New NC Supreme Court Case: Applicability of Condominium Act Foreclosure Rights to Pre-1986 Condominiums

A decision last week (November 4) by the NC Supreme Court provides helpful authority to older condominiums not only in the context of foreclosures, but in the larger context of relying on the retroactive portions of the NC Condominium Act (Chapter 47C).

In the Matter of the Foreclosure of a Lien by Executive Office Park of Durham Association, Inc Against Martin E. Rock A/K/A Martin A Rock considered the issue of whether a pre-October 1, 1986 condominium, formed pursuant to the NC Unit Ownership Act (Chapter 47A), has the power of sale for foreclosure as set forth in the Condominium Act. This right did not exist in the Declaration at issue or expressly in the older Unit Ownership Act governing condominiums. Pre-October 1, 1986 condominiums cannot “opt in” to the Condominium Act in the way that pre-1999 planned communities can opt in to the Planned Community Act. However, the Condominium Act does have numerous portions that are retroactive to all condominiums whenever created. N.C.G.S. 47C-1-102(a) states that “47C-3-116 (Lien for Assessments)…….appl[ies] to all condominiums created in this State on or before October 1, 1986, unless the declaration expressly provides to the contrary.”  Here, nothing in the Declaration provided to the contrary–the Declaration did not prohibit non-judicial foreclosure. Thus, the Court held the community association could rely on the retroactive language for authority to pursue a nonjudicial foreclosure.

This case is important not just because of the foreclosure power, but because older Unit Ownership Act condominiums routinely rely on retroactive portions of the Condominium Act to conduct business. N.C.G.S. 47C-1-102(a) contains the full list of retroactive portions of the Condominium Act which help older communities operate. You can use this link to the Condominium Act, with all retroactive portions in bold. The retroactive portions include instruction and authority on issues ranging from eminent domain to the power to fine (and protections for owners), and condominiums boards and owners should consider these sections when interpreting the relative rights and responsibilities of associations and members.  

NOTE: The NC Condominium Act was amended in June 2022 to try to resolve the issue of retroactivity. However, the Executive Office Park case continued on appeal. See NC Community Association Legislative Update – June 21, 2022.

This NC Supreme Court decision overrules the prior decision by the Court of Appeals as summarized in this May 18, 2021 post: New NC Appellate Case: Executive Office Park of Durham Association, Inc. v Rock (Older Condo Collections).

If you have questions about this case, the Condominium Act or any other community association topic, please contact one of our attorneys in the community association practice group in Charlotte, Greensboro, Raleigh or Wilmington, North Carolina, or Columbia or Greenville, South Carolina.

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