Can a NC public body keep the location and seller secret in closed session when discussing buying real estate?

Plain-English summary

The 1994 NC General Assembly substantially narrowed the Open Meetings Law's closed-session exceptions, dropping the count from twenty to seven. One of the surviving exceptions, the new G.S. § 143-318.11(a)(5), let a public body close a session to instruct its staff or negotiators about "the price and other material terms of a contract or proposed contract for the acquisition of real property" (or about employment contract terms).

Senate President Pro Tempore Marc Basnight asked the AG how broad "other material terms" was. Could a city council, for example, refuse to identify the property's location or the seller while it deliberated whether to buy? The argument for closure went like this: location and seller identity are essential terms of any real estate contract; therefore they are "material terms"; therefore they belong in closed session. The argument for openness went the other way: those facts are not what the body actually negotiates over (the seller's identity is a fact, not a negotiable term), and the strong public policy in favor of open meetings should pull the exception back.

Chief Deputy AG Andrew A. Vanore, Jr. and Chief Counsel John R. McArthur agreed with the openness side. The key textual move was on the word "negotiating." The statute lets a body close a session "to instruct its staff or agent in negotiating the price or other material terms." That implies that only the terms the body actually plans to negotiate over are properly closed. A body doesn't "negotiate" the seller's name; the seller's name is fixed. If the body has no negotiating reason to keep a fact secret, it cannot use (a)(5) to do so.

Three pieces of context backed the narrow reading:

The statutory public policy declaration. G.S. § 143-318.9 says NC's policy is that hearings, deliberations, and actions of public bodies "be conducted openly." G.S. § 143-318.11(a) repeats the point: closed sessions are appropriate "only when required to permit the public body to act in the public interest." Strong open-meetings policy weighs heavily against expansive readings of the exceptions.

Legislative history of the 1994 amendments. Before 1994, the law had 20 closed-session exceptions, including a broad "site selection" exception in (a)(1). The General Assembly repealed that broader language and replaced it with the narrower (a)(5). Shrinking the number of exceptions and tightening the property exception signaled an intent to limit closures, not preserve old practice.

Practical balance. Sellers usually know when a public body is interested in their property; identifying them in open session normally does not hurt the body's bargaining position. Same for location. The body's actual negotiating leverage lies in price, financing terms, contingencies, and similar negotiable points. Keeping the genuinely negotiable terms in closed session protects fiscal interests; locking down identity and location does not, while it does cost public trust.

The opinion's bottom line: under § 143-318.11(a)(5), a public body may not reserve location or seller identity for closed session unless it intends, in good faith, to negotiate those items as material terms.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. § 143-318.11 has been amended additional times, and several NC appellate decisions have addressed the open-meetings real property exception. The general principle, that exceptions are construed narrowly, has held.

Background and statutory framework

The 1994 overhaul. 1994 Sess. Laws Ch. 570 reorganized the Open Meetings Law. The closed-session list shrank from 20 exceptions to 7. The property exception was tightened from "site selection" (broad) to "negotiating price and other material terms" (narrow).

The old (a)(1) site-selection exception. Before 1994, a body could close a session to consider site selection generally. That allowed plenty of cover for early-stage deliberations. The new (a)(5) does not allow site selection deliberations as such; only negotiating-stage discussions are protected.

The narrow-construction rule. NC courts construe Open Meetings Law exceptions narrowly. The statute itself reinforces that rule by using the word "only" twice in § 143-318.11(a).

Ordinary statutory construction tools. Vanore and McArthur applied the standard NC framework: plain meaning, legislative intent, surrounding statutory context. They acknowledged "material terms" is ambiguous on its face but resolved the ambiguity through the open-meetings policy lens.

Practical guidance for public bodies. The opinion did not prescribe specific minute-keeping practices, but the rule it set out means that bodies should be prepared to articulate, on the record, which terms they intend to negotiate. A body that closes a session and later reveals it had nothing to negotiate is at risk of a violation finding.

Material terms in real estate contracts. Black's Law Dictionary (1968 ed.) defines "material terms" as those "important, necessary or essential to the agreement." The AG explained that the broader Black's-style definition would not control here because the statute uses the word "negotiating," which narrows the universe.

Common questions

Q: Can a public body close a session to discuss whether to buy a specific property at all?

A: The threshold "should we buy?" deliberation is hard to fit into (a)(5), which is keyed to negotiating contract terms. The body should generally make the threshold decision in open session and then close for negotiation specifics.

Q: What about discussions about whether to make an initial offer?

A: Setting an initial offer price is squarely within (a)(5); price is the paradigm material term to negotiate.

Q: What about discussions of bond financing or appraisals?

A: Financing structures and appraisal strategy can be material terms or related to bargaining position. Closure depends on whether the body is genuinely negotiating those items.

Q: Can a public body invoke (a)(5) preemptively, before negotiations begin?

A: The statute focuses on negotiation. A body that has not yet started negotiations and is not preparing to negotiate may have a harder time invoking (a)(5).

Q: What is the remedy for an improper closed session?

A: NC's Open Meetings Law allows declaratory and injunctive relief and provides for attorney's fees. Egregious violations can lead to invalidation of actions taken in closed session.

Q: How does this opinion interact with the attorney-client privilege closed session under (a)(3)?

A: Different exceptions, different scopes. (a)(3) covers privileged legal-advice discussions; (a)(5) covers real property and employment contract negotiations. A body may use both if both apply, but each exception's elements must be independently satisfied.

