North Carolina House Committee Considers HOA Reform

CAI is committed to fostering positive and transparent community association living experiences. To address concerns from homeowners and legislators, CAI encourages a comprehensive approach that considers both legislative and educational initiatives. 

Legislators in North Carolina have effectively balanced individual homeowner rights and those of their neighbors in community associations for years. As the House Select Committee on Homeowners’ Associations requests input and examines the need for potential reform, Community Associations Institute, welcomes the opportunity to discuss the benefits of homeowners association and condominium living and how current laws work remarkably well for everyone.

CAI applauds the legislature for opening a dialogue that includes homeowners, association leaders, industry professionals, and policymakers. Drawing from more than 50 years of experience in developing best practices for community association governance, management, and operations, CAI understands the complexity of issues related to collections and foreclosures, transparency, accountability, and fairness for homeowners.

“CAI is committed to working with North Carolina Senate and House members to promote the interests of the millions of North Carolinians living in community associations through reasonable legislation that fairly balances individual and collective owner interests,” says Harmony Taylor, chair of the CAI North Carolina Legislative Action Committee, partner at Law Firm Carolinas, and a fellow in CAI’s College of Community Association Lawyers. “We firmly believe that open communication and education, particularly of homebuyers, will help everyone understand and support their obligations and rights. The LAC further supports legislation that promotes reasonable access to association records and ensures that owners continue to receive ample notice before legal action to collect funds necessary for the operation of the association is commenced, whether through fines, liens, foreclosure, or pursuit of a civil judgment.”
  
CAI is committed to constructive engagement with the legislative review process.

“Homeowners association and condominium association board members, community managers, and attorneys are ready to work with legislators to find balanced solutions to identified problems. In community living, where owners have agreed to follow rules that benefit all, it’s imperative to balance individual rights with those of neighbors,” says Jerry Iverson, a member of the CAI North Carolina LAC and a past president of the St. James Property Owners Association in Southport. “We need to get any changes to law right so that North Carolina’s thousands of associations and millions of residents aren’t negatively impacted.”

North Carolina legislators appear to be focused on reform related to transparency and foreclosure procedures. In many ways, CAI believes communities are already achieving desired goals along these fronts.

• Transparency. The North Carolina Planned Community Act, Condominium Act, and Nonprofit Act provide that financial records, association and board meeting minutes, and other records are made available to owners. Homeowners and homebuyers should have access to nonconfidential community documents, understand their rights and responsibilities of community living, and get involved in community governance.
• Foreclosure procedures. Both the Planned Community Act and the Condominium Act detail the collection process for delinquent assessments. Generally, any assessment levied against an owner that has remain unpaid for a period of 30 days or longer constitutes a lien on the lot or unit when a claim of lien is filed of record in the office of the clerk of superior court of the county in which the lot is located in the manner provided by statute. However, the lien is not automatic, and certain statutory steps are (and should be) required both before and following the filing of the lien. Fortunately, almost all owners pay assessments on time. Many legal safeguards, including repeated communication, protect owners. A delay or barrier to pursuing collections means other neighbors lose essential services or pay more. The vast majority of associations operate with tight budgets that require all owners to pay on time, and when this does not occur, collection is a necessary step.​​

CAI believes collaboration among stakeholders is crucial to creating a balanced framework that protects homeowners’ rights while promoting the effective governance of community associations. 

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