Court Opinion

ID: 7396650
Source: CourtListenerOpinion
Date Created: 2022-07-29 01:19:15.346581+00
Date Added: 2024-06-11T16:21:49.066464
License: Public Domain

TYSON, Judge dissenting.
The majority's opinion holds plaintiff "substantially complied" with the North Carolina Condominium Act ("the Act") notwithstanding plaintiff's failure to include in the declaration, a mandatory "time limit within which each of [the development] rights must be exercised ..." as required by N.C. Gen.Stat. § 47C-2-105(a)(8). I disagree and vote to affirm the trial court's decision granting summary judgment in favor of defendants. I respectfully dissent.
I. Standard of Review
"A question of statutory interpretation is ultimately a question of law for the courts." Brown v. Flowe, 349 N.C. 520, 523, 507 S.E.2d 894, 896 (1998). This Court reviews the interpretation of a statute de novo. Oxendine v. TWL, Inc., ___ N.C.App. ___, ___, 645 S.E.2d 864, 865 (2007).
II. Substantial Compliance
Plaintiff argues the failure to include a time limitation for development rights in the declaration was a nonmaterial omission and it therefore "substantially complied" with the Act. I disagree.
A. North Carolina Law
The General Assembly enacted the North Carolina Condominium Act based upon the Uniform Condominium Act of 1980. According to the official commentary to the Act, the statutory provision at issue is not "significantly different" from the Uniform Act.
N.C. Gen.Stat. § 47C-2-105 (2005) provides, in relevant part:
(a) The declaration for a condominium must contain:
....
(8) A description of any development rights and other special declarant rights reserved by the declarant, together with a legally sufficient description of the real estate to which each of those rights applies, and a time limit within which each of those rights must be exercised.
(Emphasis supplied). Official Comment 9 to N.C. Gen.Stat. § 47C-2-105 states, "[p]aragraph (a)(8) requires the declaration to describe all development rights and other *906special declarant rights which the declarant reserves. The declaration must describe the real estate to which each right applies, and state the time limit within which each of those rights must be exercised." (Emphasis supplied).
The word "must" is synonymous with "shall." Internet East, Inc. v. Duro Communications, Inc., 146 N.C.App. 401, 405-06, 553 S.E.2d 84, 87 (2001). This Court has stated, "[t]he word `shall' is defined as `must' or `used in laws, regulations, or directives to express what is mandatory.'" Id. (citation and quotation omitted) (emphasis supplied). The majority's opinion correctly states that delineation of a time limit in N.C. Gen.Stat. § 47C-2-105(a)(8) is a mandatory requirement, but holds, despite the plain language and legislative intent of the statute, that plaintiff has substantially complied with the Act pursuant to N.C. Gen.Stat. § 47C-1-104(c) (2005).
N.C. Gen.Stat. § 47C-1-104(c) states, "[i]f a declarant, in good faith, has attempted to comply with the requirements of this chapter and has substantially complied with the chapter, nonmaterial errors or omissions shall not be actionable." (Emphasis supplied). The threshold issue presented is whether the omission of the statutorily required express time limit for future development is nonmaterial. The majority's opinion states plaintiff has substantially complied with the Act because "the Declaration contains every other relevant component either mandated by the Act or considered to be material by the parties." I disagree.
B. Silverview v. Overlook at Mt. Crested Butte
This appears to be an issue of first impression in North Carolina. In the absence of controlling authority, we must look to other jurisdictions to review this issue. I find the reasoning and holding in Silverview v. Overlook at Mt. Crested Butte to be directly on point and persuasive. 97 P.3d 252 (Colo.App. 2004), cert. denied, No. 04SC179, 2004 WL 1813925, at *1 (Colo., Aug. 16, 2004). In Silverview, the Colorado Court of Appeals held, based on the language of Colo.Rev.Stat. § 38-33.3-205 (2003), that the omission of a time limitation on the development rights in the declaration rendered the rights void ab initio. In virtually identical language to N.C. Gen.Stat. § 47C-2-105(a)(8), Colo.Rev. Stat. § 38-33.3-205(1)(h) states:
(1) The declaration must contain:
....
(h) A description of any development rights and other special declarant rights reserved by the declarant, together with a description sufficient to identify the real estate to which each of those rights applies and the time limit within which each of those rights must be exercised.
(Emphasis supplied).
In Silverview, the Court stated, "the word `must' connotes a requirement that is mandatory and not subject to equivocation. Thus, in using the word `must,' the plain language of [Colo.Rev.Stat.] § 38-33.3-205(1)(h) unambiguously requires any reservation of development rights to include a `time limit within which each of those rights must be exercised.'" 97 P.3d at 255.
