H.B. 959
GENERAL ASSEMBLY OF NORTH CAROLINA
May 1, 2024
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH30446-NKz-126A
Short Title: Various Changes to Homeowners' Assoc. Laws. (Public)
Sponsors: Representative Iler.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO MAKE VARIOUS CHANGES TO THE NORTH CAROLINA CONDOMINIUM
3 ACT AND THE NORTH CAROLINA PLANNED COMMUNITY ACT, TO MANDATE
4 PRELITIGATION MEDIATION OF DISPUTES BETWEEN OWNERS' ASSOCIATIONS
5 AND THEIR MEMBERS, AND TO REQUIRE THE DEPARTMENT OF JUSTICE TO
6 COLLECT AND REPORT ON COMPLAINTS SUBMITTED TO IT INVOLVING SUCH
7 DISPUTES, AS RECOMMENDED BY THE HOUSE SELECT COMMITTEE ON
8 HOMEOWNERS' ASSOCIATIONS.
9 The General Assembly of North Carolina enacts:
10
11 PART I. ASSOCIATION RECORDS
12 SECTION 1.(a) G.S. 47C-3-118 reads as rewritten:
13 "§ 47C-3-118. Association records.
14 (a) The association shall keep financial records sufficiently detailed to enable the
15 association to comply with this chapter. All financial and other records, including records of
16 meetings of the association and executive board, shall be made reasonably available for
17 examination by any unit owner and the unit owner's authorized agents as required by the bylaws
18 and by Chapter 55A of the General Statutes if the association is a nonprofit corporation. If the
19 bylaws do not specify a shorter time, the association shall make the requested records reasonably
20 available for examination within 30 days of receiving the unit owner's written request. Except as
21 otherwise provided in the bylaws, the association is not required to make available for
22 examination financial records created more than three years before the date on which the
23 association receives the unit owner's written request. If the bylaws do not specify particular
24 records to be maintained, the association shall keep accurate records of all cash receipts and
25 expenditures and all assets and liabilities. In addition to any specific information that is required
26 by the bylaws to be assembled and reported to the unit owners at specified times, the association
27 shall make an annual income and expense statement and balance sheet available to all unit owners
28 at no charge and within 75 days after the close of the fiscal year to which the information relates.
29 Notwithstanding the bylaws, a more extensive compilation, review, or audit of the association's
30 books and records for the current or immediately preceding fiscal year may be required by a vote
31 of the majority of the executive board or by the affirmative vote of a majority of the unit owners
32 present and voting in person or by proxy at any annual meeting or any special meeting duly called
33 for that purpose.
34 …."
35 SECTION 1.(b) G.S. 47F-3-118 reads as rewritten:
36 "§ 47F-3-118. Association records.
*DRH30446-NKz-126A*
 General Assembly Of North Carolina Session 2023
1 (a) The association shall keep financial records sufficiently detailed to enable the
2 association to comply with this Chapter. All financial and other records, including records of
3 meetings of the association and executive board, shall be made reasonably available for
4 examination by any lot owner and the lot owner's authorized agents as required in the bylaws and
5 Chapter 55A of the General Statutes. If the bylaws do not specify a shorter time, the association
6 shall make records reasonably available for examination within 30 days of receiving the lot
7 owner's written request. Except as otherwise provided in the bylaws, the association is not
8 required to make available for examination financial records created more than three years before
9 the date on which the association receives the lot owner's written request. If the bylaws do not
10 specify particular records to be maintained, the association shall keep accurate records of all cash
11 receipts and expenditures and all assets and liabilities. In addition to any specific information
12 that is required by the bylaws to be assembled and reported to the lot owners at specified times,
13 the association shall make an annual income and expense statement and balance sheet available
14 to all lot owners at no charge and within 75 days after the close of the fiscal year to which the
15 information relates. Notwithstanding the bylaws, a more extensive compilation, review, or audit
16 of the association's books and records for the current or immediately preceding fiscal year may
17 be required by a vote of the majority of the executive board or by the affirmative vote of a
18 majority of the lot owners present and voting in person or by proxy at any annual meeting or any
19 special meeting duly called for that purpose.
20 …."
21
22 PART II. COMMON EXPENSE LIABILITY
23 SECTION 2.(a) G.S. 47C-3-103 reads as rewritten:
24 "§ 47C-3-103. Executive board members and officers.
