Insight by Morningstar Law Group Partner Molly Stuart

There has been some confusion about whether the City of Raleigh has halted annexations. In short: Raleigh has not enacted a moratorium. But the City has temporarily narrowed eligibility for certain annexation requests.

What’s Changed?

Raleigh’s annexation policy generally allows annexation eligibility based on several factors—such as whether the property is in the City’s extraterritorial jurisdiction (the “ETJ”), within an annexation agreement area, or directly touches city limits.

However, effective October 26, 2025, and for a 12-month period, Raleigh adopted a temporary freeze on one path to eligibility. Properties can no longer qualify for annexation solely because they become newly contiguous to the city limits. In other words, when the City annexes a parcel, that action will not make additional adjacent parcels automatically eligible during the freeze period. This appears in Resolution No. (2025) 717, which contains a map of the eligible area, called the “Priority Annexation Area.”

Why Did the City Do This?

The City wants to stabilize boundary changes while staff reviews broader policies related to growth, annexation, and water/sewer service. Possible policy revisions may follow, but none have been announced yet.

What This Means for Developers

• Annexations are still happening, including for properties within the ETJ and adjacent to city limits as of October 25, 2025.
• Projects relying on new contiguity-only eligibility will be ineligible for the term of this policy.
• Projects qualifying under other criteria—such as ETJ status, pre-existing contiguity, or annexation agreement areas—may still move forward.
• Look out for potential changes to Raleigh’s long-term growth and utility extension policies once staff completes its evaluation.

This policy does make it less clear when annexation is available for a property. If you’re ready to dig in, let’s talk. mstuart@morningstarlawgroup.com; 919.890.3318.

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Ann joins us as Counsel in our Real Estate and Land Use practice, bringing extensive experience in land use, planning, zoning, and civil litigation.

Before joining Morningstar, Ann served as Town Attorney for Chapel Hill and as a tenured professor at the UNC School of Government, where she taught and advised North Carolina judges. Her background gives her a unique perspective on the legal challenges faced by real estate developers, municipalities, and property owners.

“Ann’s expertise in land use, municipal law, and civil litigation makes her an exceptional addition to our team,” said Jason Barron, Partner and Integrator at Morningstar. “Her insight and guidance will be invaluable to clients navigating planning, zoning, and land use issues.”

Our Real Estate and Land Use group continues to grow — now 12 attorneys strong — helping clients move projects forward across North Carolina.

We’re thrilled to have Ann on board and look forward to the experience and perspective she brings to the team.

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Yesterday, attorneys Molly Stuart, Tish Shapiro, and staff member Branden Foster participated in the program’s Real Estate Week, engaging with undergraduate and MBA students interested in careers in real estate.

We’re honored to help foster the next generation of real estate professionals and to continue our partnership with NCCU’s outstanding program.

The post Morningstar Law Group is proud to support the MBA Real Estate Program at North Carolina Central University! appeared first on Morningstar Law Group.

Insight by Morningstar Law Group Partner Jeff Roether

On December 13, 2024, the Supreme Court of North Carolina issued a ruling in Schooldev East, LLC, v. Town of Wake Forest (Case No. 268A22) which reaffirmed North Carolina’s public policy in favor of “the free and unrestricted use and enjoyment of land” and the protection of property rights in general.

Background

In 2019, Schooldev East, LLC (“SE”), applied to the Town of Wake Forest (the “Town”) for a major subdivision plan permit and a major site plan permit with the intention of constructing a charter school on a thirty-five-acre parcel of land.

The Town’s planning board and board of commissioners held joint hearing on the application where SE presented evidence to support the application, in specific, evidence as to SE’s compliance with the Town’s uniform development ordinance (the “UDO”) section 3.7.5 which contained provisions regarding the “construction of off-premises sidewalks, multi-use paths[,] or greenways to existing networks” and “[c]onnectivity…to surrounding residential areas”. SE presented evidence that it would construct a multi-use path along the front of the property connecting the project to a neighboring park and to a future subdivision across the road. During the hearing, no evidence in opposition to SE’s application was presented.

Despite this, the planning board voted to recommend denial of the application. The board of commissioners then deliberated, considering matters beyond the scope of the evidence presented, and subsequently voted to deny the application, justifying the denial in large part on the board’s determination that the project would not provide sufficient connectivity with all surrounding neighborhoods.

