2022 Legislative Review
Chris Burti, Vice President and Senior Legal Counsel

The 2021-2022 Legislative Sessions adopted a substantial number of bills that will have a significant impact upon North Carolina real property practice. Time and space do not permit a complete list nor an extensive discussion of these, however, we hope that you will find this summary helpful.

S.L. 2022-12 - Tenancy by entireties reimbursement provisions

This bill revised N.C.G.S. Section 41-61 to clarify reimbursement prohibition as follows:
"§ 41-61. Reimbursement for expenditures made on entireties property.
(a) In the case of property held as tenants by the entirety, neither spouse is entitled to reimbursement from the other for expenditures made with respect to the property during the existence of the tenancy by the entirety, including payments made for recurring expenses, improvements, and payments made on indebtedness secured by a lien on the property.
(b) When the tenancy by the entirety is converted to a tenancy in common by absolute divorce or otherwise, responsibility for expenditures for made with respect to the property held as tenants in common is allocated as provided by the law governing tenants in common.
(c) When the tenancy by the entirety is terminated by death, neither the surviving spouse nor the personal representative of the deceased spouse is entitled to reimbursement from the other for expenditures made with respect to the property during the existence of the tenancy by the entirety, including payments made for recurring expenses, improvements, and payments made on indebtedness secured by a lien on the property.
(d) Nothing in subsection (a), (b), or (c) of this section does any of the following:
(1) Applies in any proceeding for equitable distribution or constitutes any limitation on the power of the court in any equitable distribution proceeding.
(2) Renders unenforceable the terms of any otherwise valid and enforceable provisions in a premarital agreement, postmarital agreement, or promissory note given by one spouse to the other.
(3) Affects any otherwise valid and enforceable lien or judgment."
https://www.ncleg.gov/BillLookUp/2021/S278

S.L. 2022-12 - New Marketable Title Act exclusion number (14) for active HOA's

N.C.G.S. Section 47B-3(14) mitigates the effects of the controversial North Carolina Supreme Court opinion in C Invs. 2, LLC v. Auger (2022-NCSC-119).

N.C.G.S. Section 47B-3...
Such marketable record title shall not affect or extinguish the following rights: ...
(14) Notwithstanding anything in this section to the contrary, provisions contained in any declaration of covenants that are applicable to any of the following:
a. A condominium created under Chapter 47A or 47C of the General Statutes of North Carolina.
b. A cooperative, as defined in G.S. 47F-1-103(8).
c. A planned community, other than a planned community in which all lots are restricted exclusively to nonresidential purposes, whenever created, to which any of the provisions of Chapter 47F of the General Statutes of North Carolina apply; provided, however, that if such planned community was created prior to January 1, 1999, this exemption shall not apply unless it is governed by an owners' association in existence as of July 1, 2022."
SECTION 4.(b) This section becomes effective July 1, 2022.
https://www.ncleg.gov/BillLookUp/2021/S278

SL 2022-55 - NC Farm Act of 2022

This Bill provides, among other items, that conservation easements are not extinguished by tax foreclosures under G.S. 105-374(k) and G.S. 105-375(i). Since many conservation easements are easements in gross, not appurtenant to another tax parcel and often do not have a separate parcel identifier, this provision provides clarity.
https://www.ncleg.gov/BillLookUp/2021/S762

S.L. 2022-12 - Condominium Act clarifications and curative provisions

N.C.G.S. Section G.S. 47C-2-105(a)5) is a curative provision added to provide:
A unit that is not specifically described by an upper limiting boundary with reference to established datum shall be deemed to include so much of the land and air above the unit as would be attributed to a noncondominium parcel of land under the common or statutory law applicable to such noncondominium parcel of land. A unit that is not specifically described by a lower limiting elevation boundary with reference to established datum shall be deemed to include so much of the land and air below the unit as would be attributed to a noncondominium parcel of land under the common or statutory law applicable to such noncondominium parcel of land.