25 …
26 (c) Within 30 days after adoption of any proposed budget for the condominium, the
27 executive board shall provide a summary of the budget to all the unit owners, and shall set a date
28 for a meeting of the unit owners to consider ratification of the budget not less than 10 nor more
29 than 60 days after mailing of the summary. There shall be no requirement that a quorum be
30 present at the meeting. The Except as otherwise provided in subsection (c1) of this section, the
31 budget is ratified unless at that meeting a majority of all the unit owners or any larger vote
32 specified in the declaration rejects the budget. In the event the proposed budget is rejected, the
33 periodic budget last ratified shall be continued until such time as the unit owners ratify a
34 subsequent budget proposed by the executive board.
35 (c1) Ratification of a proposed budget that would increase the previous year's common
36 expense liability by more than ten percent (10%) requires the approval of a majority of all the
37 unit owners or any larger vote specified in the declaration, unless the amount of the increase is
38 expressly authorized in the declaration. After ratification of the budget, no action may be taken
39 by the executive board that would increase the budgeted common expense liability for that fiscal
40 year by more than five percent (5%) without the approval of a majority of all the unit owners or
41 any larger vote specified in the declaration.
42 …."
43 SECTION 2.(b) G.S. 47F-3-103 reads as rewritten:
44 "§ 47F-3-103. Executive board members and officers.
45 …
46 (c) Within 30 days after adoption of any proposed budget for the planned community,
47 the executive board shall provide to all the lot owners a summary of the budget and a notice of
48 the meeting to consider ratification of the budget, including a statement that the budget may be
49 ratified without a quorum. The executive board shall set a date for a meeting of the lot owners to
50 consider ratification of the budget, such meeting to be held not less than 10 nor more than 60
51 days after mailing of the summary and notice. There shall be no requirement that a quorum be
Page 2 DRH30446-NKz-126A
 General Assembly Of North Carolina Session 2023
1 present at the meeting. The Except as otherwise provided in subsection (c1) of this section, the
2 budget is ratified unless at that meeting a majority of all the lot owners in the association or any
3 larger vote specified in the declaration rejects the budget. In the event the proposed budget is
4 rejected, the periodic budget last ratified by the lot owners shall be continued until such time as
5 the lot owners ratify a subsequent budget proposed by the executive board.
6 (c1) Ratification of a proposed budget that would increase the previous year's common
7 expense liability by more than ten percent (10%) requires the approval of a majority of all the lot
8 owners or any larger vote specified in the declaration, unless the amount of the increase is
9 expressly authorized in the declaration. After ratification of the budget, no action may be taken
10 by the executive board that would increase the budgeted common expense liability for that fiscal
11 year by more than five percent (5%) without the approval of a majority of all the lot owners or
12 any larger vote specified in the declaration.
13 …."
14
15 PART III. NONJUDICIAL FORECLOSURE
16 SECTION 3.(a) G.S. 47C-3-116 reads as rewritten:
17 "§ 47C-3-116. Lien for sums due the association; enforcement.
18 …
19 (f) Except as provided in subsection (h) of this section, the association, acting through
20 the executive board, may foreclose a claim of lien in like manner as a mortgage or deed of trust
21 on real estate under power of sale, as provided in Article 2A of Chapter 45 of the General Statutes,
22 if the assessment remains unpaid for 90 days or more. The association shall not foreclose the
23 claim of lien unless the all of the following conditions are met:
24 (1) The executive board votes to commence the proceeding against the specific
25 unit.
26 (2) The amount of the lien is equal to or greater than six months of assessments
27 or equal to or greater than two thousand five hundred dollars ($2,500),
28 whichever is less.
29 (3) The association offered the unit owner a reasonable opportunity to cure the
30 default by making payments under an installment schedule as authorized
31 under subsection (i) of this section, and the unit owner either did not accept
32 the offer or defaulted on payments required under the agreed installment
33 schedule.
34 (f1) The following provisions and procedures shall be applicable to and complied with in
35 every nonjudicial power of sale foreclosure of a claim of lien, and these provisions and
36 procedures shall control to the extent they are inconsistent or in conflict with the provisions of
37 Article 2A of Chapter 45 of the General Statutes:
38 …."
39 SECTION 3.(b) G.S. 47F-3-116 reads as rewritten:
40 "§ 47F-3-116. Lien for sums due the association; enforcement.
41 …
42 (f) Except as provided in subsection (h) of this section, the association, acting through
43 the executive board, may foreclose a claim of lien in like manner as a mortgage or deed of trust
44 on real estate under power of sale, as provided in Article 2A of Chapter 45 of the General Statutes,
45 if the assessment remains unpaid for 90 days or more. The association shall not foreclose the
46 claim of lien unless the all of the following conditions are met:
47 (1) The executive board votes to commence the proceeding against the specific
48 lot.
49 (2) The amount of the lien is equal to or greater than six months of assessments
50 or equal to or greater than two thousand five hundred dollars ($2,500),
51 whichever is less.
