This case was initiated as an action for declaratory judgment filed by Plaintiff Lori Postal in the Superior Court of Buncombe County, North Carolina. In 2017, Ms. Postal purchased a parcel of undeveloped real property in Asheville, NC located in a residential subdivision known as "Beaverlake Heights." The Beaverlake Heights subdivision was created in the late 1950s and is subject to a set of Restrictive Covenants recorded in the Buncombe County Registry. These restrictive covenants provide, among other things, that real property located within the subdivision be used solely for residential purposes, be limited to single family dwellings not to exceed two and half stories, etc. The restrictive covenants also contain setback restrictions for all buildings and provide that no residential structure shall be places on any lot having an area of less that 15,000 square feet. A complete copy of the restrictive covenants at issue are provided in these materials.
The undeveloped lot purchased by Ms. Postal is smaller than the minimum lot requirement, and she has filed this lawsuit against all other property owners in the subdivision seeking to have the restrictive covenants declared invalid. Ms. Postal filed a Motion for Partial Summary Judgment on the grounds that the North Carolina Marketable Title Act, N.C.G.S. 47B-l et seq., operates to invalidate all restrictive covenants other than the one limiting her property to residential use because the restrictive covenants do not appear in her 30-year chain of title. The trial court granted summary judgment on these grounds and the Defendants have appealed this decision. In effect, this decision invalidates the entire set of restrictive covenants other than the one specifically limiting the property to residential use.
The issue in this case regarding the interpretation of the North Carolina Marketable Title Act is also involved in two other cases currently pending before in the Court of Appeals, C Investments 2, LLC v. Arlene Auger, et al., 18-CvS- 12903(Mecklenburg County), COA 19-976 and Williams et al. v. Readon et al., 18- CvS-15898(Mecklenburg County), COA 20-450. H. Weldon Jones, III has filed amicus curiae briefs on behalf of CAl in both of those cases advocating for our position, and we are requesting that he do the same in our case.
The only issue on appeal involves the proper legal interpretation of the North Carolina Marketable Title Act. Specifically, it is a question of how broadly or narrowly to interpret the statutory exception which provides that restrictive covenants are not affected or extinguished by the operation of the Act.
The Defendants-Appellants are advocating for a broad interpretation of the statutory exception regarding restrictive covenants. Briefly, this argument is that all restrictive covenants which form a general or uniform scheme of residential development are valid and enforceable, regardless of whether the covenants appear in Plaintiffs 30-year chain of title.
The Plaintiff-Appellee is advocating for a narrow interpretation of the statutory exception regarding restrictive covenants. Briefly, this argument is that the North Carolina Marketable Title Act operates to invalidate all restrictive covenants, other than the one specifically limiting the property to residential use, because the restrictive covenants do not appear in her 30-year chain of title.
If the Plaintiff-Appellee's narrow interpretation of the North Carolina Marketable Title Act is adopted by the Court, this will have the effect of seriously limiting the validity and efficacy of restrictive covenants throughout the entire state. Many neighborhoods and residential developments will have existing covenants called into doubt and in many cases these covenants will become unenforceable. Further, the usefulness of restrictive covenants to help future community associations plan and develop will be negatively impacted.
North Carolina Court of Appeals Opinion (Issue June 2021)
Court: North Carolina Court of Appeals
Topic: Marketable Title Act
Brief Author: H. Weldon Jones, III, Esq. of Jordan Price
CAI Amicus Review Panel: Mr. Robert Diamond, Esq. (VA), Mr. Stephen Marcus Esq. (MA), Mr. Darren Bevan, Esq (CA), Mr. Gary Daddario, Esq., CCAL (NH), Mr. Matthew Heron, Esq. (MI), Mr. Marc Markel, Esq., CCAL (TX), and Mr. Thomas Schild, Esq, CCAL (MD)