Nordbye v. BRCP/GM Ellington

The right of third-party beneficiary of a covenant to enforce the covenant may not be abrogated without his or her consent. Also, a state agency's interpretation of a federal statute will not be given deference if it is not a federal agency and Congress's intent is clear on the issue.

A rental property (the property) was financed with federal tax credits on the condition that it would remain low-income housing for 30 years, recorded as a restrictive covenant (the declaration) for the benefit of all qualified tenants. The IRS recaptured most of the tax credit after a state department determined the property did not comply with the required federal standards to maintain the credit. The department entered an agreement (the release) with the property’s owner that purported to abrogate the declaration. BRCP bought the property and issued a 30-day, no-cause eviction notice to Nordbye. Nordbye brought this action for injunctive and declaratory relief to enforce the declaration. The trial court granted BRCP’s motion for summary judgment based on the principles in Chevron. The Court of Appeals held that Chevron did not apply because the department was a state department and because Congress’s intent to prohibit purposeful termination of the 30-year term for low-income housing was clear. Moreover, the Court held that the release did not abrogate the declaration. Oregon law requires the consent of a third-party beneficiary of a covenant before that covenant may be modified. Reversed and remanded.