DRH30446-NKz-126A Page 3
 General Assembly Of North Carolina Session 2023
1 (3) The association offered the lot owner a reasonable opportunity to cure the
2 default by making payments under an installment schedule as authorized
3 under subsection (i) of this section, and the lot owner either did not accept the
4 offer or defaulted on payments required under the agreed installment schedule.
5 (f1) The following provisions and procedures shall be applicable to and complied with in
6 every nonjudicial power of sale foreclosure of a claim of lien, and these provisions and
7 procedures shall control to the extent they are inconsistent or in conflict with the provisions of
8 Article 2A of Chapter 45 of the General Statutes:
9 …."
10
11 PART IV. PRELITIGATION MEDIATION
12 SECTION 4.(a) G.S. 7A-38.3F reads as rewritten:
13 "§ 7A-38.3F. Prelitigation mediation of condominium and homeowners owners' association
14 disputes.
15 (a) Definitions. – The following definitions apply in this section:
16 (1) Association. – An association of unit or lot owners organized as allowed under
17 North Carolina law, including G.S. 47C-3-101 and G.S. 47F-3-101.
18 (2) Dispute. – Any matter relating to real estate under the jurisdiction of an
19 association about which the member and association cannot agree. The term
20 "dispute" does not include matters expressly exempted in subsection (b) of
21 this section.
22 (3) Executive board. – The body, regardless of name, designated in the
23 declaration to act on behalf of an association.
24 (4) Mediator. – A neutral person who acts to encourage and facilitate a resolution
25 of a dispute between an association and a member.
26 (5) Member. – A person who is a member of an association of unit or lot owners
27 organized as allowed under North Carolina law, including G.S. 47C-3-101
28 and G.S. 47F-3-101.
29 (6) Party or parties. – An association or member who is involved in a dispute, as
30 that term is defined in subdivision (2) of this subsection.
31 (a1) Disputes related solely to a member's failure to timely pay an association assessment
32 or any fines or fees associated with the levying or collection of an association assessment are not
33 covered under this section.
34 (b) Voluntary Prelitigation Mediation. – Prior to filing a civil action, the The parties to a
35 dispute arising under Chapter 47C of the General Statutes (North Carolina Condominium Act),
36 Chapter 47F of the General Statutes (North Carolina Planned Community Act), or an
37 association's declaration, bylaws, or rules and regulations are encouraged to initiate mediation
38 pursuant to this section. However, disputes related solely to a member's failure to timely pay an
39 association assessment or any fines or fees associated with the levying or collection of an
40 association assessment are not covered under this section.may agree at any time to mediation of
41 the dispute pursuant to this section.
42 (b1) Mandatory Prelitigation Mediation. – Prior to filing a civil action arising under
43 Chapter 47C of the General Statutes (North Carolina Condominium Act), Chapter 47F of the
44 General Statutes (North Carolina Planned Community Act), or an association's declaration,
45 bylaws, or rules and regulations, a party shall initiate mediation pursuant to this section. If an
46 action is initiated, it shall, upon the motion of any party prior to trial, be dismissed without
47 prejudice by the court unless any one or more of the following apply:
48 (1) The nonmoving party has satisfied the requirements of this section, and this
49 fact is indicated in the mediator's certification issued under subsection (g) of
50 this section.
Page 4 DRH30446-NKz-126A
 General Assembly Of North Carolina Session 2023
1 (2) The court finds that a mediator failed to issue a mediator's certification under
2 subsection (g) of this section indicating that the nonmoving party satisfied the
3 requirements of this section.
4 (3) The court finds good cause for a failure to attempt mediation. Good cause
5 includes a determination that the time delay required for mediation would
6 likely result in irreparable harm or that injunctive relief is otherwise
7 warranted.
8 (c) Initiation of Mediation. – Either an association or a member may contact the North
9 Carolina Dispute Resolution Commission or the Mediation Network of North Carolina for the
10 name of a mediator or community mediation center. Upon contacting a mediator, either the
11 association or member may supply to the mediator the physical address of the other party, or the
12 party's representative, and the party's telephone number and e-mail address, if known. The
13 mediator shall contact the party, or the party's representative, to notify him or her the party of the
14 request to mediate. If the parties agree to mediate, they Unless the mediation is waived pursuant
15 to subsection (e) of this section, the parties shall request in writing that the mediator schedule the
16 mediation. The mediator shall then notify the parties in writing of the date, time, and location of
17 the mediation, which shall be scheduled not later than 25 days after the mediator receives the
18 written request from the parties.
19 (d) Mediation Procedure. – The following procedures shall apply to mediation under this
20 section:
21 (1) Attendance. – The mediator shall determine who may attend mediation. The
22