Like most everything else in 2020, this year’s legislative session has not been typical. This is the second legislative year of the 2019-2020 Session. Normally, some of the bills that survived “crossover” in 2019 (see NC Community Association Legislative Update – May 10, 2019) would be tweaked and considered, but new significant legislation is not all that common in the second year of a session. Due to the COVID-19 pandemic and everything related to that, the financial crisis, and numerous social issues that risen to the forefront, the focus of this year’s legislative session has mostly been on new proposals unrelated to community associations.
Below are summaries of current proposals that would impact North Carolina’s homeowner and condominium associations. For any significant adopted proposal, our firm will do a fuller review as part of our HOA/Condo blogs.
(1) House Bill 594: HOAs – “Leased Properties” was a bill that would have limited the ability of homeowner associations to restrict rentals. Bills that survive crossover are sometimes changed to completely different subjects, which allows them to bypass usual crossover concerns. The title and subject of House Bill 594 was changed this year to “Temporarily Open Gyms/Health Clubs/Fitness Centers,” and it no longer has anything to do with community associations.
(2) House Bill 806: “HOA/Condo Pool Opening Limited Immunity.” HB 806 was originally introduced as “HOA/Condo Crime & Fidelity Insurance Policies” and would have required certain HOA/Condo crime and fidelity coverage. Amendments have been made both to the title and purpose of the legislation. HB 806 would now shield owners, operators and agents of community association pools from claims for injury or death resulting from transmission of COVID-19 alleged to have resulted from the reopening of the pool. To obtain such immunity, certain conditions must have been met. The pool must have been opened “in accordance with” applicable Executive Orders. The bill also does not provide protection in the event of gross negligence, wanton conduct, or intentional wrongdoing. (FYI, due to the passage of the more general HB 118 below, there may be less need for a pool-specific law.) Because of differences between the adopted House version and the adopted Senate version of HB 806, it is presently in conference committee for review.
The full bill can be found at https://www.ncleg.gov/BillLookUp/2019/HB%20806
(3) House Bill 118: “COVID-19 Liability Safe Harbor” began in 2019 as a bill to change first responder laws. In its current form, HB 118 shields business and nonprofit corporations, including nonprofit community associations, from claims arising from the contraction of COVID-19. Like HB 806 dealing with pools, the bill does not provide protection in the event of gross negligence, willful or wanton conduct, or intentional wrongdoing. As of June 24 HB 920 has been passed by both the House and Senate, ordered enrolled (which is a legislative process), and sent to the Governor for signing.
The full bill can be found at https://www.ncleg.gov/BillLookUp/2019/HB118
(4) House Bill 920: “Condominium Association Changes” would make numerous changes to the NC Condominium Act regarding the creation of condominiums and the content and amendment of condominium declarations. Most of these are technical and being done at the request of title companies and developers in hopes of better creating and identifying the condominium. However, the bill also provides that:
- If no time limit is placed on developer or special declarant rights, such rights would expire 7 years from when the declaration was recorded; however, a 67% vote of the association (excluding the Declarant) could extend such development or special declarant rights for up to 10 years
- “Ambiguities, errors, or inconsistencies in the condominium instruments” could be corrected through a judicial reformation process
- Various provisions of the NC Condominium Act would be conformed to the NC Planned Community Act governing homeowner associations, including:
- Directors could be removed by a majority vote of all persons present and entitled to vote at any meeting of the unit owners at which a quorum is present (versus the current 67% vote requirement).
- Association meetings would have to be noticed with “not less than 10 nor more than 60 days” notice (currently, statute says not more than 50 days).
- Budget ratification meetings would have to be held “not less than 10 nor more than 60 days” after mailing of the budget summary (versus the current not less than 14 days nor more than 30).
- In the event business cannot be conducted at any condominium membership meeting because a quorum is not present, quorum would be halved at continuations of that meeting.
- In the event any common expense is caused by the misconduct of any unit owner or occupant, the association would be able to assess that expense against the unit of that owner or occupant.
As of June 24 HB 920 has been passed by both the House and Senate, ordered enrolled (which is a legislative process), and sent to the Governor for signing.
The full bill can be found at https://www.ncleg.gov/BillLookUp/2019/HB%20920
The NC Legislative Action Committee (NC-LAC) is a committee of the Community Associations Institute. The NC-LAC monitors and influences legislation that affects community associations and its members talk with legislators on issues of concern to HOAs and condos. Two of our firm’s attorneys, Steve Black and Harmony Taylor, serve as volunteers on the LAC. To properly do its job, the NC-LAC needs funds for letters, mailings and other costs. Please consider a contribution to the NC-LAC by visiting 12 Reasons Why You Should Donate to NC-LAC.
For questions on any of the above bills, feel free to contact me or another attorney at our firm. Additional information will be posted if there are developments on any of these legislative proposals.
Author: Jim Slaughter
Articles have been Reprinted with permission from Black, Slaughter, Black.
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