This lawsuit was filed in 2018 by Wade and Margaret Williams and several of their neighbors to enforce the protective covenants in their Eastover neighborhood in Charlotte, North Carolina. The Plaintiff sued all the lot owners in a neighborhood called Eastover in Mecklenburg County, North Carolina. Eastover was established in 1952. and consisted at that time of 17 residential lots. However, Defendants acquired a lot in Eastover and seeks to violate the scheme of development.
The main issue advanced by the Defendants at the trial level, and the sole issue on appeal, is whether or not the North Carolina Marketable Title Act, N.C.G.S. § 478-1, et seq., ha extinguished a// the Protective Covenants other than the residential use restriction for Eastover. Specifically, the Defendants successfully argued to the trial court that the Marketable Title Act extinguished all of the restrictions other than the residential use restriction, because none of the exceptions in the Act applied. We argued that the exception contained in N.C.G.S. § .478-3(13) protected all the scheme of development restrictions set forth in the Protective Covenants. The trial court agreed with Defendants and entered an Order granting Summary Judgment extinguishing the Protective Covenants, other than the "residential use only covenant. A copy of that Order granting Summary Judgment is attached hereto as Exhibit C. Memoranda in Support of the Defendants Motion for Summary Judgment, and in Opposition to the Defendants' Motion for Summary Judgment were filed, and are attached hereto as Exhibits D & E. Upon receipt of the Court's ruling, the Plaintiffs and other timely filed Notice of Appeal to the North Carolina Court of Appeals. The Record on Appeal has been filed and the Appellants' brief is due 3 August 2020.
The one appellate issue on appeal is does the exception to the real property Marketable Title Act contained in N.C.G.S.§ 478-3(13), protect all of the restrictive covenants imposed for Eastover under the common scheme of development, or does it merely protect the residential use only restriction.
The Court's ruling, if upheld will adversely affect every neighborhood association in the State of North Carolina. The trial Court's Summary Judgment decision would effectively allow developers to avoid the protective covenants for most planned communities in North Carolina, except for the residential use restriction. The elimination of single-family restrictions, setback restrictions, height restrictions, and the numerous other standard restrictions which form the scheme of development for most neighborhoods in North Carolina are at risk if this opinion is upheld by the Court of Appeals. No appellate court in North Carolina has ruled upon the issue presented in this case, so this will be a landmark decision affecting the practice a real estate in the State of North Carolina from Murphy to Manteo. It is extremely important that the judge's decision be reversed, and the exception to the Marketable Title Act be interpreted to include all the restrictive covenants set forth in the scheme of development of each neighborhood. We believe strongly this was intent of the drafters of the legislation. This has been confirmed by conversations with the leading proponent of the legislation. The trial courts in North Carolina have differed on this issue, so it is ripe for Appellate determination to settle the law in the State of North Carolina.
North Carolina Court of Appeals Opinion (Issue June 2021)
Court: North Carolina Court of Appeals
Topic: North Carolina Marketable Title Act/Protective Covenants
Brief Author: H. Weldon Jones, III and Hope Derby Carmichael of Jordan Price Wall Gray Jones & Carlton PLLC
CAI Amicus Review Panel: Mr. Robert Diamond, Esq. (VA), Mr. Stephen Marcus Esq. (MA), Mr. Ed Allcock, Esq. (MA), Mr. Kenneth Chadwick, Esq. (VA), Ms. Mary Howell, Esq. (CA), Mr. Randall Lipshutz, Esq. (GA), Mr. Stefan Richter, Esq. (PA), and Patrick Whelan, Esq. (AZ)