The Colorado General Assembly also enacted a statute with language that is similar to N.C. Gen.Stat. § 47C-1-104(c). Colo.Rev. Stat. § 38-33.3-203(4) (2003) states, "[t]itle to a unit and common elements is not rendered unmarketable or otherwise affected by reason of an insubstantial failure of the declaration to comply with this article. Whether a substantial failure impairs marketability is not affected by this article." (Emphasis supplied). The majority's opinion correctly states the Colorado Court of Appeals found the statute's noncompliance provision inapplicable because the dispute did not concern title or marketability. Id. at 256. However, the Court subsequently states, "even assuming [the noncompliance provision] were to apply, we find Overlook's argument unpersuasive." Id.
The Colorado Court of Appeals held that examples of insubstantial defects included omitting the words "`condominium,' `cooperative,' or `planned community'" from the declaration or the failure to include "the plats or plans to comply satisfactorily with the requirement that they be clear and legible." Id. The Court further stated, "Overlook's mathematical argument that missing only *907one out of twenty-three requirements must necessarily be an `insubstantial failure' is overly simplistic .... we [do not] believe that the General Assembly intended an omission that leads to development rights being reserved with no time limitation to be considered insubstantial." Id. (emphasis supplied).
The Colorado Court of Appeals relied on two subsections as the basis of its holding:
(2) ... This provision does not extend the time limit on the exercise of development rights imposed by the declaration pursuant to section 38-33.3-205(1)(h).
....
(5) If a declarant fails to exercise any development right within the time limit and in accordance with any conditions or fixed limitations described in the declaration pursuant to section 38-33.3-205(1)(h), or records an instrument surrendering a development right, that development right shall lapse....
Colo.Rev.Stat. § 38-33.3-210(2) and (5) (2003). The Court concluded "[t]hese subsections are consistent with the conclusion that the omission of a time limitation is not `insubstantial'." Id.
C. Analysis
The North Carolina and Colorado General Assemblies enacted virtually identical provisions regarding the mandatory requirements the declarant must comply with in order to reserve future development rights. Although Colorado law is not binding on North Carolina, I find the Colorado Court of Appeals' analysis of virtually identical statutes to be directly on point and persuasive to the facts and legal issue before us.
N.C. Gen.Stat. § 47C-2-110 (2005) is a very similar provision to Colo.Rev.Stat. § 38-33.3-210(2). N.C. Gen.Stat. § 47C-2-110(b) expressly limits future development rights by stating:
Development rights may be reserved within any real estate added to the condominium if the amendment adding that real estate includes all matters required by, and is in compliance with, G.S. 47C-2-105 and, if a leasehold condominium, G.S. 47C-2-106 and also if the plats and plans include all matters required by G.S. 47C-2-109. This provision does not extend the limit on the exercise of developmental rights imposed by the declaration pursuant to G.S. 47C-2-105(a)(8).
(Emphasis supplied). Further, Official Comment 1 to N.C. Gen.Stat. § 47C-2-110 states:
This section generally describes the method by which any development right may be exercised. Importantly, while new development rights may be reserved within new real estate which is added to the condominium, the original time limits on the exercise of these rights which the declarant must include in the original declaration may not be extended. Thus, the development process may continue only within the self-determined constraints originally described by the declarant.
(Emphasis supplied).
Although the North Carolina Condominium Act does not have a provision identical to Colo.Rev.Stat. § 38-33.3-210(5), stating failure to exercise the development right within the prescribed time causes the development rights to lapse, I find the addition of the subsection and Official Comment above to be indicative of the General Assembly's intent to require inclusion of a time limitation for future development rights a mandatory and material part of the declaration. The majority's reliance upon N.C. Gen.Stat. § 47C-1-104(c) to excuse the omission is misplaced. This statute expressly applies to only "nonmaterial errors or omissions" and is inapplicable in this case.
Further, the majority's holding excusing plaintiff's omission on the ground that plaintiff otherwise substantially complied with the Act because "the Declaration contains every other relevant component either mandated by the Act or considered to be material by the parties" was expressly disavowed by the Colorado Court of Appeals.
The General Assembly's intended purpose in enacting N.C. Gen.Stat. § 47C-2-105(a)(8) was for the declarant to fully disclose to and inform the buyer, upon purchase, of any future development rights the declarant maintains over the property and the timing in which those rights must be exercised. The *908buyer can then decide whether to purchase the property based on the present conditions and the disclosed conditions which may exist at a specified time in the future. Based upon the plain and mandatory language of the statute, N.C. Gen.Stat. § 47C-1-104 should not be used to grant plaintiff future development rights it did not expressly reserve to exercise within a stated time period.
III. Conclusion
N.C. Gen.Stat. § 47C-2-105(a)(8) expressly and mandatorily requires the declaration of condominium to include a time limit within which future development rights must be exercised. The failure to include this time limitation is a material omission, which renders the development rights void ab initio.
The substantial compliance provision of N.C. Gen.Stat. § 47C-1-104(c) is inapplicable to this mandatory and material provision of the Act. The trial court correctly granted summary judgment in favor of defendants and its order should be affirmed. I respectfully dissent.