N.C. Ct. of Appeals: In re Dong- Foreclosure Deed Set Aside

Summary: On June 17, 2010, Waddington Ridge HOA filed a claim of lien against Dong’s residence and then filed a notice of foreclosure hearing on July 22, 2010. At that hearing, the Clerk of Court allowed the foreclosure to proceed and the sale was held on November 2, 2010, with the foreclosure deed being recorded on February 17, 2011. Dong filed a motion for relief from the foreclosure order on October 31, 2011, and the trial court ultimately concluded that Dong had not received proper notice and, pursuant to N.C. R. Civ. P. 60(b)(4) and (6), set asided the foreclosure order and declared the deed void. The HOA argued on appeal that N.C.G.S. § 1-108 provides that title to property sold in good faith following a judgment is not affected if the judgment is subsequently set aside. Relying on Town of Cary v. Stallings, 97 N.C. App. 484, 389 S.E.2d 143 (1990), the Court of Appeals rejected this argument as N.C.G.S. § 1-108 is interpreted to mean that “the conveyance of title to such property, as acquired in good faith, is not automatically affected, but, title to such property may in fact be affected if the court deems it necessary in the interest of justice.” Id. at 145. Consistent with Stallings, the trial court did not abuse its discretion in deeming the foreclosure deed void. Commentary: This opinion does not describe the defects in service by the HOA, learning the facts that resulted in overturning of the foreclosure would be valuable. For a copy of the opinion, please see: In re Dong- Foreclosure Deed Set Aside.pdf