

9.    Since the Fed has recently cut rates, can the loan interest rate be adjusted accordingly? Our bank is First Citizens Banks and Trust.  We chose them because they have an entire division that specializes in HOAs and their flexibility. The loan request is at committee and the interest rate will not lock until 5 days before closing. The rate is quoted at the 10 yr treasury + 2% so we expect we may see a slight improvement in the final rate before closing.

 

10.  What does the Board believe the costs of the property taxes, repairs and maintenance and any other expenses related to the additional properties are? Will this add more to our annual dues and how much? Properties acquired or owned by the HOA as common space will be exempt from paying property taxes since we are a not for profit designated entity.  We have already filed the forms on current deeded property for 2026 exemption. A reserve study will be done in 2026. It will show us what funds we need to have on hand to cover repairs and replacement for things like roofs, roads, water, amenities. Our inspection review shows that there are no significant deferred maintenance items needing immediate attention. We currently have approximately $900,000 in our reserve account that was transferred to us in September so we have a pretty solid financial picture. We do not anticipate any additional dues needed. However, since we have yet to manage the neighborhood, some of this is unknown but we have worked hard to do a solid budget for 2026 by digging into past expenses and feel confident we are in good shape.

 

11.  How can we complete the transfer of the community before we are assured our water system is complete and functional? The developer is legally and contractually obligated to complete the water system, even if after the final transfer. The new valve has been installed and we should very soon have two functioning pumps and two functioning water tanks. The last item is the radio and controller system that will operate and control the pumps and monitor tank water levels. These will hopefully be installed very soon. The engineer who designed the system will provide a final sign off on the completed system before it transfers. Mark will assure that the work is complete and pay for the work needed even if several months after completion of the transfer.

 

12.  I’m questioning the one-size-fits-all Special Assessment.  Why is a ~$600K property considered for Special Assessment purposes to be equal in value to an improved property worth 5-6 time more? Our covenants state that annual assessments as well as special assessments should be applied equally per lot. We did not specifically discuss a different allocation method for this reason. If the membership would want us to address that, then we will have to figure out the specifics of a different allocation method and the process of approval to change how assessments are defined and allocated among owners. This would involve a covenant change and would require a  ⅔ majority vote of owners. This new method would then apply for future assessments.

 

13.  Why are we agreeing to manage the rentals for the discos or wilderness cabins if they are being sold? Isn’t this just more HOA expense? We didn’t think we could handle additional purchase of these properties and we were concerned about significant rental traffic, particularly for the Discos for short term rentals. In addition, we currently have a significant amount of rental from current Chinquapin owners for extra guests. We chose to negotiate and Mark agreed to place significant deed restrictions on the properties. He is selling to Chinquapin owners and their rental is restricted to Chinquapin owners and their guests. The agreement provides a revenue split to cover the cost of administration. If rentals are all internal, we do not think they will be burdensome on staff and it will allow us to have control over their use. 

 

14.  I am glad we are getting the Fish Shack. What are our plans for it? We aren’t sure yet, but will engage the trail committee and owners  in this discussion. We think its best use long term may be a Nature Center and Hikers Retreat for use by all owners. It has a bathroom and the adjoining land could be a great addition to our amenities.

         

15.  I am concerned about Packs Creek development without our ability to control what is  built there. Why is the developer allowed to build without going through ARC or HOA? Developers who relinquish their declarant rights to HOAs typically retain developer rights for the remaining undeveloped parcels, meaning that they can operate without HOA permission as long it is within the Covenants, Development agreement and ARC guideline and standards. Mark assures us that we will be proud of the additional homes. Can he expand what is being developed?  No, unless it is stated in the Developer agreement, additional property, subdivision or other changes would require our consent.

 

16.  If we are doing a special assessment, why do we also need a dues increase? Mark announced the dues increase at our annual meeting, before we knew what we would be purchasing or the final costs. He originally was going to raise the yearly assessment dues to $4500 but he agreed to do a smaller increase to cover inflation and give us some cushion against unknown maintenance expenses. We told him we preferred to let the owners make any final decision related to any  property purchases rather than the board.  As we have carefully developed our budget, we determined we would be able to absorb some of the purchase debt service through our operating budget and still contribute to our reserve.

 

17.  Are we assuming liabilities that we need to account for? Our attorney has done exhaustive deed searches and other due diligence. We think we have identified all liabilities. For instance, the retention pond off New Settlers Way at the second Double Knob Gate and some property on the other side of the road has an environmental restriction and has required signage related to the environmental hazard from an old gun range. The gun range pre-dates Chinquapin. Additionally, we have found no significant other liabilities. We also checked the maintenance facility as part of our due diligence and the Phase 2 study was good. There may be, however, some unresolved right of way and easement items that we will get fixed over time.

 

18.  How can the Wilderness Cabins not be considered part of the community amenities and be sold? The Carltons built them and we stayed there before we built our home and they were advertised as amenities? We evaluated that and the legal opinion is that they are within the rights of Chinquapin LLC property despite those facts. There were improvements done which the HOA did not pay for. We could find no evidence that tied specific upkeep costs being paid by HOA dues, nor were utilities in the HOA name. When the Carltons sold the development, there were no protections or deed restrictions placed on specific amenities or property. It was all deeded to Chinquapin LLC. However, we were able to get the waterfalls and Fish Shack transferred and trail easements and access surveyed and recorded, in addition to deed restrictions on the Wilderness Cabins.

 

19.  When we OK the buyout, will each member have the option of how they want to pay, or will we be voting on which option we must all follow? The vote is for the overall action on the recommendation for a buy-out agreement. The option to pay is up to each owner who may choose the one-time payment or to include it in your annual dues.

20.  After reading the documents about what is being transferred, there was no mention of the Tulip Pond Area at the end of the Outpost Trail. Is this considered part of the Development agreement? It is not in the Development agreement because it was actually in the first step when Mark transferred the Outpost and it’s surrounding greenspace to the community.