Reversing a lower court decision, a North Carolina appeals court holds that a continuing care retirement community contract requiring residents to pay a membership fee is not unconscionable and does not violate property law. Wilner v. The Cedars of Chapel Hill, LLC (N.C. Ct. App., No. COA14-380, June 2, 2015).
The Wilners bought a condominium in a continuing care retirement community (CCRC). In addition to the purchase price, the purchasers were required to pay a membership fee that was 10 percent of the price of the condominium. Residents also make monthly payments for various amenities.
The Wilners filed a class action against the CCRC, arguing that covenants requiring a membership fee do not run with the land and are therefore unenforceable. They also argued that the contracts were unconscionable. The trial court granted the Wilners' summary judgment motion on the grounds that it violated state law prohibiting a fee chargeable on the transfer of property.
The North Carolina Court of Appeals reverses, holding that the CCRC's membership fee is enforceable. According to the court, the CCRC contract was not procedurally unconscionable because it was signed at closing with attorneys present, and the mere fact that the Wilners did not have the ability to negotiate the contract terms does not make the contract substantially unconscionable. In addition, the court rules that the fee is not a transfer fee because the law includes an exception for condominium fees that are declared in a contract. The court also holds that the issue in this case is a contract issue and not one of a covenant running with the land.
For the full text of this decision, go to: https://appellate.nccourts.org/opinions/?c=2&pdf=32279
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