Sections 1 and 2

Enacts new GS 47C-2-117.1A (applicable to condominium owners’ associations) and new GS 47F-2-117.1 (applicable to homeowners' associations in planned communities), providing as follows. Specifies that amendments made to the declaration only affect owners whose units/lots are conveyed or transferred after the amendment takes effect and that for amendments made while an owner owns a unit/lot, the amendment has no effect until the unit/lot is conveyed or transferred to another owner. Provides that an owner takes the unit/lot subject to existing rules in the declaration at the time of conveyance or transfer.

Sections 3 and 8

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. 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 to 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. 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. 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). Makes violations an unfair and deceptive trade practice. Allows imposing a reasonable charge for providing copies of records. 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.

Section 4

Amends GS 47C-3-103 and GS 47F-3-103 by adding a requirement that ratification of a proposed budget that would increase the previous year’s common expense liability by more than 10% be approved by a majority of all of the unit/lot owners or any larger vote specified in the declaration, unless the amount of the increase is expressly allowed in the declaration. Prohibits the executive board from taking any action after the budget’s ratification that would increase the budgeted common expense liability for that fiscal year by more than 5% without the approval of a majority of the owners or any larger vote required by the declaration.

Sections 5 and 9

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

Sections 6 and 10

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 by homeowners’ association in planned communities) to require that a claim of lien securing a debt consisting of fines or fine-related charges (as defined) be filed separately from a claim of lien securing other sums owed to the association and be filed within 90 days after the date the fine was imposed. 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 requires the association to send a statement of the assessment amount via electronic mail, in addition to first class mail, if the owner has designated an email address; makes conforming changes. Extinguishes a lien securing a debt consisting of fines or fine-related charges unless proceedings to enforce the lien are instituted within one year after the filing of the claim of lien in the office of the clerk of superior court.

Amends the provisions concerning the recovery of attorney’s fees, to provide that in an action to enforce a claim of lien securing a debt consisting of fines or fine-related charges, upon findings by the court  that: (1) that there was an unwarranted refusal by the unit owner to negotiate or pay the fines or fine-related charges and (2) that the amount of damages recovered exceeded the highest offer made by the unit owner no later than 90 days before the commencement of trial, the presiding judge may allow reasonable attorneys' fees to the attorneys representing the association obtaining a judgment for damages in the suit, in an amount not to exceed the greater of $10,000 or 15% of the amount recovered. Sets out findings the judge must make when awarding these attorneys’ fees.

Limits when the association may foreclose a claim of a lien securing a debt for sums due to the association so that it is only sums other than fines or fine-related charges, and requires that the delinquency have continued for 180 (was, 90) days or more. Adds to the conditions that must be met before the association can foreclose the claim of lien to also include that the (1) amount of the lien be equal to or greater than six months of assessments or equal to or greater than $2,500, whichever is less, and (2) the association offered the unit owner a reasonable opportunity to cure the default by making payments under an installment schedule and the unit owner either did not accept the offer or defaulted on payments required under the agreed schedule.

Expands upon the notice requirements in nonjudicial power of sale foreclosures of a claim of lien so that it references the owners’ right of redemption and so that it includes the association’s certification of the actions it has taken to give the owner notice of delinquent assessments. Requires the clerk to inquire as to whether the owner occupies the unit as their principal residence and, if so, about the efforts that have been made to resolve the matter voluntarily. Sets out conditions under which the clerk must order the hearing continued.

Provides that a claim of lien securing a debt consisting of fines or fine-related charges may only be enforced by the filing of a civil action seeking a judgment.

Applies to claims of lien filed and instruments presented for registration on or after December 1, 2025.

Sections 7 and 11

Amends GS 47C-3-118 (condo association records) and GS 47F-3-118 (HOA records) to require providing requested records within 30 days of receiving an owners’ written request, unless the bylaws specify a shorter time. Specifies that the association is not required to make available financial records created more than three years before the date of receiving the request. Authorizes 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. Allows 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.

Section 12

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 13

Amends GS 7A-38.3F, which concerns prelitigation mediation of condominium and owners’ association disputes, by exempting from the statute disputes related solely to a member’s failure to timely pay an association assessment or any fines or fees associated with the levying or collection of an association assessment. Allows the parties to a dispute arising under GS Chapter 47C (North Carolina Condominium Act), GS Chapter 47F (North Carolina Planned Community Act), or an association's declaration, bylaws, or rules and regulations to agree to mediation at any time (was, parties were encouraged to initiate mediation before filing a civil action). Requires instead that before filing a civil action a party initiate mediation. Requires if an action is initiated that it be dismissed, upon motion prior to trial, without prejudice unless one of the three conditions exist, including that the court fines good cause for a failure to attempt mediation. Allows parties to agree to waive mediation by informing the mediator in writing. Sets out when a mediator may charge a reasonable fee to prepare a mediator’s certification. Amends the content of the mediator’s certification to require that it also include the results of the mediation, and if applicable, that the parties waived mediation, and if a party failed or refused without good cause to attend or participate in mediation. Allows the Supreme Court to adopt rules and standards to implement this statute. Makes additional conforming, clarifying, and technical changes. Applies to actions field on or after October 1, 2025.

Section 14

Enacts new GS 114-8.8 requiring the Department of Justice (DOJ) to receive and record data from all complaints and concerning disputes between unit/lot owner associations and their members. Allows complaints to be submitted via phone, mail, or online; sets out the information that DOJ must collect when it receives a complaint. Requires DOJ to provide a copy of the complaint to the party complained against and to allow them to respond. Requires DOJ to post the following on their website: (1) information on the process to submit complaints; (2) information about the laws and documents governing associations of unit and lot owners; (3) general information about roles, rights, and responsibilities of associations of unit owners and lot owners, their members, and other related parties; and (4) any other information DOJ deems relevant to understanding the rights and obligations of associations of unit owners and lot owners and members of such associations. Prohibits DOJ from (1) promulgating regulations or issuing guidelines concerning the administration, governance, or governing documents of associations of unit owners or lot owners and from (2) serving as an arbiter in disputes between an association of unit owners or lot owners and its members. Requires DOJ to submit an annual report to the specified NCGA committees and division and publish the report on its website; sets out what must be included in the report and how the information must be accessible. Allows DOJ to redact certain information. Effective July 1, 2025.