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NC Community Association Legislative Update – April 18, 2023

Ah, Spring has arrived! Bees are buzzing. Birds are singing. The deadline for filing HOA/condo bills in the legislature has arrived….

For the current two-year session of the NC General Assembly (2023-2025), several important dates have just passed. There are exceptions to all rules, but generally the filing deadline for Public Bills in the North Carolina Senate and House ended at 3 pm today. That makes now a good time to look at proposed legislation that, if adopted, would impact North Carolina’s homeowner and condominium associations.

The following bills are not in order of the impact they would have upon North Carolina’s almost 15,000 community associations, but are listed in order of filing date:

(1) House Bill 183: WC/Sole Proprietors Must Have Coverage

HB 183 was filed on February 22, 2023, by primary sponsors Rep. Kelly Alexander (D-Mecklenburg) and Rep. Nasif Majeed (D-Mecklenburg). Other sponsors include Rep. John Autry (D-Mecklenburg), Rep. Carla Cunningham (D-Mecklenburg), Rep. Wesley Harris (D-Mecklenburg), Rep. Pricey Harrison (D-Guilford), and Rep. Frances Jackson (D-Cumberland).

The bill would provide that a sole proprietor performing any work would have to “maintain a workers’ compensation insurance policy in effect at all times. This requirement applies even if the sole proprietor employs no other employees.” The bill notes that the definition of “employee” does not include “any person elected or appointed and empowered as an executive officer, director, or committee member” of “a nonprofit corporation subject to Chapter 47A [the Unit Ownership Act], 47C [the NC Condominium Act], 47F [the NC Planned Community Act], 55A [the NC Nonprofit Corporation Act] . . . who performs only voluntary service for the nonprofit corporation, provided that the person receives no remuneration for the voluntary service other than reasonable reimbursement for expenses incurred in connection with the voluntary service.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/H183.

(2) House Bill 311: Community Association Oversight Division

HB 311 was filed on March 8, 2023, by primary sponsors Rep. Frank Iler (R-Brunswick). Other sponsors include Rep. John Autry (D-Mecklenburg), Rep. Carla Cunningham (D-Mecklenburg), Rep. Wesley Harris (D-Mecklenburg), Rep. Pricey Harrison (D-Guilford), and Rep. Frances Jackson (D-Cumberland).

The bill would create a “Community Association Oversight Division” within the North Carolina Attorney General’s Office. This new Division would be “available to assist a homeowner in a community governed by a community association to

  1. determine whether the community association is acting in accordance with all applicable laws set forth in Chapters 47C [NC Planned Community Act], 47F [NC Condominium Act], and 55A [NC Nonprofit Act] of the General Statutes and
  2. remedy any violations the Division determines to have been made by the community association by taking all steps the Division deems necessary, including commencing legal proceedings against the community association.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/H311.

(3) Senate Bill 312: Changes to Liens and Foreclosures by HOAs

SB 312 was filed on March 14, 2023, by primary sponsor Sen. Kandie Smith (D-Edgecombe, Pitt). Other sponsors include Sen. Val Applewhite (D-Cumberland) and Sen. Gladys Robinson (D-Guilford).

The bill would amend the assessment collection provisions of the NC Planned Community Act (NGSS 47F) and the NC Condominium Act (NCGS 47C) in various ways, including to (a) require that notice of a claim of lien be served by certified mail (rather than first class mail), and (b) eliminate all associations’ ability to foreclose for nonpayment of assessments.

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/S312.

(4) Senate Bill 344 / House Bill 422: Unfair Real Estate Agreements Act

SB 344 was filed on March 21, 2023, by primary sponsors Sen. Joyce Krawiec (R-Forsyth, Stokes), Sen. Brad Overcash (R-Gaston), and Sen. Paul Lowe (D-Forsyth). Other sponsors include Sen. Mary Wills Bode (D-Granville, Wake), Sen. Amy Galey (R-Alamance, Randolph), Sen. Timothy Moffitt (R-Henderson, Polk, Rutherford), and Sen. Buck Newton (R-Greene, Wayne, Wilson).

An identical House version, HB 422, was filed on March 21, 2023, by primary sponsors Rep. Kyle Hall (R-Forsyth, Stokes), Rep. Charles Miller (R-Brunswick, New Hanover), Rep. Hugh Blackwell (R-Burke), and Rep. Vernetta Alston (D-Durham). There are 22 additional sponsors.

