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Legislative Update: Transfer of Special Declarant Rights Bill Adopted

Jim Slaughter

Jim Slaughter

The N.C. General Assembly is about to wrap up its two-year legislative session, so bills are flying around.  In my legislative update of 2013 activity (www.lawfirmcarolinas.com/blog/nc-community-association-2013-legislative-roundup/), I noted several bills that while not adopted were still eligible for consideration in the 2014 Short Session.  One of those, House Bill 330 (“Planned Community Act/Declarant Rights”) was signed into law by the Governor yesterday (Monday, July 7).

HB 330, which was originally sponsored by Representatives Rob Bryan (Mecklenburg), Paul “Skip” Stam (Wake), Tom Murry (Wake), and John Szoka (Cumberland), was intended to clarify language in the Planned Community Act as to the transfer of special declarant rights.  The reason such language was needed is that  while the model Planned Community Act on which North Carolina’s Act is based has such language, those provisions were removed from North Carolina’s statute when it was adopted in 1999.  As a result, North Carolina’s statute dealing with declarant rights has only provided that:

NC General Statute § 47F-3-104.  Transfer of special declarant rights.
Except for transfer of declarant rights pursuant to foreclosure, no special declarant right (G.S. 47F 1 103(28)) may be transferred except by an instrument evidencing the transfer recorded in every county in which any portion of the planned community is located.  The instrument is not effective unless executed by the transferee. (1998 199, s. 1.)

The problem with this prior language is that it provided little direction except in instances of a written agreement transferring rights from a declarant to a successor declarant.  Our firm has regularly argued over and litigated issues of whether there is a declarant and what rights/responsibilities that declarant might have in instances of foreclosure, bankruptcy, or declarant insolvency.  The new statute should help resolve such disputes.

The new statute is complicated, so rather than summarize it here, the full wording can be found at www.ncleg.net/Sessions/2013/Bills/House/PDF/H330v3.pdf.   The declarant rights statute takes effect immediately (except as to pending litigation) and applies to all planned communities, regardless of whether the association was created prior to or after enactment of the Planned Community Act on January 1, 1999.

If you’re interested, the full history (and various amendments) of the proposal can be found at www.ncleg.net/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=HB330&submitButton=Go.

If other proposals are considered during the remainder of the session, we’ll provide additional legislative updates.

Author: Jim Slaughter
Articles have been Reprinted with permission from Black, Slaughter, Black.

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