HOAs play a vital role in maintaining community standards and enhancing the quality of life for residents. However, navigating the legal landscape surrounding HOAs can be complex.
In addition to the association’s governing documents, HOAs are subject to state and federal legislation that shapes their operations and responsibilities. Misunderstanding the laws that govern these associations can lead to costly litigation, potential fines, and strained relationships within the community.
In this article, we explore state legislation affecting HOAs in North and South Carolina. We also discuss recent legislative updates and compliance strategies.
Contents
- Legislation Affecting HOAs in N.C.
- Legislation Affecting HOAs in S.C.
- Governing Acts for Condominiums
- Open Meetings Law in the Carolinas
- 2024 HOA Legislation Updates
- Compliance Strategies for HOA Boards
Legislation Affecting HOAs in North Carolina
In N.C., the most significant piece of legislation impacting HOAs is the North Carolina Planned Community Act.
This statute applies to all planned communities created on or after January 1, 1999, with the exception of communities with 20 or fewer lots. (These smaller communities are regulated by their own governing documents instead.)
Key features of the act include:
Formation of HOAs
The PCA outlines the process for establishing a homeowners association, requiring the creation of governing documents, such as declarations and bylaws.
Transparency and Disclosure
The act mandates that all governing documents be made available to prospective buyers, ensuring they understand the community’s rules before purchasing property.
Member Rights and Responsibilities
The PCA defines the rights of homeowners, including their ability to participate in meetings and vote on significant issues. It also outlines the responsibilities of homeowners regarding the payment of assessments and adherence to community rules.
Meetings and Governance
The act calls for meeting notices to be provided to all members in advance. Minutes must also be recorded and made available to members.
Assessment Collection
The act sets forth procedures for collecting assessments, allowing associations to enforce timely payment while providing homeowners with protections against unfair practices.
Amendments to Governing Documents
The PCA includes provisions for amending governing documents, allowing communities to adapt to changing needs and preferences.
Additional Legislation in N.C.
HOAs in North Carolina may also be subject to:
- The North Carolina Nonprofit Corporation Act: This legislation governs the formation and operation of nonprofit entities, including HOAs.
- The North Carolina Debt Collection Act: The North Carolina Debt Collection Act regulates how debts, including unpaid assessments, can be collected by HOAs.
Legislation Affecting HOAs in South Carolina
The South Carolina Homeowners Association Act governs the state’s HOAs. This legislation outlines requirements for:
Filing Governing Documents
HOAs must file their governing documents, including bylaws and rules, with the appropriate county office.
Meeting Notices
The act mandates that associations provide advance notice of meetings to all members.
Disclosure for Homebuyers
HOAs are required to disclose key information to prospective homebuyers, including fees, rules, and any pending litigation.
Record Keeping
Associations must maintain accurate records of financial transactions, meeting minutes, and member communications.
Member Rights
The act outlines the rights of homeowners, including the right to access association records and participate in meetings.
Assessment Collection
Procedures for collecting assessments are established, providing guidelines for notifying members of delinquent payments and enforcing collection measures.
Additional Legislation in S.C.
HOAs in South Carolina may also be subject to:
- The South Carolina Nonprofit Corporation Act: This legislation governs the formation and operation of nonprofit organizations, including HOAs, in the state.
- South Carolina Consumer Protection Code: The South Carolina Consumer Protection Code aims to protect consumers from unfair or deceptive practices.
- South Carolina Uniform Act Regulating Traffic to Private Roads: This act grants HOAs the authority to implement and enforce rules regarding traffic control and safety measures.
Governing Acts for Condominiums
Condominium associations are often subject to specific legal regulations that address the inherently communal nature of condo living.
North Carolina
In North Carolina, condo associations formed after October 1, 1986, are regulated by the North Carolina Condominium Act (NCCA). This piece of legislation mirrors the PCA, providing a comprehensive framework for the formation, governance, and management of condominium communities.
All condo associations formed earlier than October 1, 1986, are subject to the North Carolina Unit Ownership Act. This act is very similar to the NCCA but less comprehensive.
South Carolina
The South Carolina Horizontal Property Act governs condominiums in the state, establishing a legal framework for the creation, management, and operation of condominiums.
The act outlines the responsibilities of the condominium association, such as maintaining common areas and collecting assessments. It also grants unit owners access to financial records and participation in meetings, promoting fair governance within the community.