The proposal is focused on prohibiting unfair real estate service agreements for resident real estate. It does that by making void any “real estate service agreement” that is to be in effect for more than one year and either expressly or implicitly aims to do any of the following:

  1. Run with the land or bind future owners of residential real estate identified in the real estate service agreement.
  2. Allow for assignment of the right to provide services without notice or consent of the owner or buyer.
  3. Create a lien, encumbrance, or other real property security interest.”

While not focused on community associations, there are contracts (by way of example: bulk service agreements, internet service agreements, pond maintenance agreements, road maintenance agreements, services initially provided by developers, or rentals of condominium rooftops for cell towers) that are filed with the county real estate records that might be invalidated as improper “real estate service agreements.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/S344.

(5) Senate Bill 376: Expanding Members’ Access to HOA Records

SB 376 was filed on March 27, 2023, by primary sponsor Sen. Todd Johnson (R-Cabarrus, Union). Other sponsors include Sen. Gale Adcock (D-Wake), Sen. Bobby Hanig (R- Bertie,  Camden,  Currituck,  Gates,  Halifax,  Hertford,  Martin,  Northampton,  Tyrrell,  Warren), Sen. Julie Mayfield (D-Buncombe), Sen. Timothy Moffitt (R- Henderson,  Polk,  Rutherford), Sen. Mujtaba Mohammed (Mecklenburg), Sen. Natalie Murdock (D-Chatham, Durham), and Sen. Gladys Robinson (D-Guilford).

The bill would amend the NC Planned Community Act (NCGS 47F) and the NC Condominium Act (NCGS 47C) to provide that, upon written request, a community association must furnish to an owner or the owner’s authorized agents “the contract(s) between the association and the community association manager relating to the management of the association.” The owner requesting the record must be provided either “a physical copy of the contract or with an agreeable time to review the contract in person.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/S376.

(6) Senate Bill 423: Homeowner Solar Expansion Act

SB 423 was filed on March 29, 2023, by primary sponsors Sen. Sydney Batch (D-Wake), Sen. Michael Garrett (D-Guilford), and Sen. Natasha Marcus (D-Mecklenburg). Other sponsors include Sen. Gale Adcock (D-Wake), Sen. Rachel Hunt (D-Mecklenburg), Sen. Julie Mayfield (D-Buncombe), Sen. Graig Meyer (D- Caswell,  Orange,  Person), Sen. Natalie Murdock (D-Chatham, Durham), Sen. Gladys Robinson (D-Guilford), Sen. Kandie Smith (D- Edgecombe,  Pitt), and Sen. Joyce Waddell (D-Mecklenburg).

The bill would amend the current statute regulating solar panels in planned communities in several ways. First, the existing language that allows an association to prohibit solar panels that are visible by a person on the ground at certain locations is removed. Instead, associations would be prohibited from regulating or prohibiting solar panels within the association if the decision has the effect of “reducing the operating efficiency of a solar collector,” which is defined as any regulation of the “of the location or screening of the solar collector [that decreases] the efficiency or performance of the solar collector by more than ten percent (10%) of the amount that was originally specified for the solar collector.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/S423.

(7) House Bill 542: Protect Homeowners’ Rights

HB 542 was filed on March 30, 2023 by primary sponsors Rep. Ya Liu (D-Wake, Primary), Rep. Mark Brody (R-Anson/Union, Primary), Rep. Steve Tyson (R-Craven, Primary), and Rep. Frank Iler (R-Brunswick, Primary). There are twenty additional sponsors.

The bill would prohibit the filing of a lien against an owner for not paying obligatory assessments unless the amount is $2,500 “or one year of unit owners’ association assessments, whichever is lesser.” Before filing a claim of lien, the current law is that notice of delinquency must be sent by U.S. Mail. This proposal would require that notice be sent to the “physical mailing address, current electronic mailing address, and current telephone number.” If either the physical address or email address of the owner are unavailable, the bill adds this additional requirement:

“If the association is unable to locate the current physical mailing address or current electronic mailing address of the unit owner, the association shall contact the closing attorney who represented the unit owner in the real estate transaction for the property as indicated in public records and attempt to obtain the contact information from that person. Nothing in this subsection shall prevent the person responsible for providing the contact information from seeking reasonable compensation for the procurement process.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/H542.

(8) Senate Bill 529: Various Changes to Nonprofit Corporations Act

SB 529 was filed on April 3, 2023, by primary sponsors Sen. Timothy Moffit (R- Henderson,  Polk,  Rutherford), Sen. Mike Woodard (D-Durham), and Sen. Ted Alexander (R- Cleveland,  Gaston,  Lincoln).

