NC 2013 Community Association Legislative Update

With about half of this year’s portion of the 2013-2014 North Carolina Legislative Session over, now seems a good time to review some of the community association related bills introduced so far. Most of the following have only been filed and received little discussion, so it’s hard to know where things may head. Also, things in the General Assembly can be hectic, so I hope everything is accurate (a link is attached at the end of each paragraph to take you to details on any specific bill).

Proposed NC Community Association Bills

If adopted, the bills listed below would in some way impact homeowner or condominium associations in North Carolina (most recently filed bills are listed first):

(1) 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.

(2) 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.

(3) 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 in excess of $100,000 maintain a fidelity bond in the amount of $1 million. Any management company would have to be covered by a fidelity bond of $1 million or more. In addition, all associations with annual assessments of more than $250,000 would be required to have an independent financial audit annually. If adopted, the bill amends both the Planned Community Act and Condominium Act to apply to all associations, regardless of when created. HB 793 has been referred to the House Judiciary Committee, Subcommittee B.

(4) 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 has been referred to the House Committee on Government.

(5) 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 has been referred to the House Judiciary Committee, Subcommittee A.

(6) 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 has been referred to the House Judiciary Committee, Subcommittee B.

(7) 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 would require that owners of condominiums or HOA’s afford access through limited common elements when necessary to conduct maintenance, repair or replacement activities. In addition, the bill provides that any amendment to an HOA declaration adopted by the association (regardless of when the association was created) that follows the provisions of the Planned Community Act or the procedures provided in the declaration would be presumed valid and enforceable. If adopted, the bill provides that it’s amendments to the Planned Community Act apply to all HOA’s, regardless of when created. SB 228 has passed both the Senate and the House.

(8) 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 has been referred to the House Judiciary Committee, Subcommittee A.

(9) 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 has been referred to the Senate Finance Committee.

If you have questions about a specific bill, feel free to contact me.  Additional updates on North Carolina community association legislation will be made as the legislative session progresses.

HOA & Condo Associations