Open Meetings Law
Open meetings law mandates certain gatherings of governmental bodies and organizations, like HOAs, be conducted in a transparent manner.
North Carolina
In North Carolina, open meetings law (N.C.G.S. § 47F-3-108) requires that HOAs conduct their meetings in a manner that promotes transparency and member participation. Key stipulations include but are not limited to:
- Accessibility: All members must be allowed to attend meetings.
- Notice of Meetings: HOAs must provide advance notice of meetings, detailing the time, date, and location.
- Recording Minutes: Minutes of all meetings must be recorded and made available to members.
- Open Voting: Votes on significant issues must be conducted openly.
South Carolina
There is no statutory requirement for “open meetings by boards” in South Carolina. However, it’s a best practice for HOAs to conduct meetings that are open to observation by members.
That said, associations may adopt their own in-house provisions for open meetings. Examples may include:
- The secretary should distribute an agenda for regular meetings at least three days in advance.
- The agenda must be made accessible to all members through a bulletin board or website.
- Relevant documents should be provided to board members alongside the agenda.
- Board meetings should take place in public venues that are comfortable for members.
- A member comment period of 15 to 30 minutes should be held at the start of each meeting for members to share their input. After the member comment period, member participation in the meeting is not permitted.
- Alcoholic beverages are not allowed at board meetings.
- For sensitive topics, the board may enter an executive session, limiting attendance to board members and relevant guests, without taking votes.
- Minutes should be finalized, signed by the designated person, and the adoption date noted. Adopted minutes must be posted publicly.
2024 HOA Legislation Updates
Since state legislation is continually evolving, board members must keep a close eye on new or modified laws that may affect HOA governance.
North Carolina
Key bills currently being monitored by the Community Associations Institute include:
- HB 959: If passed, the bill will make various policy changes to the PCA and NCCA, mandate pre-litigation mediation of disputes between HOAs and their members, and require the Department of Justice to collect and report on complaints.
- HB 542: When initially proposed, this bill required a community member to have a minimum $2,500.00 delinquency in unpaid assessments (or one year’s assessments, whichever is lower) prior to an HOA filing a lien. The bill has since expanded to include language on everything from parking to management contracts.
- SB 376: This proposed bill aims to expand the rights of owners to review all contracts entered into by their association.
- SB 312: This proposed legislation eliminates the power of an association to foreclose on a claim of lien for unpaid assessments.
- HB 311: This proposed bill would establish a Community Association Oversight Division, which would be part of the North Carolina Attorney General’s office.
South Carolina
In June, during the 125th South Carolina General Assembly, legislators signed two bills into law that directly impact HOAs. These include:
- H. 4049: Under this new bill, HOAs in South Carolina can conduct virtual membership meetings. Members can also participate remotely, voting by electronic methods.
- S. 881: This bill targets practices where companies attempt to bind current and future owners to specific vendors, such as realtors, through recorded documents that run with the land.
Compliance Strategies for HOA Boards
Ensuring compliance with state laws is crucial for HOAs to function effectively and maintain the trust of their members. Here are several strategies that HOA boards can implement to remain compliant with relevant legislation.
Education and Training
HOA board members should prioritize education on state laws, particularly those affecting community governance. Regular training sessions can be organized to familiarize board members with their roles, responsibilities, and the legal framework within which they operate.
Review Governing Documents
Regularly reviewing the association’s governing documents is essential. These documents should align with state laws and reflect any updates or changes in legislation.
Regular Communication with Members
Open communication with HOA members is vital for compliance. Regular newsletters, meetings, and updates can keep members informed about ongoing issues and legal changes.
Seek Legal Counsel
Attorneys knowledgeable in HOA law can provide guidance on compliance matters and also assists in reviewing governing documents, drafting new policies, and making sure the board understands the legal ramifications of their decisions.
Empower Your Board Through Education and Training
As a board member, you have a duty to stay informed about the latest laws and regulations affecting HOA governance. Unfortunately, fast-paced changes in legislation can make it challenging to keep up, leading to potential compliance issues.
To help HOAs understand the legal landscape, Community Association Management offers comprehensive HOA training programs. Our educational resources equip board members with the knowledge needed to manage complex legal requirements and lead with confidence. By investing in training, your association can improve operations, foster member engagement, and ensure adherence to state laws.
To learn more about our training and education programs, contact us online or give us a call at 888-565-1226.