SE appealed, first to the Wake County Superior Court and then to the North Carolina Court of Appeals, both of which upheld the decision of the board of commissioners. SE then appealed to the North Carolina Supreme Court.

Analysis

The primary issue addressed by the Court was whether the applicant introduced sufficient evidence to establish the UDO’s requirement of “connectivity” to “surrounding residential areas.” The Town argued that the UDO required connection to “all” surrounding residential neighborhoods. SE argued that the UDO only required some connection to surrounding residential neighborhoods—which its application provided for—but not to all surrounding residential neighborhoods.

The Court determined that the ordinance did not expressly require connection to “all” surrounding areas. The UDO text required only connectivity “to surrounding residential areas” without any further qualification. Without express unambiguous language requiring complete connection, the Court found no basis for the denial. The Court further noted that state law prohibits the Town from compelling the applicant to provide off-premises improvements, which shows additional uncertainty as to whether the word “surrounding” was include non-contiguous properties.

As a result of the UDO’s ambiguity, the Court relied upon long-standing North Carolina precedents for the correct interpretation of land use ordinances. Under North Carolina law, any “well-founded doubt” as to the meaning of a land use ordinance must be resolved in favor of the “free use of property.” See Yancey v. Heafner, 268 N.C. 263, 266 (1966). The Court stressed that “[t]his is no arbitrary canon of construction,” but rather a reflection of “our state’s longstanding public policy favoring the ‘free and unrestricted use and enjoyment of land.’” Id at 21.

Therefore, the Court reversed the decision of the Court of Appeals and remanded the matter to the Town to approve the applications

Conclusion

While North Carolina’s protection of property rights is not a new development, this case is an important reminder that all doubts are to be resolved in favor of the “free use of land.”. Cases such as this continue to light the way for property owners looking to utilize their property as best they can, and serves as a reminder to local governments that clarity is best for all parties involved. As the Court observed in School Dev East, property owners “should not need law degrees to figure out what local government ordinances allow them to do with their own land.” Schooldev East, LLC, v. Town of Wake Forest, 386 N.C. 775, 789 (2024).

The post Toward the Free Use of Land: SchoolDev East, LLC v. Town of Wake Forest appeared first on Morningstar Law Group.

In August of 2023, Gov. Roy Cooper signed into law the Unfair Real Estate Agreements Act. Broadly supported by organizations from the North Carolina Real Estate Commission and the North Carolina Land Title Association to the AARP and Zillow, the new law is aimed at curtailing the rise in certain predatory “real estate service agreements” which take advantage elderly and financially distressed property owners.

The Agreements

Under this scheme, companies use high pressure tactics to convince vulnerable property owners to enter into what are called “right to list” service agreements. These companies offer a nominal cash payment upfront for signing the agreement, often less than $1,000. However, unlike a typical listing agreement which might be for a term of six months, these agreements can be for as long as forty years.

Once executed, the company becomes the exclusive listing agent for the property, but takes no steps to actually list or sell it, in some cases, not even placing a For Sale sign in the yard. The companies do, however, immediately record memoranda of the agreements, creating liens against the real estate, usually without the property owner’s knowledge or consent.

According to the Office of the Attorney General of North Carolina, a search of the state’s MLS listings for the last two and a half years shows that more than 2,000 North Carolina homeowners have entered into one of these agreements, but the companies have only listed 86 of the properties for sale.

Once a homeowner becomes dissatisfied with the company’s inability to sell the property, and attempts to list with a different agent, they find that their property is burdened with a lien securing a commission to the original company. Typically, these agreements contain onerous termination provisions.

The Lawsuit

In response to the proliferation of these agreements, in March of 2023, Attorney General Josh Stein brought suit against one such company, MV Realty. According to the Attorney General’s office, since 2020, MV Realty has entered into such agreements with more than 2,100 North Carolina property owners, and more than 32,000 property owners nationwide.