N.C.G.S. Section 47C-2-101(b)
(b) A declaration or an amendment to a declaration adding units to a condominium may not be recorded unless all structural components and mechanical systems of all buildings containing or comprising any units thereby created are substantially completed in accordance with building design plans of an architect licensed under the provisions of Chapter 83A of the General Statutes or an engineer registered under the provisions of Chapter 89C of the General Statutes, as evidenced by a recorded certificate of completion executed by the architect or engineer; provided, however, that (i) such requirement shall not apply to any unit or portion of a unit, the boundaries of which comprise solely surface space, airspace, subterranean space, or any specified combination thereof, as provided in G.S. 47C-2-105(a)(5).G.S. 47C-2-105(a)(5) and (ii) nothing in this subsection shall require that the structural components and mechanical systems of buildings be depicted on the plats or plans described in G.S. 47C-2-109(b)(6)."
https://www.ncleg.gov/BillLookUp/2021/S278

S.L. 2021-93 - Good Funds Settlement Act Changes

The bill amends the Good Funds Settlement Act to provide that a settlement agent may disburse settlement proceeds in reliance on a check drawn on the account of or issued by a licensed mortgage lender. It includes various Commercial Receivership Act technical corrections along with several other financial / banking provisions.
https://www.ncleg.gov/BillLookUp/2021/S198

S.L.2022-54 - Remote on-line notarization ("RON")

This bill extends N.C.G.S. Section 10B-25 temporary Emergency Video Notarization statute, until June 30, 2023 and establishes a permanent RON statute for North Carolina notaries, effective July 1, 2023. This is highly technical legislation that is at substantial variance with more uniform statutes adopted in other jurisdictions. It is anticipated that rules and regulations are likely to be adopted by the Secretary of State and perhaps even legislative amendments that may make substantial changes as problems requiring solutions and conflicts with other jurisdictions arise.
https://www.ncleg.gov/BillLookup/2021/H776

S.L. 2022-64 - Real Property Amendment Omnibus

This bill includes several amendments proposed by the North Carolina Bar Association and the General Statutes Commission. A brief summary of a few of these follows.

Section 47-18.1
The N.C.G.S. Chapter 47 recording provision for entity name changes is made consistent with the N.C.G.S. Section 55D-26 provisions, which requires recordation of the certificates issued by the applicable Secretary of State for name changes, mergers, etc.
N.C.G.S. Section 47-119
This provision for recording memoranda for options is clarified to explicitly include options to purchase or convey, rights of first refusal or rights of first offer, consistent with N.C.G.S. Section 47-18
N.C.G.S. Section 47-119.1
This provision for recording memoranda of contracts to purchase real estate is clarified and updated (there remains some question as to whether courts will construe this to include land sale contracts as they are not explicitly listed).
N.C.G.S. Section 41-6.5
This statute abolishes the common law rule against perpetuities effective as of October 1, 1995, which is the effective date of the adoption of the Uniform Statutory Rule against Perpetuities in North Carolina.

The legislation also includes non-substantive technical corrections clarifying provisions for limited liability partnerships; judicial review in contested cases; respondent's right to having counsel or appointment of a guardian ad litem in guardianship proceedings; and for designations of landmarks of historical, architectural, prehistorical, and cultural significance.
https://www.ncleg.gov/BillLookUp/2021/H1018

S.L. 2021-91 - General Statutes Commission Technical Corrections
This bill contains several real property related technical corrections several are summarized as follows:
Part I makes clarifying amendments for notices in execution sales,
Part II makes clarifying amendments for default upset bid procedures in partition and for private sales.
Part III makes clarifying amendments for tax foreclosures and pairs up the required notices in rem tax foreclosures conforming the parties entitled to notice with N.C.G.S. Section 105-374.
Part IV makes numerous clarifying amendments for effective dates for probate, recording, and notarial curatives updated from 2013 to 2022, in various sections of N.C.G.S. Chapter 47 and N.C.G.S. Chapter 10B

Part V makes clarifying amendments regarding creation of tenancies by entireties making it clear the in order to create a joint tenancy with right of survivorship with the grantor and a grantee, the grantor must also be a grantee.
https://www.ncleg.gov/BillLookUp/2021/S196

S.L. 2021-85 Miscellaneous Amendments and Technical Corrections.
This act (i) removes the location requirement for holographic wills to align North Carolina with all other states recognizing Holographic wills, (ii) updates the N.C.G.S. Chapter 36C definitions of "terms of a trust" and "trust instrument"; revises the Article 8A provisions on power holders of trusts, and (iii) clarifies the trust exclusion to the Rule against Perpetuities and makes technical changes in the surrounding language, as recommended by the general statutes commission.

