The end of the year is always a good time to look back and reflect. The close of 2024 offers an opportunity to examine recent legislative developments affecting small claims procedure, summary ejectment, magistrate nominations, and real property crimes. The amendments and enactments discussed in this post are currently effective.

Small Claims Procedure

Written Findings of Fact in Order Authorizing a Party to Appeal as an Indigent

A party seeking to appeal as an indigent typically completes and files AOC-G-106, “Petition to Proceed as an Indigent.” G.S. 7A-228(b1) authorizes a superior or district court judge, magistrate, or the clerk of superior court to rule on the petition and allow a party to appeal to district court as an indigent. If the party by affidavit shows to the clerk that they meet one of the criteria listed in G.S. 1-110, the clerk or an assistant clerk shall authorize the party to appeal as an indigent. If the party seeking to appeal as an indigent does not meet any of the criteria in G.S. 1-110, a superior or district court judge, a magistrate, or the clerk of superior court has discretion to authorize the party to appeal as an indigent if the person cannot pay the costs of appeal. The party’s petition shall be allowed if the party meets one or more of the following criteria:

1. Receives electronic food and nutrition (FNS) benefits.
2. Receives Work First Family Assistance.
3. Receives Supplemental Security Income (SSI).
4. Is represented by a legal services organization that has as its primary purpose the furnishing of legal services to indigent persons.
5. Is represented by private counsel working on the behalf of or under the auspices of a legal services organization that has as its primary purpose the furnishing of legal services to indigent persons.

S.L. 2024-54 rewrites G.S. 7A-228 to add subsection (b2) which requires the judicial official authorizing a person to appeal to district court as an indigent to make written findings. AOC-G-106 has been revised to allow the judicial official to make the required written findings. The judicial official must either:

1. Make written findings including all the above criteria that led to the authorization of the person to appeal as an indigent and all information or evidence used to determine that one or more of the criteria existed; or
2. Make written findings indicating that the authorization of the person to appeal as an indigent person was not based on the above criteria and all information or evidence used to determine that the person would otherwise be authorized to appeal as an indigent.

The requirement for written findings of fact will require the judicial official to consider information or evidence beyond the petitioner’s affidavit, especially in cases where the party does not meet any of the criteria in G.S. 1-110. The additional information and evidence may be the testimony of the party or documents that support that the party is unable to pay the costs of appeal. A party who submits to the court an affidavit containing untrue allegations risks dismissal of the appeal and having to pay the court costs advanced. G.S. 7A-228(b1). Where previously the affidavits submitted by parties seeking to appeal as indigent may have been given a cursory examination, the requirement of written findings of fact will require the judicial official to conduct a more thorough examination.

Motion to Dismiss Defendant’s Perfected Appeal to District Court

A defendant perfects the appeal to district court by giving notice of appeal and paying the costs of court. G.S. 7A-228(b). The plaintiff can file a motion to dismiss the appeal. Prior to October 1, 2024, the plaintiff had to show to the court that the defendant:

1. Failed to raise a defense orally or in writing in the small claims court;
2. Failed to file a motion, answer, or counterclaim in the district court; and
3. Failed to comply with any obligation set forth in the Bond to Stay Execution on Appeal of Summary Ejectment Judgment entered by the court.

Effective October 1, 2024, S.L. 2024-54 rewrote G.S. 7A-228(d) to require the plaintiff to show to the court that the defendant failed to raise a defense orally or in writing in the small claims court and failed to do at least one of the following:

1. File a motion, answer, or counterclaim in the district court.
2. Comply with any obligation set forth in the Bond to Stay Execution on Appeal of Summary Ejectment Judgment entered by the court.

Previously, a plaintiff was required to establish all three of the defendant’s deficiencies to prevail on a motion to dismiss a perfected appeal. Under the new rule, only two deficiencies need to be shown. A defendant may defeat the motion by filing a motion, answer, or counterclaim in district court or by satisfying the bond amount to stay execution, depending on which deficiency is pled.

Summary Ejectment

City or County Ordinances and Potential Renter’s Source of Income

S.L. 2024-47 amends G.S. 42-14.1 to add subsection (b) which prohibits local governments from enacting any ordinance which prohibits an owner or other person having the right to lease, sublease, or rent housing from refusing to rent housing to a person whose lawful source of income includes funding from a federal housing assistance program to pay rent. Subsection (c) restates existing carve outs which were previously located in subsection (a) for local governments to regulate their own properties and the rents charged for private properties receiving subsidies or properties assisted with Community Development Grant Funds. A new exception was added to allow local governments to enact ordinances or resolutions applicable to owners or operators that receive funding or financial incentives from the county or city. G.S. 42-14.1(c)(4).