Citations from the opinion

• N.C.G.S. §§ 143-318.9; 143-318.11; 143-318.11(a); 143-318.11(a)(1); 143-318.11(a)(5)
• 1994 N.C. Sess. Laws Ch. 570
• State ex rel. Utilities Comm. v. Edmisten, 291 N.C. 451, 232 S.E.2d 184 (1977)
• State v. Fulcher, 294 N.C. 503, 243 S.E.2d 338 (1978)
• State ex rel. Milk Comm. v. National Food Stores, Inc., 270 N.C. 323, 154 S.E.2d 548 (1967)
• Lafayette Transp. Service Inc. v. County of Robeson, 283 N.C. 494, 196 S.E.2d 770 (1973)
• Black's Law Dictionary, p. 1128, 4th Ed. Rev. (1968)

Source

• Landing page: https://ncdoj.gov/opinions/open-meetings-law/

Original opinion text

You have asked for an opinion whether the location and the identity of the owner of real property for a proposed land acquisition by a public body are "material terms" which may be reserved for discussion in closed session under the state's Open Meetings law. That law was amended in the 1994 legislative session. See, 1994 Sess. Laws Ch. 570.

For reasons that follow, it is our opinion that the location and identity of the owner of real property should ordinarily be discussed in open session. Discussion of those items may not be lawfully reserved for closed session unless the public body, in good faith, intends to negotiate those items as materials terms of a purchase contract.

Prior to the 1994 amendments, the Open Meetings law provided that "a public body may hold an executive session and exclude the public: . . . [t]o consider the selection of a site or the acquisition by any means or lease as lessee of interests in real property." N.C.G.S. § 143-318.11(a)(1). As part of the 1994 amendments, the General Assembly repealed this language and replaced it with the following:

It is the policy of this State that closed sessions shall be held only when required to permit a public body to act in the public interest as permitted in this section. A public body may hold a closed session and exclude the public only when a closed session is required:

. . . .

(5) To establish, or to instruct the public body's staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating (i) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease; or (ii) the amount of compensation and other material terms of an employment contract or proposed employment contract. N.C.G.S. § 143-318.11(a)(5).

When a statute is clear and unambiguous, the courts must give it its plain meaning and may not interpret its terms. State ex rel. Utilities Comm. v. Edmisten, 291 N.C. 451, 232 S.E.2d 184 (1977). In interpreting a statute, the intent of the General Assembly controls. State v. Fulcher, 294 N.C. 503, 243 S.E.2d 338 (1978). To ascertain the Legislature's intent, a court will consider the language of the statute, the legislative history and the circumstances surrounding its adoption. State ex rel. Milk Comm. v. National Food Stores, Inc., 270 N.C. 323, 154 S.E.2d 548 (1967). Unless there is indication to the contrary, a court must presume that the General Assembly intended to give the words in a statute their ordinary meaning. Lafayette Transp. Service Inc. v. County of Robeson, 283 N.C. 494, 196 S.E.2d 770 (1973).

Ordinarily, the "material terms" of a contract are those that are important, necessary or essential to the agreement. Black's Law Dictionary, p. 1128, 4th Ed. Rev. (1968). And ordinarily, the property description and identity of the seller are "material terms" of a contract to purchase real property. Focus on the words "other material terms" in Subsection (5), standing alone, could lead to the conclusion that identity of the seller and location of the property, as well as other terms essential to an agreement, are properly reserved for discussion in closed session. As discussed below, we believe this would lead to an erroneous interpretation.

Under N.C.G.S. § 143-318.11(a)(5) closed session is appropriate only when it is required to instruct its staff or agent in "negotiating" the price or other material terms of a real property contract. The term "negotiating" implies that only those material terms the public body intends to negotiate over are properly reserved for a closed session under subsection (5). This ambiguity leads us to conclude that N.C.G.S. § 143-318.11(a)(5) is not clear and unambiguous on its face and would require a court to interpret its meaning.

Other language in the Open Meetings law provides a strong indication that the Legislature intended for N.C.G.S. § 143-318.11(a)(5) to be construed narrowly. Section 143-318.9 provides that "it is the public policy of the North Carolina that the hearings, deliberations, and actions of these [public] bodies be conducted openly." N.C.G.S. § 143-318.11(a) provides that closed sessions are appropriate "only when required to permit the public body to act in the public interest as permitted in this section" and "only when a closed session is required" to achieve one of the purposes described in the list of exceptions. This strong and repeated public policy in favor of open meetings weighs in favor of construing narrowly the exception contained in subsection (5).

The legislative history also weighs in favor of a narrow interpretation of Subsection (5). Prior to amendment, N.C.G.S. § 143-318.11(a) contained twenty exceptions under which a public body could meet in closed session. The 1994 amendment reduced the number of exceptions to seven. Further, as shown above, the language of the new exception for property acquisition under Subsection (5) is more narrow that the "site selection" language under the old Open Meetings law.

Limiting the subject matter of a closed session under Subsection (5) to "price and other material terms" about which the public body intends to negotiate would also appear to strike a reasonable balance between the public interest in open government and a public body's interest in not being disadvantaged in negotiations for real property. Normally, the potential seller of real property will already know the public body wishes to enter into negotiations for purchase of property. Thus, identifying the potential seller in open session normally would not adversely affect the public body's bargaining position. Likewise, public disclosure of the location of property under consideration by the public body would not normally place the public body at a bargaining disadvantage, unless, for example, the body wishes to negotiate over which part of a larger tract it wishes to purchase. If location is a matter the public body needs to negotiate, it could do so in closed session. In short, permitting the public body to discuss in closed session all material terms it, in good faith, wishes to negotiate, would appear to protect adequately the fiscal interests of the governmental body while promoting the public's interest in open government.

For the reasons discussed above, we conclude that under N.C.G.S. § 143-318.11(a)(5), a public body may not lawfully reserve for closed session discussions and instructions to staff about material terms of a property purchase contract unless the public body intends, in good faith, to negotiate over such terms.

Andrew A. Vanore, Jr., Chief Deputy

John R. McArthur, Chief Counsel