S.L. 2022-1 - Certain Interim Progress Payment Lien Waivers Invalid
This amendment voids lien waivers procured in order to receive progress payments under the stated conditions. The section became effective March 1, 2022, and applies to liens attached on or after that date.

Section 22B-5. Waiver of liens or claims as a condition of progress payment invalid.
(a) Provisions in lien waivers, releases, construction agreements as defined in G.S. 22B-1(f)(1), or design professional agreements as defined in G.S. 22B-1(f)(5) purporting to require a promisor to submit a waiver or release of liens or claims as a condition of receiving interim or progress payments due from a promisee under a construction agreement or design professional agreement are void and unenforceable unless limited to the specific interim or progress payment actually received by the promisor in exchange for the lien waiver.
(b) This section does not apply to the following:

(1) Lien waivers or releases for final payments.
(2) Agreements to settle and compromise disputed claims after the claim has been identified by the claimant in writing regardless of whether the promisor has initiated a civil action or arbitration proceeding.

G.S. 44A-35 was also substantially amended to address court orders of attorneys' fees to the prevailing party, effective for any claim arising on or after March 1, 2022.
https://www.ncleg.gov/BillLookUp/2021/S219

S.L. 2021-53 - Living Trust Probate and Single Transaction Sale without Guardianship
The bill enacts Several Trust, Estate and Power of Appointment provisions. Of significant interest it includes a new N.C.G.S. Chapter 36C Article 4C providing for the living probate of a revocable trust similar to the provision for living probate of a Will. A Judgment by the court validating the trust operates as a bar to contesting the validity of the trust later.

Part II of the bill enacts N.C.G.S. Section 35A-1211 which should prove to be very helpful to real estate attorneys. When applicable, it avoids the necessity for initiating a complete guardianship estate administration in those limited cases where the minor or incompetent has only a single asset or a small interest in an asset that needs to be sold. All other procedural requirements for sale of a ward's interest remain unchanged. It is applicable to proceedings initiated on or after October 1, 2021. The specific provision provides:

N.C.G.S. Section 35A-1121. Authorization of a single protective arrangement or single transaction without appointing guardian.
(a) If it is established in a proper proceeding that a basis exists for the appointment of a guardian of a minor or an incompetent person, the clerk of superior court, without appointing a guardian, may order a single protective arrangement or single transaction for the benefit of a minor or incompetent person as follows:

(1) Authorize, direct, or ratify any transaction necessary or desirable to achieve any service, care, or safety arrangement meeting the foreseeable needs of the minor or incompetent person, and authorize a special fiduciary to execute any such transaction on behalf of the minor or incompetent person, including any of the following:

a. The payment, delivery, deposit, or retention of funds or property.
b. The sale, mortgage, lease, or other transfer of property in accordance with the requirements of subsection (c) of this section.
c. The entry into an annuity contract, a contract for life care, a deposit contract, or a contract for training and education.
d. The establishment, funding, or addition to a suitable trust, including, but not limited to, a trust for the benefit of the minor or incompetent person pursuant to 42 U.S.C. ? 1396p(d)(4).
e. The establishment, funding, or administration of an ABLE account, as defined in section 529A of the Internal Revenue Code.

(2) Authorize, direct, or ratify any contract, trust, or other transaction relating to the minor or incompetent person's property and business affairs, and authorize a special fiduciary to execute any such contract, trust, or other transaction on behalf of the minor or incompetent person, if the clerk of superior court determines that the transaction is in the best interest of the minor or incompetent person.

(b) Before approving a protective arrangement or other transaction under this section, the clerk of superior court shall consider the interests of creditors and dependents of the minor or incompetent person and, in view of the disability, whether the minor or incompetent person needs the continuing protection of a guardian. The clerk of superior court may appoint a temporary guardian to assist in the accomplishment of any protective arrangement or other transaction authorized under this section who shall have the authority conferred by the order and serve until discharged by order after report to the clerk of superior court of all matters done pursuant to the order of appointment.
(c) The sale, mortgage, exchange, lease, or gift of any property by a special fiduciary or temporary guardian appointed as provided in this section shall be subject to the same procedural and reporting requirements that would otherwise apply to the sale, mortgage, exchange, lease, or gift of such property by a guardian of the estate or general guardian, pursuant to this Chapter.

https://www.ncleg.gov/BillLookUp/2021/S50

North Carolina General Assembly Bills & Laws are on-line at: https://www.ncleg.gov/Legislation