Homeowners Association Reform Bill.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 3
HOUSE BILL 444
Committee Substitute Favorable 4/17/25
Committee Substitute #2 Favorable 5/6/25

Short Title: Homeowners Association Reform Bill. (Public)
Sponsors:
Referred to:
March 20, 2025
*H444-v-3*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIOUS CHANGES TO THE LAWS GOVERNING UNIT OWNERS' 2
ASSOCIATIONS AND LOT OWNERS' ASSOCIATION S, TO MANDATE 3
PRELITIGATION MEDIATION OF DISPUTES BETWEEN OWNERS' ASSOCIATIONS 4
AND THEIR MEMBERS, A ND TO REQUIRE THE DE PARTMENT OF JUSTICE TO 5
COLLECT AND REPORT ON COMPLAINTS SUBMITTED TO IT INVOLVING SUCH 6
DISPUTES. 7
The General Assembly of North Carolina enacts: 8
SECTION 1. Chapter 47C of the General Statutes is amended by adding a new 9
section to read: 10
"§ 47C-2-117.1A. Declaration amendments applicability. 11
Amendments made to the declaration pursuant to G.S. 47C-2-117 shall only affect unit 12
owners whose units are conveyed or transferred after the amendment takes effect. For 13
amendments made while a unit owner owns a unit, the amendment has no effect until the unit is 14
conveyed or transferred to another unit owner. A unit owner takes the unit subject to existing 15
rules in the declaration at the time of conveyance or transfer of the unit." 16
SECTION 2. Chapter 47F of the General Statutes is amended by adding a new 17
section to read: 18
"§ 47F-2-117.1. Declaration amendments applicability. 19
Amendments made to the declaration pursuant to G.S. 47F-2-117 shall only affect lot owners 20
whose lots are conveyed or transferred after the amendment takes effect. For amendments made 21
while a lot owner owns a lot, the amendment has no effect until the lot is conveyed or transferred 22
to another lot owner. A lot owner takes the lot subject to existing rules in the declaration at the 23
time of conveyance or transfer of the lot." 24
SECTION 3. G.S. 47C-3-102(a) reads as rewritten: 25
"§ 47C-3-102. Powers of unit owners' association. 26
(a) Unless the declaration expressly provides to the contrary, the association, even if 27
unincorporated, may do all of the following: 28
… 29
(3) Hire and terminate managing agents and other employees, agents, and 30
independent contractors. A contract between an association and a managing 31
agent shall not have a term exceeding one year and shall not co ntain an 32
automatic renewa l provision that requires the association to give notice of 33
nonrenewal more than 30 days prior to the contract 's anniversary date. Any 34
contract with a managing agent that is automatically renewed shall be 35
General Assembly Of North Carolina Session 2025
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terminable by the association for any reason upon 60 days' notice. A managing 1
agent shall not be compensated in whole or in part based on the amount of 2
fines collected by the managing agent on behalf of the association and shall 3
not collect from the association or a unit owner any fee in connection with its 4
collection of a fine imposed by the association. 5
… 6
(6) Regulate the use, maintenance, repair, replacement, and modification of 7
common elements.elements; provided, however, that in the absence of an 8
express authorization in the declaration, an association shall not enforce any 9
restriction on parking of a personal vehic le on a public street or public road 10
for which the North Carolina Department of Transportation or local 11
government has assumed responsibility for maint enance and repairs , unless 12
the authority to regulate such parking has been expressly delegated to the 13
association by the Department of Transportation or local government under 14
terms prescribing the manner in which the association may exercise that 15
authority. Any such delegation shall be valid for a period not to exceed five 16
years, at which time the association must reapply to the delegating entity. As 17
used in this subdivision, "personal vehicle" means an automobile with a gross 18
weight of less than 26,001 pounds that is used for personal pleasure, travel, or 19
commuting to and from a place of work, and does not include a motor home 20
or self-propelled recreational vehicle, or an automobile that is otherwise used 21
primarily in connection with any commercial endeavor or business. 22
… 23
(11) Impose charges for late payment of assessments, not to exceed the greater of 24
twenty dollars ($20.00) per month or ten percent (10%) of any assessment 25
installment unpaid and, after notice and an opportunity to be heard, suspend 26
privileges or services provided by the association (except rights of access to 27
