A proposal limiting HOA power has received endorsements from the House panel. Now, it heads off to the House for consideration. If passed, the proposal would cut back on the authority of community associations in the state.
Proposal Limiting HOA Power Under Consideration
A bipartisan state House panel unanimously endorsed proposals on Wednesday aimed at curbing potential abuses of power by community and homeowners associations in North Carolina.
The approved recommendations, slated for consideration by the full House, address various areas targeted by legislation in 2023. These include foreclosures, dues increases, civil litigation, transparency, and oversight. While none of the bills from 2023 became law, one is currently in a conference committee.
Proposals Summarized
One proposal seeks to restrict the power of homeowners associations to foreclose on properties for unpaid dues or fines, a power currently unlimited under the law. The suggested change involves prohibiting nonjudicial foreclosure to satisfy an HOA lien unless the debt is at least 6 months’ dues or $2,500, with the provision for the HOA to offer an installment plan before resorting to foreclosure.
Another recommendation entails allowing HOA boards to adopt budgets necessitating an assessment increase of over 10% only with majority owner approval. Outside the budget process, any HOA action requiring an assessment increase of more than 5% would require majority owner approval.
The panel also suggests mandating that HOAs permit owners to review records within 30 days of a request unless the request pertains to a financial document over 3 years old.
Regarding dispute resolution, the committee recommends that civil disputes between an HOA and its members go through mediation before proceeding to civil court unless all parties agree to skip this step.
The final recommendation proposes that the state Department of Justice include educational information about HOA rights and obligations on its website and details on how to file a complaint. The agency must collect and report on these complaints annually to the legislature and the public.
Proposal Limiting HOA Power Not Yet Final
The Community Associations Institute – North Carolina (CAI-NC) has opposed many proposed changes. Co-chairman Rep. Frank Iler emphasized that the report is not actual legislation. He clarified that any bill must be drafted and filed during the session.
Throughout the process, lawmakers considered input from homeowners, former HOA board members, and lobbyists. Co-chairman Rep. Steve Tyson deemed the report a good start. He acknowledged the limitations in making extensive changes within the committee’s timeframe.
