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