lots) during any period that assessments or other amounts due and owing to 28
the association remain unpaid for a period of 30 days or longer, and levy 29
reasonable fines not to exceed one hundred dollars 30
($100.00)(G.S. 47C-3-107.1) for violations of the declaration, bylaws, and 31
rules and regulations of the association. No fine shall be levied for violation 32
of a provision restric ting or prohibiting tutoring, educational lessons, 33
academic lessons, or swimming lessons provided in the owner's unit to a group 34
of no more than five people at any one time , regardless of whether 35
compensation is received for such lessons. 36
… 37
(12b) Impose a reasonable charge for providing copies of records requested by a 38
member, not to exceed the actual cost of photocopying the records. 39
… 40
(14a) Exercise any authority granted to it under the declarat ion to approve or 41
disapprove any proposed changes to a unit or limited common element . In 42
exercising such authority, the association shall provide a fair, reasonable, and 43
expeditious procedure for making its decision , which procedure shall be set 44
forth in the association's governing documents. The procedures shall state the 45
maximum time for issuance of a ny decision on a proposal or a request for 46
reconsideration. At a minimum, a decision shall be made within 90 days after 47
the init ial submission of the proposal or submission of any additional 48
information or changes to the proposal requested b y the association in 49
response to the initial submission. A decision shall be in writing, shall be made 50
in good faith, and may not be unreasonable, arbitrary, or capricious. If the 51
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proposal is disapproved, the decision shall include both an explanation of why 1
the proposal is disapproved and a description of the procedure for 2
reconsideration of the decision by the executive board. 3
…." 4
SECTION 4.(a) G.S. 47C-3-103 reads as rewritten: 5
"§ 47C-3-103. Executive board members and officers. 6
… 7
(c) Within 30 days after adoption of any proposed budget for the condominium, the 8
executive board shall provide a summary of the budget to all the unit owners, and shall set a date 9
for a meeting of the unit owners to consider ratification of the budget not less than 10 nor more 10
than 60 days after mailing of the summary. There shall be no requirement that a quorum be 11
present at the meeting. The budget is ratified unless at that meeting a majority of all the unit 12
owners or any larger vote specified in the declaration rejects the budget. In the event the proposed 13
budget is rejected, the periodic budget last ratified shall be continued until such time as the unit 14
owners ratify a subsequent budget proposed by the executive board. 15
(c1) After ratification of the budget, no action may be taken by the executive board that 16
would increase the budgeted common expense liability for that fiscal year by more than five 17
percent (5%) without the approval of a majority of all the unit owners or any larger vote specified 18
in the declaration. 19
…." 20
SECTION 4.(b) G.S. 47F-3-103 reads as rewritten: 21
"§ 47F-3-103. Executive board members and officers. 22
… 23
(c) Within 30 days after adoption of any proposed budget for the planned community, 24
the executive board shall provide to all the lot owners a summary of the budget and a notice of 25
the meeting to consider ratification of the budget, including a statement that the budget may be 26
ratified without a quorum. The executive board shall set a date for a meeting of the lot owners to 27
consider ratification of the budget, such meeting to be held not less than 10 nor more than 60 28
days after mailing of the summary and notice. There shall be no requirement that a quorum be 29
present at the meeting. The budget is ratified unless at that meeting a majority of all the lot owners 30
in the association or any larger vote specified in the declaration rejects the budget. In the event 31
the proposed budget is rejected, the periodic budget last ratified by the lot owners shall b e 32
continued until such time as the lot owners ratify a subsequent budget proposed by the executive 33
board. 34
(c1) After ratification of the budget, no action may be taken by the executive board that 35
would increase the budgeted common expense liability for tha t fiscal year by more than five 36
percent (5%) without the approval of a majority of all the lot owners or any larger vote specified 37
in the declaration. 38
…." 39
SECTION 5. G.S. 47C-3-107.1 reads as rewritten: 40
"§ 47C-3-107.1. Procedures for fines and suspension of condominium privileges or services. 41
