In re Foreclosure of a Lien by Exec. Off. Park of Durham Ass'n against Rock ( 2022 )

IN THE SUPREME COURT OF NORTH CAROLINA
2022-NCSC-106
No. 240PA21
Filed 4 November 2022
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
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision
of the Court of Appeals, 277 N.C. App. 444, 2021-NCCOA-211, vacating an order
entered on 4 March 2019 by Judge John M. Dunlow in Superior Court, Durham
County and remanding for dismissal. Heard in the Supreme Court on
29 August 2022.
Jordan Price Wall Gray Jones & Carlton, PLLC, by J. Matthew Waters and
Hope Derby Carmichael, for petitioner-appellant.
Mark Hayes for respondent-appellee.
Sellers, Ayers, Dortch & Lyons, PA, by Cynthia A. Jones, for Community
Associations Institute, amicus curiae.
BARRINGER, Justice.
¶1 In this matter, we address whether a condominium formed prior to the
enactment of the North Carolina Condominium Act in 1985 has the power of sale for
foreclosure pursuant to section 3-116 of that Act for nonpayment of an assessment
IN RE FORECLOSURE OF A LIEN BY EXEC. OFF. PARK OF DURHAM ASS’N AGAINST ROCK
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that occurred after 1 October 1986. For the reasons addressed herein, given the plain
language of the statute addressing the applicability of the North Carolina
Condominium Act and the plain language of the condominium’s declaration, we
conclude that petitioner Executive Office Park of Durham Association, Inc. (Executive
Office) has the power of sale for foreclosure pursuant to N.C.G.S. § 47C-3-116.
Therefore, we reverse the decision of the Court of Appeals, which vacated the trial
court’s order authorizing sale, and remand to the Court of Appeals to address the
argument of respondent Martin Rock (Rock) that the Court of Appeals declined to
address.
I. Background
¶2 In 1982, Executive Office Park Developers, LP filed a declaration of unit
ownership (Declaration) for a condominium development with Executive Office as the
governing entity. As relevant to this matter, Executive Office filed a claim of lien on
23 October 2018 against three units owned by Rock, alleging that assessments and
other charges from 2018 remained unpaid for more than thirty days. Subsequently,
the substitute trustee initiated a power of sale foreclosure. The clerk of superior court
entered an order authorizing sale, which Rock appealed. The trial court affirmed the
order authorizing sale. Thereafter, Rock appealed to the Court of Appeals.
¶3 Before the Court of Appeals, Rock argued that Executive Office lacked the
power of sale for foreclosure and that he was not in default. The Court of Appeals
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concluded that Executive Office lacked the power of sale for foreclosure because it is
the governing entity for a condominium formed and governed by a declaration signed
in 1982 that was not amended to bring it within the provisions of the North Carolina
Condominium Act. Foreclosure of a Lien by Exec. Off. Park of Durham Ass’n v. Rock,
277 N.C. App. 444, 2021-NCCOA-211, ¶¶ 19–23. The Court of Appeals also indicated
that Executive Office’s Declaration did not include the power of non-judicial
foreclosure. Id. ¶ 21. The Court of Appeals, therefore, vacated the trial court’s order
affirming the clerk of court’s order authorizing sale and remanded for dismissal. Id.
¶ 22. The Court of Appeals declined to address Rock’s remaining argument that he
was not in default. Id.
¶4 Executive Office petitioned this Court for discretionary review pursuant to
N.C.G.S. § 7A-31. This Court allowed the petition for discretionary review.
II. Analysis
¶5 On appeal to this Court, Executive Office argues that the Court of Appeals
erred because the clear and express language of N.C.G.S. § 47C-1-102(a) provides
that “[section] 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
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Opinion of the Court
provides to the contrary,” N.C.G.S. § 47C-1-102(a) (2021) (emphasis added),1 and
Executive Office’s Declaration does not expressly prohibit power of sale foreclosures.
¶6 We agree that the Court of Appeals erred. This Court reviews decisions by the
Court of Appeals for error of law. N.C. R. App. P. 16(a). Questions of statutory
interpretation are questions of law and are reviewed de novo. In re Summons Issued
to Ernst & Young, LLP, 363 N.C. 612, 616 (2009).
¶7 In its entirety, N.C.G.S. § 47C-1-102(a) states:
This Chapter applies to all condominiums created within
this State after October 1, 1986. G.S. 47C-1-105 (Separate
Titles and Taxation), 47C-1-106 (Applicability of Local
Ordinances, Regulations, and Building Codes), 47C-1-107
(Eminent Domain), 47C-2-103 (Construction and Validity
of Declaration and Bylaws), 47C-2-104 (Description of
Units), 47C-2-121 (Merger or Consolidation of
Condominiums), 47C-3-102(a)(1) through (6) and (11)
through (16)(Powers of Unit Owners’ Association), 47C-3-
103 (Executive board members and officers), 47C-3-107.1
(Procedures for fines and suspension of condominium
privileges or services), 47C-3-108 (Meetings), 47C-3-111
(Tort and Contract Liability), 47C-3-112 (Conveyance or
Encumbrance of Common Elements), 47C-3-116 (Lien for
Assessments), 47C-3-118 (Association Records), 47C-3-121
(American and State flags and political sign displays), and
47C-4-117 (Effect of Violation on Rights of Action;
Attorney’s Fees) and G.S. 47C-1-103 (Definitions), to the
extent necessary in construing any of these sections, apply
to all condominiums created in this State on or before
October 1, 1986, unless the declaration expressly provides
to the contrary. Those sections apply only with respect to
1 In June 2022, the General Assembly amended this subsection. Act of 29 June 2022,
S.L. 2022-12, § 3.(a), https://www.ncleg.gov/Sessions/2021/Bills/Senate/PDF/S278v4.pdf.
