Introduction

The present case, involving Susan K. Carpenter as trustee for the H. Joe King, Jr. Revocable Trust and others similarly situated, against William Douglas Management, Inc. and NextLevel Association Solutions, Inc. (doing business as HomeWiseDocs.com), addresses the core issue of whether fees charged for the preparation of “statements of unpaid assessments” in homeowners’ association transactions qualify as “transfer fees” under North Carolina law.

Carpenter, who sold two properties governed by homeowners’ associations, challenged the fees she incurred after her attorneys procured statements of unpaid assessments necessary to demonstrate clear title before the property transfers. She alleged that these fees were excessive and unlawful under North Carolina statutes that prohibit transfer fee covenants as well as under the State's Unfair and Deceptive Trade Practices Act (UDTPA). The defendants, by contrast, contended that these fees were straightforward charges for a routine service and did not trigger the statutory definition of a transfer fee.

Summary of the Judgment

In a decision handed down by the Fourth Circuit Court of Appeals on March 14, 2025, the court affirmed the district court’s dismissal of Carpenter’s complaint. The appellate decision concluded that the fees charged for the statements of unpaid assessments were not transfer fees under North Carolina law. The court held that such charged fees were determined at the time the statements were prepared rather than at the time of property transfer. It also found that the fees met the statutory criteria for fees that do not constitute a transfer fee. Consequently, the remaining claims – including those based on the UDTPA, unjust enrichment, negligent misrepresentation, and civil conspiracy – were also dismissed.

Analysis

Precedents Cited

The court’s analysis relied heavily on several precedential decisions and legal principles:

• Kashdan v. George Mason Univ., 70 F.4th 694 (4th Cir. 2023): This case reinforces the principle of accepting factual allegations in a complaint as true when evaluating a motion to dismiss. It enabled the court to adopt Carpenter’s factual narrative for analysis.
• Carpenter v. NextLevel Assoc. Sols., Inc., 632 F. Supp. 3d 672 (W.D. N.C. 2022): This decision clarified that fees become “payable” on preparation of documents rather than at the moment of property transfer, supporting the interpretation adopted by the appellate court.
• Fleming v. Cedar Mgmt. Grp., LLC, No. COA21-213 (N.C. Ct. App. 2022): Although unpublished, this decision was deemed to have predictive value. It specifically addressed whether charges for statements of unpaid assessments could be classified as transfer fees, ultimately supporting the conclusion that such charges were not transfer fees.
• JVC Enters. LLC v. City of Concord, 855 S.E.2d 158 (N.C. 2021): The principles of statutory interpretation set forth in this case were used to explain that clear statutory language should be given its plain meaning without extraneous construction.
• Bumpers v. Comm. Bank of N. Va., 747 S.E.2d 220 (N.C. 2013): This case provided guidance on what constitutes an “unfair or deceptive” act under the UDTPA, influencing the dismissal of the claims based on excessive fees.

The court’s reliance on these cases ensured that the analysis was grounded in a strong body of legal authority, thereby reinforcing the conclusion that the fees did not meet the statutory definition of transfer fees.

Legal Reasoning

The court’s reasoning focused on a meticulous reading of the statutory text. The statute at issue, N.C. Gen. Stat. § 39A-2(2), defines a transfer fee with two key parts: (1) a fee that is “payable upon the transfer of an interest in real property,” and (2) a fee that is “payable for the right to make or accept such transfer.” The defendants’ fees for preparing statements of unpaid assessments became “payable” only at the moment these statements were prepared—not at the property transfer.

The court further anchored its reasoning in the precise statutory exclusions. Notably, the statute expressly excludes “any reasonable fee charged for the preparation of statements of unpaid assessments.” Even though Carpenter argued that an excessive fee should retrospectively be viewed as a transfer fee, the court rejected this approach, emphasizing that exclusions in the statute are categorical and should not be reinterpreted to include fees that the statute clearly omits.

Additionally, while Carpenter attempted to justify her claims under the UDTPA by equating high fees with deceptive or unfair practices, the court underscored that the statutory framework for transfer fees is an independent measure of the public policy in question. The statutory amendments set a range for allowable fees, and the fees at issue fell within that range.

Impact

The decision has significant implications for future real estate transactions and disputes involving homeowners' associations. By establishing that fees associated with the preparation of certain documentation do not constitute transfer fees, the ruling:

• Provides greater clarity for the interpretation and enforcement of North Carolina’s transfer fee statutes.
• Limits the ability of property sellers to pursue claims for excessive transfer fees where the fees are categorized as preparation charges.
• Sets a precedent that underscores the importance of distinguishing between fees incurred for service delivery and fees related directly to property transfers.
• Ensures that parties can rely on precise statutory language and related case authorities when structuring service agreements and fee schedules in real estate closings.

For legal practitioners and homeowners’ associations alike, this clarity allows for more predictable outcomes in fee disputes and helps mitigate litigation risks.

Complex Concepts Simplified

Some key legal concepts featured in this judgment are now clarified:

• Transfer Fee: Generally defined as a fee that is payable when a real property interest is transferred or for the right to transfer property. In this case, the court clarified that fees due on the preparation of documents do not fall under this category.
• Payable vs. Due: The court examined the nuance that a fee being "payable" does not necessarily imply it is "due" at the moment of transfer. Here, the fees became payable when the statements were prepared.
• UDTPA and Excessive Pricing Claims: Under the UDTPA, isolated high fees need additional factual support to indicate unfairness or deception. Without compelling evidence of a practice being unethical or injurious to consumers, a claim based solely on high pricing is insufficient.

Conclusion

In summary, the Fourth Circuit’s decision reinforces a precise statutory interpretation of North Carolina’s transfer fee provisions. The ruling is significant because it delineates the boundary between service fees for document preparation and fees that qualify as transfer fees. By affirming that the fees charged for statements of unpaid assessments do not trigger the statutory prohibition on transfer fee covenants, the judgment not only upholds procedural dismissal standards but also clarifies key statutory terms for future disputes.

This decision will likely serve as a guiding precedent, impacting how similar claims are assessed in both state and federal courts. Legal practitioners must closely analyze fee structures in real estate transactions to ensure they fall within permissible statutory limits, thus reducing the risk of litigation based on misinterpreted fee classifications.

Overall, this ruling marks an important development in real estate and consumer protection law, providing clear guidance on the formulation and classification of fees in property transactions.