• G.S. 42-3: The Landlord’s Life Preserver

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    At common law a landlord confronted with a non-paying tenant had only one hope for regaining possession of rental property: a lease provision spelling out that the tenant’s default would trigger the landlord’s right to repossess the property (commonly referred to as a forfeiture clause). When the parties have agreed in advance to this consequence for failure to pay rent, an action for summary ejectment merely asks the court to enforce the agreement of the parties. The common law rule was that absent such agreement, the landlord was left to the unsatisfactory recourse of cutting his losses by terminating the lease as soon as possible and attempting to collect unpaid rent through an action for money owed — with all of the attendant problems associated with the collection of money judgments.

    The common law rule is still the rule when it comes to personal property. If you buy a car on the installment plan, the seller has no right to repossess the car if you default unless part of your agreement specifically gives the seller that right. But North Carolina long ago established a different rule for unwary landlords. GS 42-3, sometimes referred as the statutory forfeiture provision, allows landlords to file a summary ejectment action if the tenant misses a rent payment even though the rental agreement is silent on the consequences of default. The statute says:

    In all verbal or written leases of real property of any kind in which is fixed a definite time for the payment of the rent reserved therein, there shall be implied a forfeiture of the term upon failure to pay the rent within 10 days after a demand is made by the lessor or his agent on said lessee for all past-due rent, and the lessor may forthwith enter and dispossess the tenant without having declared such forfeiture or reserved the right of reentry in the lease.

    The North Carolina Supreme Court explained the purpose of this provision in Ryan v. Reynolds, 190 N.C. 563 (1925): “The statute was passed to protect landlords who made verbal or written leases and omitted in their contracts to make provision for re-entry on nonpayment of rent when due. The consequence was that often an insolvent lessee would avoid payment of rent, refuse to vacate, and stay on until his term expired.” This “life preserver” is available only under certain circumstances, however, which are discussed in this post.

    The landlord (or the landlord’s agent) must demand the rent.

    GS 42-3 (and its companion statute, GS 42-33) is concerned first and foremost with avoiding the situation in which a tenant fails to pay rent and continues to occupy the property. Allowing the landlord to recover the property in the absence of a contractual right to do so is a last resort—after efforts to obtain rent have failed. Thus the statute requires the landlord to (1) demand payment of the rent, and (2) wait ten days for the tenant to comply with the demand, before filing an action to recover possession. A landlord who is unaware of this statutory purpose may find the requirement perplexing. “Why should I demand payment from a tenant in default when the tenant is well-aware that the rent is late?” It is important to understand that the purpose of the demand requirement is to maximize the likelihood that the landlord will actually be paid, by requiring the landlord to (1) specifically communicate to the non-paying tenant that the rent is late, must be paid, and that the consequences of failure to pay will be eviction, and (2) then give the tenant ten days to come up with the money.

    What is required for an effective demand?

    Snipes v. Snipes, 55 N.C. App. 408, aff’d 306 N.C. 373 (1982) is the only NC case to discuss the nature of the demand required by GS 42-3. In Snipes the landowner told the tenant that she “wanted to get all this business settled.” The Court of Appeals found that insufficient, saying: “We hold that to constitute a ‘demand’ under N.C.G.S. 42-3, a clear, unequivocal statement, either oral or written, requiring the lessee to pay all past due rent is necessary. . . . The demand must be made with sufficient authority to place the lessee on notice that the lessor intends to exercise [the] statutory right to forfeiture for nonpayment of rent.” It is interesting to note that Snipes suggests that a demand should communicate the landlord’s intention to evict the tenant if payment is not made.

    Timing of the demand

    Sometimes questions arise about timing of the demand relative to filing an action for summary ejectment. One issue is whether a landlord can make demand in advance—before rent is late, or perhaps even in the lease at the outset of the tenancy. My opinion is that the plain language of the statute — with its references to “past-due rent” and the tenant’s failure to pay “within ten days after a demand is made” – establishes that the demand must be made after a rent payment comes due. Another question is whether the complaint itself may serve as a demand. Again, I believe the answer is no. The specific language of the statute provides that the landlord’s right to seek summary ejectment comes into being only upon the tenant’s“failure to pay rent within 10 days after a demand.” In other words, on Day 9 the landlord has no legal right to seek to recover possession—that right hasn’t come into existence yet. Absent specific extraordinary circumstances, the law does not permit a plaintiff to file a complaint seeking relief for defendant’s anticipated future misbehavior. There are other, more pragmatic reasons for a rule requiring demand at least ten days before a complaint is filed; in light of the accelerated timetable for summary ejectment actions, many cases are likely to be calendared for trial before the ten-day period has passed!

    What if the lease contains a forfeiture clause?

