North Carolina Lawyers Weekly
Before the plaintiff-bank’s predecessor refinanced the defendant-homeowner’s first mortgage and paid off the holder of the first mortgage, a judgment lien had been recorded against the home. When the property was subsequently sold pursuant to a judgment execution sale, plaintiff’s lien was extinguished.
We reverse summary judgment for plaintiff and remand for entry of summary judgment for defendants.
Facts
Defendant Brown bought the property in question in 2000, and lender First Horizon Home Loan Corporation recorded a deed of trust on the property. In 2014, a judgment lien was recorded, encumbering the property. In 2016, plaintiff’s predecessor refinanced Brown’s mortgage.
In 2019, the judgment creditor executed on its judgment. Brown’s daughter, defendant Anderson, was the high bidder and received a sheriff’s deed to the property. The trial court found that plaintiff retains its status as a first lienholder.
Lien Extinguished
G.S. § 1-339.68(b) expressly provides that liens which exist prior to a lien of judgment under which an execution sale is held survive that sale and remain an encumbrance on the real property. The statute is silent on the status of liens that become effective after the lien of judgment under which an execution sale is held. However, applying the canon expressio unius est exclusio alterius (the expression of one thing is the exclusion of the other), we conclude that this implied exclusion was intentional on the part of our Legislature. Therefore, liens that come to encumber a property after the lien of judgment under which an execution sale is held do not survive the sale and are extinguished.
Here, a judgment was entered against Brown in South Carolina on 21 January 2010. This judgment was domesticated in North Carolina and filed with the Office of the Clerk of Mecklenburg County on 15 July 2014. Plaintiff’s predecessor, Nationstar, filed its deed of trust in the Mecklenburg Register of Deeds on 16 August 2016.
The subject property was sold via execution sale pursuant to the 2010 judgment. Because the Nationstar deed of trust became effective as a lien on the property after the judgment under which the execution sale took place, it was extinguished by the sale.
Other Issues
The sheriff has no authority to subordinate one lien to another when conducting an execution sale. G.S. § 1- 339.68(b), not the sheriff’s deed, controls with respect to what encumbrances remain on the property.
Even though Brown, in filling out the Nationstar loan documents in 2016, checked a box that indicated that no liens or judgments encumbered the property, plaintiff cannot rely on Brown’s statement to relieve it of the consequences of failing to identify a publicly available judgment. Equitable subrogation does not apply in this case.
Plaintiff has not brought a claim for fraud or for unjust enrichment against defendants, despite there being no apparent bar to it doing so at the time it filed its initial complaint. Plaintiff instead opted to pursue relief under a quiet title action and an equitable doctrine, which are not available to it on this particular set of facts.
Reversed and remanded.
Midfirst Bank v. Brown (Lawyers Weekly No. 011-209-22, 14 pp.) (Darren Jackson, J.) Appealed from Mecklenburg County Superior Court (Karen Eady-Williams, J.) Bonnie Keith Green and Wesley Deaton for defendants; Benjamin Leighton, Roy Michaux, Ryan Hoffman and David McAdams for plaintiff. 2022-NCCOA-788
