Bill Summary for H 882 (2015-2016)

Summary date: 

Apr 20 2015

Bill Information:

View NCGA Bill Details2015-2016 Session
House Bill 882 (Public) Filed Tuesday, April 14, 2015
AN ACT TO MAKE VARIOUS CHANGES TO THE PLANNED COMMUNITY ACT.
Intro. by Jordan.

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Bill summary

Enacts new GS Chapter 93A, Article 7, Community Association Property Management, providing that the acts conducted by a community association (association), including collecting and handling assessments and other funds and managing property, are considered real estate transactions. Gives the North Carolina Real Estate Commission (Commission) the power to administer the Article and adopt rules. Makes it unlawful to act as a community association property manager, engage in the business of community association property management, or hold self out to be a community association property manager, or use such title, on or after October 1, 2015, without being licensed by the Commission. Prohibits issuing a license to a partnership, association, corporation, limited liability company, or other business entity.

Prohibits a licensee from exercising control over the reserves or investment accounts of a community association or an operating account of a community association, unless specified conditions are met. Also prohibits a licensee from giving legal or financial advice. Requires community association property managers to be covered by a bond of at least $20,000. Sets out further bonding requirements. Requires contracts to provide community association property management services be in writing and provide that the contract (1) expires in one year but allows for continuation on a month-to-month basis; (2) contains an escape clause, allowing cancellation of a contract for any reason with a 60-day notice; and (3) provides for a notice of cancellation with proper notice before the contract expires and before contract renewal. Requires community associations to register with the Commission annually and sets out information that must be provided. Requires a $100 registration fee. Requires members of an association's executive board to, within 60 days after an election, complete a minimum of four hours of education regarding the laws related to community associations under GS Chapters 47C and 47F. Provides that the Commission will provide this training and the association must pay a fee of $75 for each individual board member participating in the training.  

Amends GS 93A-16(a), making conforming changes and providing that community associations can receive funds for unsatisfied judgments for certain acts committed by community association property managers or members of the community association's executive board from the Real Estate Education and Recovery Fund. 

Amends GS 47C-3-103 and 47F-3-103 adding language to provide that failure to comply with the above educational requirement will result in the board member being required to submit a written notice of resignation to the board. If the member fails to resign, such inaction will be considered a breach of fiduciary duty and will subject the member to specified discipline. 

Amends the NC Planned Community Act by enacting GS 47F-2-105, Contents of declaration, requiring the declaration that creates a planned community to include 14 specific types of information, such as a legal description of the real estate included in the common interest community and any authorization that entitles the association to establish and enforce construction and design criteria and aesthetic standards. Enacts GS 47F-2-106, requiring the declaration to allocate the common expense liabilities of the association and a portion of the total association votes to each lot, with disclosure on how those allocations are made. Sets out class voting regulations.

Amends GS 47F-2-117, Amendment of declaration, making conforming changes and providing that an association cannot require more than an 80% majority vote to amend the declaration.  Deletes a provision which provided that actions challenging the validity of an adopted amendment cannot be brought after one year has passed. Adds clarifying language.

Amends GS 47F-2-120, Master association, to provide that powers of an association can be delegated to an unincorporated nonprofit association in addition to for-profit or not-for-profit corporations. Makes conforming changes.  Adds language providing limitations on use of powers, limiting use to the extent expressly permitted in the declaration in specified circumstances. Limits the liability of the members of an executive board for delegated powers and responsibilities. Requires certificates of incorporation and declarations to provide for the election of the executive board of the master association when declarant control of a master association terminates. 

Amends GS 47F-3-101, Organization of owners' association, making conforming changes.

Amends GS 47F-3-103, Executive board members and officers, setting out provisions which limit the control period of a declarant to the earliest occurrence of (1) 120 days after conveyance of 67% of the lots, (2) two years after a declarant has ceased to offer lots for sale in the ordinary course of business, or (3) two years after any development right to add new lots was last exercised. Provides procedures and requirements for electing board members not later than 60 days after 25% of the lots have been conveyed.

Amends GS 47F-3-114, Surplus funds, deleting language which allowed for the funding of a reasonable operating expense surplus.

Amends GS 47F-3-118, Association records, deleting all of the substantive language of subsection (a) and adding language which requires associations to retain 10 different types of records as specified, including financial statements, audits, and tax returns of the association for the preceding three years and all ballots, proxies, and other records related to voting by unit owners for at least one year. Provides that records are to be made available for inspection and copying by lot owners or agents. Sets out other provisions concerning the maintenance of records. Establishes a $10 penalty assessed against an association for each day that access to the records is denied. Establishes procedure for requesting record access and exempts specified records from being made available for inspection and copying. Requires an association to make annual income and expense statements and balance sheets available to all lot owners at no charge and within 75 days after the close of the fiscal year. Makes technical changes.  

Amends GS 47F-3-116 to provide that claims of lien can only be foreclosed in like manner as a mortgage or deed of trust on real estate if the assessment has remained unpaid for 90 days and it is against a lot that is not the primary residence of the owner (previously, did not exempt primary residences from such claims of liens). Provides that a claim of lien against a primary residence can only be enforced by judicial foreclosure as specified. 

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