Key provisions of new N.C. HOA legislation

The Committee was formed last year to examine the issues facing HOAs and homeowners, and to make recommendations to the General Assembly on changes to existing HOA laws. The report includes draft legislation likely to be introduced in the near future. Here’s a summary of the key provisions of the proposed legislation:

• HOAs will be required to cancel liens filed against an owner’s property within 30 days of payment of the debt in full. Failure to do so can result in a $1,000 fine against the HOA..

• HOAs will be required to provide an independent annual financial review of the HOA’s financial statements within 90 days of the end of the fiscal year. A financial audit (more extensive than a review) will be required for HOAs with an annual budget of $400,000 or more if their governing documents require an audit, or if requested by a majority of the HOA members or board of directors.

• HOA members will be able to vote at member meetings in person, by proxy, or by absentee ballot. Current law does not provide for voting by absentee ballot. If a vote is taken without an actual meeting of the owners, voting may be by electronic or paper ballots.

• A single person may not cast proxy votes totaling more than 15 percent of the total votes in the association.

• Voting on issues that affect only a portion of the homeowners may be restricted to only those owners affected.

• Alternative dispute resolution of HOA-related issues will be specifically allowed if both parties agree.

• Community Association Managers will be required to obtain a license from the state. Obtaining a license will require passing a state-administered exam, or earning a professional certification from one of a number of nationally recognized property-management organizations. Managers will also have to obtain insurance or a fidelity bond of at least $20,000, and continuing education will be required of licensed managers.

• Persons who have been actively engaged as community-association managers for at least three years will not be required to pass an exam or provide proof of one of the listed professional designations in order to obtain a license.

• HOAs consisting of 20 or more residential units or lots will be required to register with the state and pay an annual fee of no more than $50.

Keep in mind that this is only a draft bill, and once it is introduced in the legislature, there are likely to be some changes made to it.

However, the draft bill is a good indication of the “hot button” issues that the Committee on Homeowners’ Associations felt needed to be addressed based on the input received from the public meetings. The full report, along with minutes of the public meetings, can be found on the Committee’s Web site: http://bit.ly/K7nppQ.

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