Bill Summaries: H542 HOA REVISIONS/FORECLOSURE TRUSTEE AUCTIONS. (NEW)

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  • Summary date: Sep 12 2023 - View Summary

    Senate amendment to the 3rd edition makes the following changes.

    Sections 1 and 5.

    Changes certain powers of the unit owners’ association (Association) under the NC Condominium Act (GS 47C-3-102) or a homeowners’ association (HOA) under the NC Planned Community Act (GS 47F-3-102) as follows.

    Now prohibits managing agent or other contractor/employee contracts from exceeding one year in duration or containing an automatic renewal provision that requires the Association/HOA to give notice of nonrenewal more than 30 days prior to the contract’s anniversary date (was, bar on automatic renewal of such agreements). Provides for termination of automatically renewable contracts upon 60 days notice by the Association/HOA.  Prohibits a managing agent from collecting from an Association/HOA or property owner any fee in connection with its collection of a fine imposed by the Association/HOA.  

    Prevents an Association/HOA from enforcing any restriction on parking of newly defined term, personal vehicle, on a public street or public road for which the NC Department of Transportation (DOT) or local government has assumed responsibility for maintenance and repairs, unless the Association/HOA has been delegated such enforcement (was, blanket bar on enforcement of parking restrictions on public roads/streets). Authorizes the Association/HOA to enforce such restrictions if the authority regulate parking has been expressly delegated to the Association/HOA by DOT or the local government. Specifies that such delegations are only valid for five years, after which the Association/HOA must reapply to the delegating authority. 

    Authorizes the Association/HOA to impose charges in connection with the preparation of a lender’s questionnaire or certification or a statement of unpaid assessments (was, reasonable charges in connection with the preparation of statements of unpaid assessments) which now must be furnished within 10 days (was, 10 business days) after receipt of the request. Makes conforming changes. Changes the time period triggering the expedited fee from when the request is made within 48 hours of closing to if the item is to be furnished less than 10 days after the receipt of the request. Specifies that charges for the preparation of the lender’s questionnaire or certification must be made by the requesting party. Prevents an Association/HOA or either of their managing agents (was just Association/HOA) from imposing a charge for administrative tasks required upon the transfer of title to a unit, except as authorized by GS 47C-3-102(12a) (Associations) or GS 47F-3-102(13a) (HOAs). Extends unfair trade and deceptive practice provisions to managing agents.

    Requires the Association/HOA to provide a fair, reasonable and expeditious procedure for making a decision pertaining to a proposed change to a unit or limited common element. Requires that the Association/HOA's decision be in writing, made in good faith, and not be unreasonable, arbitrary, or capricious. Requires that procedure be set forth in the Association/HOA's governing documents. Provides for timeframe on decision and a procedure for reconsideration of the decision if disapproved by the Association/HOA's executive board. 

    Sections 2 and 6.

    Amends GS 47C-3-107.1 (process for fines collected by an Association) and GS 47F-3-107.1 (same-HOA) to provide for a written notice of hearing to be sent to a unit owner not less than 10 days prior to the hearing date to be heard on any charges by the Association/HOA. Caps any fines imposed without further hearing on the violation at $2,500 for continuing violations. 

    Sections 3 and 7.

    Amends GS 47C-3-116 (pertaining to liens imposed for sums due to Associations) and GS 47F-3-116 (pertaining to liens imposed due to HOAs in planned communities) as follows.

    Removes 30-day lien filing deadline for fines imposed by the Association/HOA that are solely comprised of interest on unpaid fines, or attorneys' fees incurred by the Association/HOA solely associated with fines imposed by the Association/HOA. Now requires that a claim of lien securing a debt consisting of fines or fine-related charges must be filed separately from a claim of lien securing other sums owed to the Association/HOA and must be filed withing 90 days after the date the fine was imposed.  Defines fines or fine-related charges to mean fines imposed by the Association/HOA, interest on unpaid fines, or attorneys’ fees incurred related to fines imposed by the Association/HOA. Makes technical changes.

    Deletes requirement that Association/HOA ensure that its records contain a current phone number for a property owner subject to the Association/HOA.   Makes conforming changes. Changes required language on the first page of a claim of lien to remove reference to judicial foreclosure and to specify that the Association/HOA can pursue remedies against the property owner and the property (was, just property).   Narrows the scope of those debts which are extinguished if the Association/HOA fails to initiate proceeds to enforce the lien to just fines or fine-related charges (was, a debt consisting solely of fines imposed by the Association/HOA, interest on unpaid fines, or attorneys' fees incurred by the Association/HOA solely associated with fines imposed by the Association/HOA). Increases the time that the Association/HOA has to initiate enforcement proceedings to one year after the filing of the claim of lien in the office of the clerk of superior court (was, within 180 days after the filing of the claim of lien in the office of the clerk of superior court).

    Deletes cap on an award of attorneys’ fees cannot exceed 15% of the amount recovered in any such actions. Instead, allows imposition of reasonable attorneys’ fees not to exceed the higher of $10,000 or 15% of the amount recovered so long as the court finds (1) there was an unwarranted refusal by the property owner to negotiate or pay the fines or fine-related charges and (2) the amount of damages recovered exceeded the highest offer made by the property owner no later than 90 days before the commencement of trial. Requires judge to issue written factual findings detailing the basis for the award. Makes organizational changes.

