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This is absolutely corrrect. Unless CC&R's are incorporated within the municipal or county framework, they only apply to your neighborhood and the group that embodies it's ruling association.
Now, you dont get off totally Scot free. You must also adhere to county codes, as may apply. You said NO large livestock on property under 5 acres, as I recall, so I suspect you have no violation.
When she sold it to a developer, her (and maybe the developer) wrote out the covenants to keep out the "riff-raff."
This is normally the case, especially if it is a private development out in the county. As I said before, the owner/developer etc. can make up whatever rules they want and call them covenants. Most people who want to buy in such a development as yours expect them, so they most often exist. Generally, they will be generic but there can be specifics.
WHY people would move into such an imposing arrangment has always baffled me, but hey, that is another issue altogether.
The original owner may have entered the covenenants (if they exist as such) as
deed restrictions, however, so you should focus on that. That is their right and the purchaser must honor them or petition to have them repealed, which is a bothersome process. It is a good point you made that the owner and developer may have been in collusion on the matter and so they originated that way - you'll have to learn that.
But the point is, these are vastly different than the simple covenants of some hoity-toity "homeowners club," so tread lightly here.
There is no one to report to as far as I know. We've lived here over a year and this is the first we've heard of anything. The neighbor that informed me of all this said that if someone files a complaint with the county we'd be served and we'd have to go to court or become compliant with the covenant laws.
After scanning through all this, I would be inclined to think you are under jurisdictional prudence - that is to say, the county codes and ordinances are enforceable. You can be taken to court for violation of those, and the association CAN enter civil plea against you if they want to pursue any of their own little restrictions.... but it doesn't sound as if there is anyone to care that much.
PERSONAL OBSERVATION:
Normally, if there is an active HOA with a body of regents, you would have heard from them long before now. They are usually small minded people with a little power, and so they wield it widely. It's pretty hard to escape the notice of such folks.
With your little Band of 8 there in WaterBush Acres, it's going to be a much better thing to just get everyone together, have a chat and move on.
If all else fails, do what everyone else does: blame the lawyers. CC&R's should surface during preliminary title and document searches/verifications. They will be included in your property documents, if they exist. If they missed them and so failed to include them, point the finger and scream "foul!"
BTW youre doing a great job of this! Nice, cool head you got there....