In 2023, a torrent of proposed legislation targeted community associations and their management companies.
In response, the North Carolina Legislative Action Committee (NC LAC) of the Community Associations Institute took action to protect community associations from potentially harmful laws.
Of the more than 1600 bills introduced, 24 would have directly affected community associations, according to the Community Associations Institute of North Carolina (CAI-NC). Tirelessly, the NC LAC undertook the task of enlightening legislators on the far-reaching consequences that these measures could impose on HOAs.
"We fulfill the crucial role of being the vigilant eyes and attentive ears for community associations, particularly concerning proposed legislations," noted Ward and Smith attorney Madeline Lipe, who also serves as Secretary of the NC LAC. "Our responsibilities encompass meticulously tracking bills, meticulously analyzing their potential impact on community associations, and engaging in constructive dialogue with legislators to educate them on the practical implications of proposed laws."
The NC LAC's efforts have yielded success thus far, as several bills will be carried over to 2024, creating opportunities for further amendment. Here's a comprehensive overview of the bills that the organization has diligently worked to defeat:
HB 542 – HOA Revisions/Foreclosure Trustee Auctions
The NC LAC strongly opposed this legislation and successfully advocated to amend it, removing specific stipulations that would have negatively impacted community associations. Such stipulations include delaying fee collection, making it harder for some associations to pay bills on time, and precluding the filing of a lien until the account balance was $2,500 overdue. This bill was amended several times to include various provisions regarding limits on the term and renewals of management contracts, regulation of common elements, records access, hearing procedures, removal of the ability to lien for failing to pay fines, and fees for preparing lender questionnaires. The bill has been carried over to 2024 for further amendments.
HB 551/SB 553 – Landlord-Tenant and HOA Changes
This bill seeks to change the applicability of declaration amendments, particularly with respect to rental restriction, to different owners depending on when the lot or unit was conveyed – creating a patchwork system of inconsistent governance. The NC LAC opposed this legislation, with the primary concern being a provision posing a significant threat to the community association housing model. This bill has also been carried over to 2024.
SB 376 – Expanding Members’ Access to HOA Records
This proposed bill aims to expand the rights of owners to review all contracts entered into by their association. The NC LAC supported provisions regarding the right to review management contracts and made proposals to amend its language to exclude specific financial terms. This bill has also been carried over to 2024.
SB 312 – Changes to Liens and Foreclosures by HOAs
This bill seeks to eliminate community association's ability to foreclose on properties for unpaid assessments (i.e., dues). Community associations are obligated to provide upkeep to common property and in many instances, to offer services to all residents, including those residents who do not pay their assessments. The NC LAC opposed this legislation, which would put a strain on association budgets by removing the authority of community associations to foreclose for unpaid assessments. The bill has been carried over to 2024.
HB 311 – Community Association Oversight Division
This proposed legislation sought to establish a Community Association Oversight Division. The LAC opposed this legislation as it discovered this bill was in response to an isolated incident whereby a group of owners complained over a passed special assessment in one community association. In that instance, the governing documents of the community association gave the Board of Directors specific authority to levy the special assessment without a member vote. The NC LAC took the position that an isolated incident such as this, does not warrant a legislative response creating a statewide agency to oversee community associations.
"The impact of the NC LAC's work cannot be overstated," affirmed Ward and Smith Community Associations Practice Group Leader and President-Elect of the CAI-NC Board of Directors, Adam Beaudoin. "By staying involved in the legislative process and advocating for community associations, we are safeguarding the rights and interests of homeowners, managers, and community association professionals in the state."
With over 14,400 community associations, North Carolina is poised to witness the community association housing model emerge as the most common form of housing by 2040. This trajectory underscores the significance of the work undertaken by NC LAC.
"Community associations play a critical role in the state's economy and housing market, providing valuable services to homeowners and contributing significantly to the overall well-being of neighborhoods," remarked Madeline. "The NC LAC is dedicated to protecting these vital organizations, ensuring their continued success for years to come."
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© 2024 Ward and Smith, P.A.
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.
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