Unless a specific procedure for the imposition of fines or suspension of condominium 42
privileges or services is provided for in the declaration, a hearing shall be held before the 43
executive board or an adjudicatory pa nel appointed by the executive board to determine if any 44
unit owner should be fined or if condominium privileges or services should be suspended 45
pursuant to the powers granted to the association in G.S. 47C-3-102(11). Any adjudicatory panel 46
appointed by the executive board shall be composed of members of the association who are not 47
officers of the association or members of the executive board. The unit owner charged shall be 48
given notice of the charge, opportunity to be heard and to present evidence, and no tice of the 49
decision. A written notice of hearing shall be sent to the unit owner as provided in 50
G.S. 47C-3-116(e)(3) not less than 10 days prior to the scheduled hearing date. The notice of 51
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hearing shall specify the date, time , and place of the hearing and shall include a general 1
description of each alleged violation and the action, if any, to cure each alleged violation. The 2
unit owner shall be given an opportunity to be heard and to present evidence at the hearing. A 3
written notice of the decision specifying each violation verified by the evidence and the action, 4
if any, to cure each verified violation shall be sent to the unit owner as provided in 5
G.S. 47C-3-116(e)(3). If it is decided that a fine should be imposed, a fine not to exceed one 6
hundred dollars ($100.00) may be imposed for the violation and without further hearing, for each 7
day more than five days after the decision that the violation occurs. occurs, up to a maximum 8
fine of two thousand five hundred dollars ( $2,500). Such fines shall be assessments secured by 9
liens under G.S. 47C-3-116. If it is decided that a suspension of condominium privileges or 10
services should be imposed, the suspension may be continued without further hearing until the 11
violation or delinquency is cured. A unit owner may appeal a decision of an adjudicatory panel 12
to the full executive board by delivering written notice of appeal to the executive board within 13
15 days after the date of the decision. The executive board may affirm, vacate, or modify the 14
prior decision of the adjudicatory body." 15
SECTION 6. G.S. 47C-3-116 reads as rewritten: 16
"§ 47C-3-116. Lien for sums due the association; enforcement. 17
(a) Any assessment attributable to a unit which remains unpaid for a period of 30 days or 18
longer shall constitute a lien on that unit when a claim of lien is filed of record in the office of 19
the clerk of superior court of the county in which the unit is located in the manner provided in 20
this section. A claim of lien securing a debt consisting of fines or fine-related charges shall be 21
filed separately from a claim of lien securing other sums owed to the association and shall be 22
filed within 90 days after the date the fine was imposed . As used in this section, "fines or 23
fine-related charges " means fines imposed by the association, interest on unpaid fines , or 24
attorneys' fees incurred by the association related to fines imposed by the association. Once filed, 25
a claim of lien secures all sums due the association through the date filed and any sums due to 26
the association thereafter. Unless the declaration provides otherwise, fees, charges, late charges 27
and other charges imposed pursuant to G.S. 47C-3-102, 47C-3-107, 47C-3-107.1, and 47C-3-115 28
are subject to the claim claims of lien provided for under this section as well as any other sums 29
due and payable to the association under the declaration, the provisions of this Chapter, or as the 30
result of an arbitration, mediation, or judicial decision. 31
(b) The association must provide proper notice of delinque nt assessments to the unit 32
owner before filing a claim of lien. The association must make reasonable and diligent efforts 33
ensure that its records contain the unit owner's current physical mailing address. address and 34
current electronic mailing address. No fewer than 15 days prior to filing the lien, the association 35
shall mail do all of the following: 36
(1) Mail a statement of the assessment amount due by first class mail to the 37
physical address of the unit and the unit owner's address of record with the 38
association and, if different, to the address for the unit owner shown on the 39
county tax records for the unit. If the unit owner is a corporation or limited 40