    Reinstates authority to Association/HOAs to foreclose a claim of lien in like manner as a mortgage or deed of trust on real estate under power of sale but only if the debt consists of sums due the Association/HOA other than fines or fine-related charges and if the delinquency has continued for 180 days or more (was, 90 days or more). Provides for content and delivery of notice. Provides for a process by which the clerk must inquire as to whether the subject property is the owner’s principal residence and if so, what efforts the Association/HOA made to communicate with the owner and to resolve the matter voluntarily before foreclosure proceedings. Provides for a process for continuance of the hearing for up to 90 days if the clerk finds there is good cause to believe that additional time or additional measures have a reasonable likelihood of resolving the delinquency without foreclosure.  Reinstates language clarifying that an Association/HOA may pursue judicial foreclosure of an allowed claim of lien and that the attorneys’ fees for these matters are not subject to the limitations set forth above.  Authorizes enforcement of a claim of lien securing a debt consisting of fines or fine related-charges by filing a civil action seeking a judgment. Provides for an effective date for liens that arise as a result of entry of judgment. Makes conforming changes.

    Sections 4 and 8.

    Amends GS 47C-3-118 (Association records) and GS 47F-3-118 (HOA records) to allow for reasonable attorneys’ fees and costs to the prevailing party if a motion to compel such records is filed. Also allows the court to order the association to pay an owner's costs incurred in obtaining an order when the association doesn't allow the owner to inspect and copy the requested contract and the court later enters an order compelling the association to do so.

    Makes conforming changes to the act’s long title.


  • Summary date: Jun 27 2023 - View Summary

    Senate committee substitute to the 2nd edition makes the following changes.

    Sections 1 and 5.

    Changes certain powers of the unit owners’ association (Association) under the NC Condominium Act (GS 47C-3-102) or a homeowners’ association (HOA) under the NC Planned Community Act (GS 47F-3-102) as follows. Specifies that an Association/HOA cannot compensate a managing agent based in whole or in part on the amount of fines collected on behalf of the Association/HOA. Prohibits any such contracts from containing an automatic renewal provision or exceeding one year in duration. Applies to contracts between an Association/HOA and a managing agent entered into on or after the date the act becomes law.

    Prevents an Association/HOA from enforcing any restriction on parking on a public street or public road for which the NC Department of Transportation or local government has assumed responsibility for maintenance and repairs. Prevents an Association/HOA from levying a fine for a violation of a provision restricting or prohibiting tutoring, educational lessons, academic lessons, music lessons, or swimming lessons provided in the owner's unit to a group of no more than five people at any one time, regardless of whether compensation is received for such lessons. Permits an Association/HOA to impose a reasonable charge for providing copies of records requested by a member, not to exceed the actual cost of photocopying the records.

    Prevents an Association/HOA from imposing a charge for administrative tasks required upon the transfer of title to a unit, except as authorized by GS 47C-3-102(12a) (Associations) or GS 47F-3-102(13a) (HOAs). Specifies that a violation of this provision is an unfair and deceptive trade practice under State law.

    Sections 2 and 6.

    Specifies that all fines collected by either an Association under GS 47C-3-107.1 or an HOA under GS 47F-3-107.1 as part of a proceeding for fines and suspension of planned community privileges or services must be remitted to the Civil Penalty and Forfeiture Fund (Fund).

    Sections 3 and 7.

    Amends GS 47C-3-116 (pertaining to liens imposed for sums due to Associations) and GS 47F-3-116 (pertaining to liens imposed due to HOAs in planned communities) as follows.

    Removes requirement that the delinquent assessment be at least $2,500 or one year of Association/HOA assessments, whichever is less, that remains unpaid for a period of 30 days or longer to constitute a lien on the unit/lot when a claim of lien is filed. Now specifies lien-filing deadline of 30 days after the fine was imposed for debts consisting solely of fines imposed by the Association/HOA interest on unpaid fines, or attorneys' fees incurred by the Association/HOA solely associated with fines imposed by the Association/HOA.

    Clarifies that if an Association/HOA is going to provide notice of a delinquent assessment to the unit/lot owner by phone or email, it can only do so if the owner has designated an email address or telephone number with the Association/HOA.

    Specifies that a lien for a debt consisting solely of fines imposed by the Association/HOA, interest on unpaid fines, or attorneys' fees incurred by the Association/HOA solely associated with fines imposed by the Association/HOA is extinguished unless proceedings to enforce the lien are instituted within 180 days after the filing of the claim of lien in the office of the clerk of superior court. Further specifies in any such action to enforce any such liens, any award of attorneys’ fees cannot exceed 15% of the amount recovered.