    As a general rule, a landlord enjoys great benefit from a skillfully written forfeiture clause allowing the landlord to recover possession of rental property with a minimum of procedural requirements and triggered by whatever violations are of consequence to the landlord. Sometimes, though, such a landlord may encounter some obstacle to proving that she is entitled to summary ejectment pursuant to the terms of the lease.  Can a landlord in this circumstance “switch grounds” to GS 42-3, saying in effect “Forget about the lease–I am prepared to demonstrate that I made demand for the rent at least ten days before filing this action and that the rent has not been paid”?

    The answer to this question, which comes up surprisingly often, is no. In Charlotte Office Tower Associates v. Carolina SNS Corp., the Court of Appeals had this to say: “GS 42-3 [is] remedial in nature and will apply only where the parties’ lease does not cover the issue of forfeiture of the lease term upon nonpayment of rent. Where the contracting parties have considered the issue, negotiated a response, and memorialized their response within the least, the trial court appropriately should decline to apply these statutory provisions. . . . The statute has no application to [such a] case.” 89 NC App 697 (1988).

    Any discussion of GS 42-3 is incomplete without discussion of a companion statute, GS 42-33, which gives a tenant the right to stop a summary ejectment action in its tracks by tendering the rent and court costs. Tender is an available defense only in actions for summary ejectment based on the statutory forfeiture provision, a rule that has generated considerable confusion for many years. I’ll talk about the law related to tender in my next post.

    Dona Lewandowski joined the faculty of the Institute of Government in 1985 and spent the next five years writing, teaching, and consulting with district court judges in the area of family law. In 1990, following the birth of her son, she left the Institute to devote full time to her family. She rejoined the School of Government in 2006. Lewandowski holds a BS and an MA from Middle Tennessee State University and a JD with honors, Order of the Coif, from the University of North Carolina at Chapel Hill. After law school, she worked as a research assistant to Chief Judge R.A. Hedrick of the NC Court of Appeals.

    One thought on “G.S. 42-3: The Landlord’s Life Preserver”

    • Joy Garner says:

      We, as Landlords, have the forfeture clause in our Lease, & was read each clause initialed by Tenant & Landlord, as indication he had Read, Understood & Agreed To this clause, as with each & every clause contained in the Lease. Even with being the case, we are having to wait until the Eviction Notice is being served on the Tenant, A Notice to Quit has been sent by Certified Mail, Return Receipt in hand.He went into a violent, ranting threatening rage when he was asked to clean up the ‘dog-poop that was lying all over the front yard, in different stages of decaying, smelling & unsanitary to the area.
      With all of this being done, plus many other situations taking place (ex: town bldg. inspector being contacted,as well as county health dept. for what was reported by Tenant, as being “Sewage bubbling up in yard!” This turned out to be kitchen sink grease trap leak, soapy water was observed, no sewage) This problem was resolved immediately, & would have done sooner, IF we had been notified there was Any problem on the property. This was clearly “Retaliatory Harassment”, which it was threatened, to get our property condemed, prior to any of the papers being sent or processed, plus ^ $130 in court papers to be served. During this time lapse, the Tenant, leaves the area, refuses phone calls, Voice Msgs requesting return call, no responses to anything. So, as taxpaying residents, we are left w/ NoRent, No possession of ‘Our House’,no knowledge of what condition it’s in. Too much stress, too many sleepless nights, too much to put i here w/ 18 days since the 4th of this month, when we went to Tenant & requested Rent that was late. At this meeting, we were talked to worse than either of us, being Seniors, have ever encountered in our lives, ordered to “Get off of his property & never come back. We were called “F***ing dumb, stupid, ignorant, crazy old people who didn’t know how to handle our property”. This went on for a good 20 + minutes in a rage on his part, beyond description, & he was so arrogant & proud of his hateful words, he had his live-in girlfriend, who we didn’t know was a permanent guest, videoing it on his phone.
      I never knew old people had to be subjected to this kind of treatment! We never raised our voices, but, after ‘wishes of death to both of us, on the spot, & on our trip home in an accident’ we left, with intentions of going to the Court House, to get them, plus another roommate out immediately, only to be told we had time consuming steps to take when we sought help. We are bewildered, feel threatened by this person, who has a pitt bull therapy dog, turns out 2 pit bulls were in the house.
      As residents of NC all of our lives, we are very concerned, being Blessed to have our sanity, no mental problems, many physical health situations, to find we have to be subjected to this kind of treatment on our own property with no recourse. In these economic times, hiring a lawyer is not in our financial ‘ability’, plus we are continuing to be deprived of our income, & even if he’s located & shows up in Court, the best we can hope for is a judgement in our favor, giving him 10 years to pay. Where is the Justice in this? Will be looking for a reply, hopefully with a solution. We are scheduled to go to Court, in front of a Magistrate, 10/26/17, with little hope of him being there w/ his “Service dog”, to be clear, he has no physical disability, has a job, & from what we’ve observed leads a normal life.

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