The bill would make numerous changes to the NC Nonprofit Corporation Act, including the requirement that all nonprofit corporations file an annual report with the Secretary of State in electronic form each year, to include:

  1. The name of the corporation and the state or country under whose law it is incorporated.
  2. The street address, and the mailing address if different from the street address, of the registered office in this State, the county in which the registered office is located, the name and email address of its registered agent at that office, and a statement of any change of the registered office or registered agent.
  3. The address and telephone number of its principal office.
  4. The names, titles, and business street addresses of its principal officers and the name, mailing address, email address, and telephone number of an individual who is authorized to provide information regarding persons with the authority to bind the corporation.
  5. A brief description of the nature of its activities. 
  6. An email address for the corporation, if different from the email address provided under subdivision (2) of this subsection.

In addition, the minimum required size of a board of directors would be changed from one (1) to three (3).

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/S529.

(9) Senate Bill 553 / House Bill 551: Landlord/Tenant and HOA Changes

SB 553 was filed on April 4, 2023, by primary sponsors Sen. David Craven (R-Anson, Montgomery, Randolph, Richmond, Union), Sen. Timothy Moffitt (R-Henderson, Polk, Rutherford), and Sen. Jim Perry (R-Beaufort,  Craven,  Lenoir).  Other sponsors include Sen. Bobby Hanig (R-Bertie,  Camden,  Currituck,  Gates,  Halifax,  Hertford,  Martin,  Northampton,  Tyrrell,  Warren) and Sen. Tom McInnis (R-Cumberland,  Moore).

An identical House version, HB 551, was filed on April 3, 2023 by primary sponsors Rep. John Bradford (R-Mecklenburg), Rep. Jon Hardister (Guilford), and Rep. Kyle Hall (Forsyth, Stokes). Other sponsors include Rep. Kevin Crutchfield (R-Cabarrus,  Rowan), Rep. Frances Jackson (D-Cumberland), Rep. Jeffrey McNeely (R-Iredell), Rep. Joseph Pike (R-Harnett), Rep. Bill Ward (R-Camden,  Gates,  Hertford,  Pasquotank), and Rep. Harry Warren (R-Rowan).

The proposal is mostly focused on rental issues between landlords and tenants. However, the bill would also amend both the NC Planned Community Act (NCGS 47F) and the NC Condominium Act (NCGS 47C) so that any declaration amendments made by the members would “only affect lot owners whose lots are conveyed or transferred after the amendment takes effect. For amendments made while a lot owner owns a lot, the amendment has no effect until the lot is conveyed or transferred to another lot owner. A lot owner takes the lot subject to existing rules in the declaration at the time of conveyance or transfer of the lot.”

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/H551.

(10) House Bill 642: Marketable Title Act – Restrictive Covenants

HB 642 was filed on April 17 by primary sponsor Rep. Sarah Stevens (R-Surry,Wilkes).

The bill’s full title is “An Act to Clarify the Effect of Marketable Record Title upon Restrictive Covenants in the Marketable Title Act.” As you may recall, there was legislation adopted last year to clear up confusion as to the impact of the Marketable Title Act on community associations. (See NC Community Association Legislative Update – June 21, 2022) HB 642 leaves those fixes in place, but would also provide that that the MTA does not apply to “Restrictive covenants applicable to a general or uniform scheme of single-family or multifamily residential development, provided said covenants are otherwise enforceable.” It is not believe that this proposal impacts community association, but more information on the intent is necessary,

The full bill can be found at https://www.ncleg.gov/BillLookUp/2023/H642.

FYI, the NC Legislative Action Committee (NC-LAC) is a committee of the Community Associations Institute. The NC-LAC monitors and makes recommendations on legislation that affects community associations, and its members talk with legislators on issues of concern to HOAs and condos. Law Firm Carolinas partner Harmony Taylor is a volunteer on the LAC. To properly do its job, the NC-LAC needs funds for mailings, communications, and other costs. Please consider a contribution to the NC-LAC by visiting 12 Reasons Why You Should Donate to the NC-LAC.

If you have specific questions on any of the above bills, feel free to contact me or another attorney at our firm. If there are developments on these or other relevant legislative proposals, additional information will be posted.

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

* These articles and related content on this website are provided without warranty of any kind and in no way constitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).