    Deletes authority to Associations/HOAs to foreclose a claim of lien in like manner as a mortgage or deed of trust on real estate under power of sale if the assessment remains unpaid for 90 days or more along with accompanying procedural requirements for those foreclosure proceedings. Instead, Associations/HOAs may, through their executive boards, enforce a claim of lien by judicial foreclosure under GS Chapter 1, Article 29A, so long as the following four requirements are met: (1) the amount of the unpaid assessments exceeds $2,500 or twelve months of assessments, whichever is less; (2) the debt secured by the claim of lien does not consist solely of fines imposed by the Association/HOA, interest on unpaid fines, or attorneys' fees incurred by Association/HOA; (3) the assessment remains unpaid for at least 90 days; and (4) the Association/HOA’s executive board votes to commence the proceeding against the specific lot.

    Requires the unit owners’/homeowners’ association to provide proper notice of delinquent assessment to the unit/lot owner before filing a claim of lien. Sets forth rules related to notice and makes conforming changes to the owner's contact information that must be given to the association.

    Makes conforming changes.

    Amends the required language for a claim of lien asserted by an Association under GS 47C-3-116(c) so that it reads, “This document constitutes a lien against your property, and if the lien is not paid, the Association may proceed with judicial foreclosure (was, foreclosure) against your property (was, against your property in like manner as a mortgage under NC law)."

    Sections 4 and 8.

    Amends GS 47C-3-118 (Association records) and GS 47F-3-118 (HOA records) authorizing a property owner or their authorized agent to inspect and copy, at a reasonable time and location specified by the Association/HOA, any contract entered into authorizing a managing agent to exercise any of the powers granted to the Association/HOA under GS 47F/C-3-102 if the owner gives the Association/HOA written notice of the demand at least five business days prior to the date on which the owner wishes to inspect and copy.

    Section 9.

    Amends GS 115C-457.1 (creation and administration of the Civil Penalty and Forfeiture Fund) to authorize the General Assembly to authorize the placement of additional funds from other sources into the Fund. Amends GS 115C-457.2 (remittance of monies into the Fund) to direct that any additional funds that the General Assembly authorizes to be placed in the Fund must be remitted to the Office of State Budget and Management by the entity having custody of the funds within 10 days after the close of the calendar month in which the funds were received or collected.

    Section 10.

    Amends exceptions to the formatting requirements set forth in GS 161-14(b) (registration of instruments) to also exclude certified copies of a court-filed document presented for registration on paper (was, just instruments listed under GS 25-9-521 [uniform form of written financing statement and amendment]). Effective December 1, 2023.

    Section 11

    Amends GS 45-21.4 (places of sale of real property) to increase the number of places where sale of real property may occur when either (1) the mortgage or deed of trust with power of sale of real property confers the mortgagee or trustee the right to designate the place of sale or (2) the mortgage or deed of trust with power of sale of real property does not designate, or confer upon the mortgagee or trustee the right to designate, the place of sale, or when it designates as the place of sale some county in which no part of the property is situated, to include another public location within the county (or counties) where the land (or any part thereof, if the land is in more than one county) is situated as designated by the mortgagee or trustee if the deed of trust/mortgage confers them with the right of sale or as designated by the clerk of the superior court where the land (or any part thereof) is located.

    Amends GS 45-21.23 (time of sale of real property) to increase the time when a sale must begin from no later than one hour after the designated start time in the notice of sale to three hours after that start time.  

    Enacts new GS 45-21.25A authorizing remote bids for sale of real property, as follows. Authorizing the person exercising the power of sale of real property or their agent to accept remote bids from persons not physically present at the place of sale, as designated pursuant to GS 45-21.4. Requires that all bids accepted at the sale must be clearly announced to all participating bidders, whether physically present or not. Directs the person exercising the power of the sale or their agent to collect all funds required to be by the winning bidder prior to accepting a remote bid. Prohibits the person exercising the power of sale of real property or their agent from assessing any charges to the mortgagor incurred in connecting with remote bidding. Further specifies that such charges are not recoverable as costs and expenses of the foreclosure. 

    Makes Section 11 effective October 1, 2023, and applicable to notices of foreclosure sale filed with the clerk of superior court on or after that date.

    Makes organizational changes and conforming changes to the act’s effective date. Makes conforming changes to the act’s titles.


  • Summary date: Apr 26 2023 - View Summary

    House committee substitute to the 1st edition makes organizational and clarifying changes to GS 47C-3-116 (pertaining to liens imposed for sums due to condominium owners’ associations) and GS 47F-3-116 (pertaining to liens imposed due homeowners’ association in planned communities).


  • Summary date: Mar 30 2023 - View Summary

    Amends GS 47C-3-116 (pertaining to liens imposed for sums due to condominium owners’ associations) and GS 47F-3-116 (pertaining to liens imposed due homeowners’ association in planned communities) to require that the delinquent assessment be at least $2,500 or one year of unit owners’/homeowners’ association assessments, whichever is lesser, that remains unpaid for a period 30 days or longer to constitute a lien on the unit/lot when a claim of lien is filed. (Currently, no minimum amount required before past due assessment can become a lien on the unit if more than 30 days past due.) Requires the unit owners’/homeowners’ association to provide proper notice of delinquent assessment to the unit/lot owner before filing a claim of lien. Sets forth rules related to notice and makes conforming changes to the owner's contact information that must be given to the association.