NC 2013 Community Association Legislative Update – May 17

It’s been a busy legislative week!

Yesterday (Thursday, May 16) was this session’s “crossover deadline.” That’s the day non-budget bills must have passed either the House or the Senate or are dead for the session. (CAVEAT: “Dead” legislatively doesn’t always mean “completely dead.” As a News & Observer article recently noted: “[Legislative] rules are made to be circumvented, so there are many ways to keep legislation alive.” Also, bills that spend or take in money are not usually subject to crossover deadlines.) Generally, though, if a non-budget bill hasn’t passed one chamber by the deadline, it’s done for the two-year session (through the end of 2014).

As a result, now seems a good time to review bills that would in some way impact homeowner or condominium associations in North Carolina. The bills below are listed by bill number/date of introduction. Since the General Assembly is hectic this time of year and I’m not certain all online information is updated, there is a link at the end of each paragraph to confirm specifics on any proposal.


(1) Senate Bill 228: HOA’s/Limited Common Elements/Amend of Declaration was filed March 7 by Senators Bill Cook (Beaufort/Camden/Currituck/Dare/Gates/Hyde/Pasquotank/Perquimans) and Ronald Rabin (Harnett/Johnson/Lee). The bill has three main separate provisions:

(a) owners of condominiums or HOA’s must afford access through any limited common elements when necessary for maintenance, repair or replacement activities;
(b) the Planned Community Act was amended to make clear that the declaration, bylaws, and articles of incorporation all together “form the basis for the legal authority for the planned community;”
(c) any amendment to an HOA declaration adopted by the association (regardless of when the association was created) pursuant to the provisions of the Planned Community Act or the declaration “are presumed valid and enforceable.”

The provisions of SB 228 also apply to pre-1999 associations. SB 228 passed both the Senate and the House and was signed into law on April 24.


(1) House Bill 278: HOA’s/Voluntary Prelitigation Mediation was filed on March 13 by Representatives Deborah Ross (Wake), Duane Hall (Wake), Kelly Alexander (Durham), Beverly Earle (Mecklenburg), Susan Fisher (Buncombe), Rosa Gill (Wake), Pricey Harrison (Guilford), Jonathan Jordan (Ashe/Watauga), Marvin Lucas (Cumberland), Chuck McGrady (Henderson), Rodney Moore (Mecklenburg), and Michael Wray (Halifax/Northampton). The bill would allow for prelitigation mediation of disputes between associations and owners (except disputes regarding assessments) through local community mediation centers. All associations would have to notify members in writing each year of the right to mediation, and the implementation of mediation would toll any statutes of limitation or repose with respect to claims. HB 278 passed the House on April 23 and was referred to the Senate Commerce Committee.

(2) House Bill 330: Planned Community Act/Declarant Rights was filed on March 18 by Representatives Rob Bryan (Mecklenburg), Paul “Skip” Stam (Wake), Tom Murry (Wake), and John Szoka (Cumberland). The bill would clarify language in the Planned Community Act as to successor declarants, whether by transfer or foreclosure. The bill was supported by the NC Bar Association and would bring North Carolina’s Act more in line with the uniform Planned Community Act. HB 330 passed the House on May 6 and was referred to the Committee on Rules and Operations of the Senate.

(3) House Bill 331: HOA’s Uniform Lien Procedure was filed on March 18 by Representatives Rob Bryan (Mecklenburg), Paul “Skip” Stam (Wake), Robert Brawley (Iredell), and Phil Shepard (Onslow). The bill would standardize procedures for collections and enforcing claims of lien, stabilize title issues by validating past nonjudicial foreclosures, and makes other technical corrections to the Condominium and Planned Community Acts. HB 331 was recommended by the Real Property Section of the NC Bar Association and is part of the Bar Association’s legislative agenda. HB 331 passed the House on May 1 and was referred to the Senate Judiciary II Committee.