Disbursements of Rental Payments to Landlords Pending Appeal

Amendments to G.S. 42-31 and 42-34 add a new time limitation for the payment to the landlord of rental payments paid by adefendant into the clerk’s office if the case is appealed. S.L. 2024-54. If a landlord prevails on summary ejectment in small claims, the magistrate’s judgment shall order the clerk of court to pay to the landlord, within five (5) business days of a written request, any rental payments paid by the defendant which are not claimed by the defendant in the pleadings and any moneys of the undertaking remaining in the clerk’s office after the appeal has been resolved. AOC-CVM-401, “Judgment in Action for Summary Ejectment” and AOC-CVM-403 “Judgment in Action for Summary Ejectment Criminal Activity” have been revised to reflect the required language in the order section of the forms.

Landlords have always had to apply to the clerk for disbursement of rental payments, but this change clarifies that such application should be in writing. Based on guidance from the Administrative Office of the Courts, the written request should, at minimum, include the file number, state that the plaintiff is requesting that the clerk pay out the bond funds, and be signed by the plaintiff. If the written application clearly requests all future periodic payments be released, then the plaintiff would not need to make multiple requests during the pendency of the appeal. There is a separate form to collect a Tax ID Number (TIN) or Social Security Number (SSN) that must be completed before the funds are released which satisfies the clerk’s obligation to report to the Internal Revenue Service (IRS).

Late Fees

The legislature clarified language in G.S. 42-46(a) by adding “calendar” to describe the type of days counted before a late fee may be assessed. S.L. 2024-47. Previously, the rule for computation of time in G.S. 1A-1, Rule 6 would have applied, and weekends and legal holidays would be excluded. Where a more specific rule sets out a different computation method, the specific rule applies instead of the more general rule. Now, legal holidays and weekends are counted. Counting begins on the first day following the day the rent was due and ends on the fifth day.

Attorneys’ Fees

The legislature further clarified the attorney’s fees provision in G.S. 42-46(i)(3) by requiring the landlord to be the prevailing party in order to be entitled to reasonable attorneys’ fees in small claims. The statute is also amended to address attorneys’ fees in appeals of summary ejectment to district court. S.L. 2024-47. The landlord is entitled to all actual reasonable attorneys’ fees paid or owed if the district court determines that the tenant knew, or should have known, that the appeal was frivolous, unreasonable, without foundation, in bad faith, or solely for the purpose of delay. Id. Presumably, the landlord would prevail in such a case where the tenant’s appeal is without merit. The district court judge entering an attorneys’ fees award for this reason should include findings of fact that support the conclusion that the appeal was without merit for the reasons set out above.

Magistrate Nominations

Law Enforcement Qualification for Magistrate Nomination

Prior to July 2024, current or former law enforcement officers seeking nomination as a magistrate had to either have a four-year degree from an accredited college or university or a two-year associate degree and four years of law enforcement experience. S.L. 2024-33 amended G.S. 7A-171.2(b) to make law enforcement officers with eight years of experience in North Carolina eligible for nomination as a magistrate (regardless of educational level).

Real Property Crimes

I do not ordinarily cover criminal laws, but these laws relate to real property and should be on every magistrate’s radar when dealing with landlords, property owners, and potentially defrauded tenants.

Increase to Punishment for Injury to Residential Real Property

Effective December 1, 2024, it is a Class I felony for a person to willfully and wantonly damage, injure, or destroy the residential real property of another and the damages are $1,000 or more. G.S. 14-127. Since this increased punishment is for damage to residential real property, landlords whose properties have been destroyed by tenants may seek criminal charges. Citizens wishing to file this new charge will likely need to involve law enforcement since the typical practice is to require a law enforcement investigation before charging a felony.

Fraudulent Rental, Lease, or Advertisement for Sale of Residential Real Property

Effective December 1, 2024, it is a Class H felony to fraudulently rent or lease residential real property to another person if the defendant knows that the renter or lessor has no lawful ownership or leasehold interest in the property, and it is a Class I felony to advertise real property for sale if the defendant knows the purported seller has no legal title or authority to sell the property. G.S. 14-117.8. Fraudulent rentals are on the rise, so citizens are likely to call the magistrate’s office seeking a remedy when they have been duped by a fraudulent landlord, so it is important to know about these new crimes that address fraudulent rentals and sales of real property.

And with that, the 2024 season comes to a close. I hope the next few weeks bring you and your offices lots of joy in addition to the chaos. There are more legislative changes to come in 2025, but I will write about them closer to their effective date. I look forward to seeing you in the new year!