The lawsuit alleges that MV Realty advertises a “Homeowner Benefit Agreement” which offers to pay between $300 and $5000 to homeowners who enter the program. If the homeowner agrees, MV Realty immediately dispatches a notary to the homeowner’s house with the agreement for execution. This is the first opportunity the homeowner has had to read the agreement itself. If the homeowner sells or transfers their house at any time in the following forty years, MV Realty is entitled to a 6% commission on either the sale price or fair market value of the property. If another broker lists the property, MV Realty requires a 3% early termination fee. The agreement provides that it “runs with the land” and if breached it becomes a “lien” against the property. MV Realty has gone so far as to file suit itself against homeowners to enforce its rights under these agreements.

In August, the Attorney General was granted a preliminary injunction against MV Realty, preventing it from entering into any agreements during the pendency of the litigation. On March 7, 2024, the North Carolina Supreme Court granted MV Realty’s motion to stay the injunction.

The Statute.

As a defense against these practices, the General Assembly created the Unfair Real Estate Agreements Act (N.C.G.S. § 93A-85.1 et seq.). The purpose of the Act is to “prohibit the use of real estate service agreements that are unfair to an owner of residential real estate” by forbidding recording of such agreements and limiting their duration.

A real estate service agreement is “unfair, void, and in violation” of the Act if it is for a term longer than one year and does one of the following:

• Runs with the land or binds future owners of the residential real estate identified in the real estate service agreement.
• Allows for assignment of the right to provide services without notice or consent of the owner or buyer.
• Creates a lien, encumbrance, or other real property security interest.

If the service agreement is in violation of the Act, the company has no right to receive a refund of any consideration paid to the property owner. A service agreement may not be recorded in the land records. If it is, it is automatically void, without the necessity for the recording of any further document. The Act further provides that any violation constitutes an unfair and deceptive trade practice. An aggrieved property owner has a private cause of action against the violating service provider and may recover attorney’s fees and damages. The Act also is enforceable by a lawsuit by the Attorney General.

Taken together, the lawsuit and legislation represent a vigorous defense by North Carolina against unscrupulous companies seeking to take advantage of homeowners across the state.

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Congratulations to our colleagues selected by their peers to Business North Carolina’s Legal Elite 2024! Pictured left to right, top to bottom: Chris Graebe, Litigation; Will Graebe, Young Guns; Shannon Joseph, Litigation; Gene Jones, Business; John Kivus, Intellectual; Molly Stuart, Real Estate; and Jennifer Van Doren, Intellectual.

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Morningstar Law Group’s power team of business law partners Grayson Hale and Gene Jones were recently named to 2024 Best Lawyers. This recognition by their peers reflects Grayson’s and Gene’s stellar careers assisting corporate clients as they navigate the intricacies of mergers and acquisitions, corporate governance, business formation, financing, licensing, and a myriad of complex legal issues. Join us in congratulation them on this well-deserved accolade.

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Morningstar Law Group is proud to have recently assisted its long-time Charlotte software company client Aceyus, Inc. with the sale of its business. Aceyus, a market leader in advanced data integration and analytics, announced in August that it has been acquired by Five9.

The Morningstar Law Group team was led by partners Gene Jones and Randy Whitmeyer.  Randy and Gene worked closely with Bowen, Aceyus’ financial advisor, on the transaction.

Morningstar Law Group has robust technology law and mergers and acquisitions practices and frequently represents companies involved in M&A matters.

The post Morningstar Law Group Assists Long-Time Client with Sale of Business appeared first on Morningstar Law Group.

On Wednesday, August 16, the North Carolina Senate overrode Governor Roy Cooper’s veto of HB 488. Of particular relevance to builders and developers, Section 9 of HB 488 mandates that the Building Code Council amend the North Carolina State Building Code to:

1. REMOVE the requirement that three-family (triplex) and four-family (quadplex) dwellings provide greater than a 2-hour fire resistance rating for wall, floor, and ceiling separation assemblies, and
2. REMOVE the requirement that these dwelling types provide automatic fire sprinkler systems.

This section became effective when it became law.

Additionally, the bill overall aims to block the Building Code Council from adopting stricter energy efficient standards for things or things like insulation, windows and doors, and heating and cooling systems until after 2031. For more information, please do not hesitate to contact us.

Insight by Jason Barron and Keenan Conder

The post Real Estate & Land Use Client Alert: NC Senate Decision Overrides Governor’s Veto and Impacts Builders & Developers appeared first on Morningstar Law Group.