Executive Office has not argued that this amendment applies to this matter.
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events and circumstances occurring after October 1, 1986,
and do not invalidate existing provisions of the
declarations, bylaws, or plats or plans of those
condominiums.
N.C.G.S. § 47C-1-102(a) (emphasis added).
¶8 As relevant to this matter, the legislature provided in subsection 47C-3-116(f)
that:
Except as provided in subsection (h) of this section, the
association, acting through the executive board, may
foreclose a claim of lien in like manner as a mortgage or
deed of trust on real estate under power of sale, as provided
in Article 2A of Chapter 45 of the General Statutes, if the
assessment remains unpaid for 90 days or more.
N.C.G.S. § 47C-3-116(f) (2021).
¶9 When construing statutes, courts first look “to the language of the statute
itself.” Hieb v. Lowery, 344 N.C. 403, 409 (1996). “When the language of a statute is
clear and without ambiguity,” courts must “give effect to the plain meaning of the
statute.” Diaz v. Div. of Soc. Servs., 360 N.C. 384, 387 (2006). In these circumstances,
“judicial construction of legislative intent is not required.” Id.¶ 10 Here, the statute is clear: “unless the declaration expressly provides to the
contrary,” the power of sale permitted by N.C.G.S. § 47C-3-116(f) “appl[ies] to all
condominiums created in this State on or before October 1, 1986 . . . with respect to
events and circumstances occurring after October 1, 1986.” N.C.G.S. § 47C-1-102(a).
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¶ 11 Since it is undisputed that the condominium at issue was created in North
Carolina before 1 October 1986 and the assessments and non-payment at issue in this
case occurred after 1 October 1986, Executive Office possesses the power of sale
permitted by N.C.G.S. § 47C-3-116(f) “unless the declaration expressly provides to
the contrary.” N.C.G.S. § 47C-1-102(a).
¶ 12 In the Declaration, the declarant indicates its desire and intention “to submit”
the property “to the provisions of the North Carolina Unit Ownership Act (Chapter
47A, North Carolina General Statutes).”
¶ 13 Then, in paragraph 12 in the subparagraph entitled “Powers,” the Declaration
states as follows:
The Association shall have all of the powers and duties set
forth in the Unit Ownership Act, except as limited by this
Declaration and the Bylaws, and all of the powers and
duties reasonably necessary to operate the condominium
as set forth in this Declaration and the Bylaws and as they
may be amended from time to time.
¶ 14 Subsequently, in paragraph 15 entitled “Assessments,” it states:
Any sum assessed remaining unpaid for more than
thirty (30) days shall constitute a lien upon the delinquent
unit or units when filed of record in the Office of the Clerk
of Superior Court of Durham County in the manner
provided for by Article 8 of Chapter 44 of the General
Statutes of North Carolina as amended. The lien for unpaid
assessments shall also secure reasonable attorney’s fees
incurred by the Manager or the Board of Directors incident
to the collection of such assessment or the enforcement of
such lien. In any foreclosure of a lien for assessments, the
owner of the unit subject to the lien shall be required to pay
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a reasonable rental for the unit, and the Manager or Board
of Directors shall be entitled to the appointment of a
receiver to collect the same.
¶ 15 The foregoing language neither expressly excludes foreclosure by power of sale
nor limits Executive Office’s foreclosure authority to only judicial foreclosures.2
Rather, the Declaration expressly allows for foreclosure of a claim of lien but does not
elaborate further. In other words, no provision in the Declaration before us is
“invalidated” by the application of N.C.G.S. § 47C-3-116(f), which permits the power
of sale for foreclosure in certain circumstances. See N.C.G.S. § 47C-1-102(a) (“Those
sections apply only with respect to events and circumstances occurring after October
1, 1986, and do not invalidate existing provisions of the declarations . . . .”) (emphasis
added)).
¶ 16 Rock argues that the declarant’s indication in the Declaration of its desire and
intention “to submit” the property “to the provisions of the North Carolina Unit
Ownership Act” bars Executive Office’s use of non-judicial foreclosure. However, the
North Carolina Unit Ownership Act neither expressly excludes foreclosure by power
of sale nor limits foreclosure authority to only judicial foreclosures. See N.C.G.S.
§ 47A-22(b) (2021). Further, the North Carolina Unit Ownership Act in effect when
the Declaration was filed required a declaration of intent by the owners to submit
2In fact, the paragraph on “Assessments” uses the term “any foreclosure,” and the
subparagraph on “Powers” indicates that Executive Office “shall have . . . all of the powers
and duties reasonably necessary to operate the condominium.”
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their property to the Act to be filed with the register of deeds to create unit ownership.
N.C.G.S. § 47A-2 (1981). Thus, this reference to the North Carolina Unit Ownership
Act simply satisfies the requirement in N.C.G.S. § 47A-2. Rock’s reliance on this
reference is therefore misplaced. Thus, we conclude that the Declaration does not
expressly provide to the contrary.
III. Conclusion
¶ 17 The Court of Appeals erred by failing to reference and apply the plain language
of N.C.G.S. § 47C-1-102(a) when addressing respondent Rock’s contention that the
condominium association Executive Office lacked the power of sale for foreclosure.
Having construed the statute according to its plain language and determined that
Executive Office’s Declaration does not contain a provision “expressly to the contrary”
of the power of sale for foreclosure permitted by N.C.G.S. § 47C-3-116(f), we reverse
the Court of Appeals’ decision. We further remand this case to the Court of Appeals
to address Rock’s remaining argument that he was not in default that the Court of
Appeals did not reach and is not before this Court.
REVERSED AND REMANDED.