We blogged about C Investments 2 v. Auger, a potentially impactful case for older communities, two weeks ago. The North Carolina Court of Appeals issued unpublished opinion (i.e. they are not binding on courts) in two companion cases to Auger, Postal v. Kayser and Williams v. Reardon.
To recap the Auger decision, the Court of Appeals held that the Marketable Title Act extinguishes restrictive covenants that do not appear in an owner’s chain of title for 30 or more years; however, the MTA does not extinguish covenants that restrict property to residential use.
In Postal and in Reardon, the trial courts determined that old restrictive covenants were extinguished because of the MTA, except for covenants limiting the lots to residential use. In Postal, the covenants were recorded in the 1950s for Beaverlake Heights subdivision in Asheville. In Reardon, the restrictive covenants were recorded for Eastover subdivision in Charlotte in the 1920s.
The appeals court upheld the trial court decisions based on the holding in the Auger case, and it found that the restrictive covenants are extinguished, while residential use restrictions for Beaverlake Heights and Eastover remained intact. The outcomes in the Postal and Reardon cases were expected, since the facts and the law mirror Auger.
The final chapter is not written on Auger necessarily (and likewise, on Postal and Reardon either). On May 27th, some of the Auger parties requested the Court of Appeals to rehear the case. We will continue to provide updates as we learn more.
We also reiterate that due to the effect of these three cases on older restrictive covenants, communities may need to act to preserve restrictive covenants recorded less than 30 years ago. Please reach out to us if you have questions about your community’s restrictive covenants.
ABOUT BEN KARB
In his HOA and condominium practice, Ben regularly advises HOAs and condominium associations across a broad spectrum of issues, including the interpretation of covenants, contractual matters, and collection of assessments. He routinely attends membership meetings and assists communities with the ever-difficult process of amending their governing documents. He has formed numerous HOAs and condominium associations, and regularly drafts and amends Declarations and corporate documents for his clients.
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Offit Kurman, one of the fastest-growing, full-service law firms in the United States, serves dynamic businesses, individuals and families. With 15 offices and nearly 250 lawyers who counsel clients across more than 30 areas of practice, Offit Kurman helps maximize and protect business value and personal wealth by providing innovative and entrepreneurial counsel that focuses on clients’ business objectives, interests and goals. The firm is distinguished by the quality, breadth and global reach of its legal services and a unique operational structure that encourages a culture of collaboration. For more information, visit www.offitkurman.com.
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