(4) House Bill 793: HOA’s/Fidelity Bonds was filed on April 10 by Representatives Jason Saine (Lincoln), Rodney Moore (Mecklenburg), and Jonathan Jordan (Ashe/Watauga). The bill would require that HOA and condo associations with annual assessments of $100,000 or more maintain a fidelity bond insuring against theft or dishonesty equal to the annual operating budget, but not more than $1 million. Any management agent or company would have to be covered by a fidelity bond equal to the annual operating budget, but not more than $2 million. In addition, HB 793 would require an audit in the event: (1) the governing documents require an audit; (2) the associations has annual assessments of $250,000 or more; or (3) an audit is requested by majority vote of the board or by a vote of a majority of the unit owners present at a special or annual meeting. Both the fidelity bond and audit language would also be retroactive to older associations. HB 793 passed the House on May 16 and was referred to the Senate Commerce Committee.


(1) House Bill 175: No HOA’s Home Foreclosures was filed on February 27 by Representatives Rodney Moore (Mecklenburg), Kelly Alexander (Mecklenburg), Susi Hamilton (Brunswick/New Hanover), Larry Bell (suplin/Sampson/Wayne), Dana Bumgardner (Gaston), Susan Fisher (Buncombe), Larry Hall (Durham), Pricey Harrison (Guilford), Yvonne Lewis Holley (Wake), and Larry Pittman (Cabarrus). The bill would prohibit homeowner and condominium associations from foreclosing on association assessment liens. Associations would be limited to filing liens or bringing a lawsuit against delinquent owners.  HB 175 was referred to the House Judiciary Committee, Subcommittee A.

(2) House Bill 553: Amend Carteret County Occupancy Tax was filed on April 3 by Representative Pat McElraft (Carteret/Jones).  This local bill would allow Carteret County to levy an additional one percent room occupancy and tourism development tax on the “rental of any room, lodging, or similar accommodation furnished by any . . . condominium . . . within the county that is subject to sales tax imposed by the State.” HB 553 was referred to the House Committee on Government, which reported it favorably, and then was re-referred to the Committee on Finance.

(3) House Bill 871: Regulate Community Association Managers was filed on April 11 by Representatives Rodney Moore (Mecklenburg), Frank Iler (Brunswick), Kelly Alexander (Mecklenburg), William Brawley (Mecklenburg), Beverly Earle (Mecklenburg), Elmer Floyd (Cumberland), Yvonne Lewis Holley (Wake), and Mitchel S. Setzer (Catawba).  The bill would allow the Real Estate Commission to regulate community association property managers. Beginning October 1, 2013, no person would be permitted to act as a community association property manager without being a licensed real estate broker. No management contracts could exceed one year, and all would have to include an “escape clause” (that term is not defined). In addition, the bill would require that all community associations register with the Real Estate Commission annually with the names and addresses of board members, the name of the real estate broker managing the association, and by paying $100. HB 871 was referred to the Committee on Rules, Calendar and Operations of the House.

(4) House Bill 883: Education Required/Community Association Board Members was filed on April 11 by Representatives Rodney Moore (Mecklenburg) and Kelly Alexander (Durham).  The bill would amend the laws regulating real estate brokers and salespersons to require that board members of community associations complete four hours of training within 60 days of election on topics such as “the laws, management, and functions of community associations.” The bill is unclear as to whether it would apply to all condominiums and homeowner associations, regardless of when created. HB 883 was referred to House Judiciary Committee, Subcommittee B.

(5) Senate Bill 18: Amend Locksmith License Act was filed January 30 by Senators Stan Bingham (Davidson/Montgomery), Bill Cook (Beaufort/Camden/Currituck/Dare/Gates/Hyde/Pasquotank/Perquimans), Clark Jenkins (Bertie/Chowan/Edgecombe/Hertford/Martin/Northampton/Tyrrell/Washington), and Gene McLaurin (Anson/Richmond/Rowan/Scotland/Stanly). The bill would amend the Locksmith Licensing Act to require that any person providing locksmith services for a “multi-family unit, such as an apartment or condominium” must be licensed or face a misdemeanor or a felony, depending on the offense. SB 18 was referred to the Senate Finance Committee.

(6) Senate Bill 54: Time for Recording Foreclosure Notice was filed on February 5 by Senator Malcolm Graham (Mecklenburg). The bill would require that in case of foreclosure, the commissioner or trustee must record a notice of foreclosure with the Register of Deeds within 60 days after filing the final report on the sale of the property. SB 54 was referred to the Judiciary II Committee, reported out favorably, withdrawn from the calendar several times, and finally re-referred to Judiciary II.

If you have questions about a specific bill, feel free to contact us. I’ll try to provide more information as the session proceeds.

HOA & Condo Associations