House committee substitute makes the following changes to the 1st edition.

Changes the long title.

Amends the fidelity bond requirements of GS 47C-3-113.1 of the North Carolina Condominium Act and GS 47F-3-113.1 of the North Carolina Planned Community Act, providing that fidelity bonds required by these sections must provide coverage in an amount at least equal to the annual operating budget of the association, but is not required to be greater than $5 million (was, bond must provide coverage in the amount of $1 million).

Amends GS 47C-3-118(a) and GS 47F-3-118(a), deleting language that established that an audit or extensive review or compilation of the books and records for the current or preceding fiscal year could be required by a vote of the majority of the board or by affirmative vote of a majority of unit or lot owners at an annual meeting or any special meeting properly called.

Enacts GS 47C-3-118.1 and 47F-3-118.1, Financial audit requirements, providing that the executive board must provide for an annual independent financial audit of the unit or lot owners' association if any of three specified conditions are met, including:

(1) The declaration, bylaws, or other governing documents expressly require conducting an annual financial audit.

(2) The association has annual revenues or expenditures of $250,000 or more.

(3) An audit is requested by a vote of a majority of the board or by a vote of a majority of the unit or lot owners present and voting in person or by proxy at any annual meeting or special meeting duly called for that purpose.

Requires the board to provide for an annual independent financial audit of the association if annual revenues or expenditures reach or surpass $150,000. The audit must be completed no later than one year after the end of the association's fiscal year and must be made available to unit or lot owners within 30 days after its completion.