Landlord/Tenant – Summary Ejectment – North Carolina Debt Collection Act – Well-Use Fee

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Plaintiff landlord appealed from the trial court’s order dismissing its complaint in summary ejectment and granting a money judgment to defendant tenant.

We reverse the trial court’s order, as we agree with landlord that the trial court erred in concluding that landlord violated the North Carolina Debt Collection Act.

In 2019, landlord rented a Raleigh, NC property to tenant. The property is a single-family home with a well that supplies water solely to the home. The parties executed a rental contract, or a lease, under the terms of which landlord agreed to rent the property to tenant, who agreed to pay monthly rent of $1,175. Four days after executing the lease, the parties signed an amendment, modifying the “[t]otal rent” to a monthly amount of $1,350. The amended lease itemized the rent, detailing a “[b]ase rent” of $1,175, a “[w]ater utility” amount of $125, and a “[w]asher[–d]ryer” amount of $50. The water-utility amount refers to tenant’s use of the well.

The parties later excluded the $50 washer–dryer amount from tenant’s total rent because tenant did not use the washer or dryer. Therefore, after the amendment, tenant’s total rent was $1,300. Throughout tenant’s tenancy, a third party subsidized part of tenant’s base rent, and tenant paid the difference plus the “[w]ater utility” amount. In 2022, landlord gave tenant a written notice to vacate the property by March 11, 2022. Tenant refused to leave the property, so on April 1, 2022, landlord filed a complaint for summary ejectment against tenant in Wake County Small Claims Court. The complaint listed the “rate of rent” as $1,350. The small-claims magistrate ordered tenant to vacate the property and tenant appealed to Wake County District Court.

After a bench trial, the trial court found landlord violated two provisions of the NCDCA. Specifically, the trial court found “landlord violated N.C. Gen. Stat. § 75-55(2) twenty-nine (29) times by attempting to collect and collecting a fee for the provision of water that [it was] not legally entitled to collect.” The trial court also found landlord violated N.C. Gen. Stat. § 75-54(4) by stating in its complaint that tenant’s “rate of rent” was $1,350, rather than $1,175.

On appeal, landlord argued the trial court erred in holding that it violated N.C. Gen. Stat. §§ 75-54, -55. We agree. Tenant was obliged to pay landlord $125 each month to use a well. Tenant’s obligation to pay accrued at the beginning of each month that tenant occupied the property. Regardless of the timing of his payments, tenant was indebted to landlord because tenant was obliged to pay “in return for something received,” well access. Therefore, given the “common and ordinary meaning” of “debt,” tenant owed landlord a debt under the NCDCA. Because we established that the money collected was a debt, landlord is therefore a debt collector under the NCDCA.

Tenant and landlord contracted for tenant to pay $125 per month for well access. Tenant paid, and landlord provided. No evidence suggests the property was unfit for tenant, and no evidence suggests that a separate well-use fee is prohibited by section 42-42. Therefore, landlord did not violate NC Gen. Stat. section 42-42 by charging Tenant a well-use fee.

Tenant also asserted that landlord’s well-use provision is unlawful under section 42-42.1 since landlord is required to charge for water based on a metered measurement. So according to tenant, the well-use provision is prohibited and therefore unfair under the NCDCA. We disagree. Landlord is a landlord, Tenant was landlord’s tenant, and the property is a single-family dwelling with a well as its water source. Landlord rented tenant access to the well, and that “service or commodity [was] not resold to or used by others.” Therefore, landlord falls squarely within the landlord–tenant exemption and is not regulated as a public utility under N.C. Gen. Statute Chapter 62. As a result, Landlord is not required to charge for water consumption based on a metered measurement.

We conclude landlord’s well-water provision does not violate sections 42-42 or 42-42.1. Therefore, the well-water provision does not violate public policy and is not unfair under the NCDCA.

Reversed.

Onnipauper LLC v. Dunston (Lawyers Weekly No. 011-173-23, 16 pp.) (Jeffrey K. Carpenter, J.) Appealed from Wake County District Court (David Baker, J.) City of Oaks Law, by Hunter Blake Winstead & Jonathan W. Anderson, for Landlord-appellant; Legal Aid of North Carolina, Inc., by BreAnna VanHook, Christopher Stella, Pamela Thombs, Celia Pistolis, & Isaac W. Sturgill, for Tenant-appellee. North Carolina Court of Appeals