Legislative Changes in North Carolina

The North Carolina legislature recently passed some new laws that will impact homeowners associations (HOAs). Below is a short summary of three of the laws that will become effective this year.

Voluntary mediation

House Bill 278 became effective July 1. This bill provides for voluntary mediation of disputes between an owner and the HOA in order to avoid litigation. The mediation is not mandatory, but if the parties choose to mediate, the legislation provides a framework for the process.

HOAs are now required to notify their members annually of the members’ right to request mediation of disputes with their HOA. The best way to provide this notice will likely be in annual meeting notices or postings on the HOA’s website.

New clarity

Senate Bill 228 overturns North Carolina case law that limited the extent to which HOAs can amend their declarations of conditions, covenants, and restrictions. As of Oct. 1, amendments to declarations adopted using the statutory procedure set forth in either the NC Condominium Act or Planned Community Act are presumed to be valid.

This change removes the uncertainty resulting from one appellate case that made it unclear how extensive amendments agreed to by homeowners could be. In addition, the articles of incorporation, bylaws, and the declaration, as long as they are not inconsistent with the statute, are all considered to give legal authority to the association.

This alleviates the concern of having to duplicate language granting certain authority to the association in all three documents. The new law also grants owners an easement across limited common elements and common elements if they need to cross them in order to perform maintenance on their homes.

Changes in foreclosure

Finally, House Bill 331 provides for some of the most significant changes with regard to HOA foreclosures. Beginning with foreclosures filed after Oct. 1, a trustee will now be appointed by the HOA to conduct the foreclosure. The HOA foreclosure process will be essentially the same as mortgage foreclosures.

The bill also contains many other provisions related to the collection of HOA assessments and the procedures that must be followed when giving notices to owners regarding the filing of claims of lien and foreclosures. I encourage HOA boards to review these new laws carefully in order to ensure your HOA is following the correct procedures.

The links below will direct you to full texts of the bills referenced above.
House Bill 278
Senate Bill 228
House Bill 331

Originally published in the Charlotte Observer on July 13, 2013.

2 thoughts on “Legislative Changes in North Carolina

  1. Would a centralized water distribution system ( underground piping extending from a limited number of wells) to each dwelling in a planned community be a “common facility” if it is maintained by Property owner annual fee assessments?

    • Probably. If the piping runs across/under individual lots, there should be language in the declaration granting the HOA an easement to enter those lots for purposes of repairing and maintaining the line. Same thing for wells – unless they’re located on HOA common area, in which case they almost certainly would be a common facility. Bottom line, it depends on how the language in the declaration treats the wells and piping; there may also be some reference to them on the recorded plat maps.

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