liability company, the statement shall also be sent by first class mail to the 41
mailing address of the registered agent for the corporation or limited liability 42
company. Notwithstanding anything to the contrary in this Chapter, the 43
association is not required to mail a statement to an address known to be a 44
vacant unit or to a unit for which there is no United States postal address. 45
(2) Send a statement of the assessment amount due via electronic mail if the 46
owner has designated an email address as provided in G.S. 55A-1-70(b). 47
(c) A claim of lien shall set forth the name and address of the association, the name of 48
the record owner of the unit at the time the claim of lien is filed, a description of the unit, and the 49
amount of the lien claimed. A claim of lien may also appoint a trustee to conduct a foreclosure 50
as provided in subsection (f) of this sectio n. The first page of the claim of lien shall contain the 51
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following statement in print that is in boldface, capital letters, and no smaller than the largest 1
print used elsewhere in the document: 2
"THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY, AND I F THE 3
LIEN IS NOT PAID, THE HOMEOWNERS ASSOCIATION MAY PROCEED WITH 4
FORECLOSURE ENFORCEMENT AGAINST YOU AND YOUR PROPERTY IN LIKE 5
MANNER AS A MORTGAGE AS PERMITTED UNDER NORTH CAROLINA LAW." 6
The person signing the claim of lien on behalf of the association shall attach to and file with 7
the claim of lien a certificate of service attesting to the attempt of service on the record owner, 8
which service shall be attempted in accordance with G.S. 1A-1, Rule 4(j), for service of a copy 9
of a summons and a complaint. If the actual service is not achieved, the person signing the claim 10
of lien on behalf of the association shall be deemed to have met the requirements of this 11
subsection if service has been attempted pursuant to both of the following: (i) G.S. 1A-1, Rule 12
4(j)(1)c, d, or e and (ii) by mailing a copy of the lien by regular, first class mail, postage prepaid 13
to the physical address of the unit and the unit owner's address of record with the association, 14
and, if different, to the address for the unit owner shown on the county tax records and the county 15
real property records for the unit. The association shall also send the owner a copy of the claim 16
of lien and certificate of service by email if the owner has designated an email address as provided 17
in G.S. 55A-1-70(b). In the event that the owner of record is not a natural person, and actual 18
service is not achieved, the person signing the claim of lien on behalf of the association shall be 19
deemed to have met the requirements of this subsection if service has been attempted once 20
pursuant to the applicable provisions of G.S. 1A-1, Rule 4(j)(3) through G.S. 1A-1, Rule 4(j)(9). 21
Notwithstanding anything to the contrary in this Chapter, the association is not required to mail 22
a claim of lien to an address which is known to be a vacant unit or to a unit for which there is no 23
United States postal address. A lien for unpaid assessments is extinguished unless proceedings 24
to enforce the lien are instituted within three years after the filing of the claim of lien in the office 25
of the clerk of superior court. A lien securing a debt consisting of fines or fine-related charges is 26
extinguished unless proceedings to enforce the lien are instituted within one year after the filing 27
of the claim of lien in the office of the clerk of superior court. 28
(d) A claim of lien filed under this section is prior to all liens and encumbrances on a unit 29
except (i) liens and encumbrances, specifically including, but not limited to, a mortgage or deed 30
of trust on the unit, recorded before the filing of the claim of lien in the office of the clerk of 31
superior court and (ii) liens for real estate taxes and other governmental assessments and charges 32
against the unit. This subsection does not affect the priority of mechanics' or materialmen's liens. 33
(e) Attorneys' Fees. – 34
(1) The association shall be entitled to recover the reasonable attorneys' fees and 35
costs it incurs in connection with the collection of any sums due. due, except 36
as otherwise provided in subdivision (2) of this subsection. 37
(2) In an action to enforce a claim of lien securing a debt consisting of fines or 38
fine-related charges, upon findings by the court (i) that there was an 39
unwarranted refusal by the unit owner to negotiate or pay the fines or 40
fine-related charges and (ii) that the amount of damages recovered exceeded 41
the highest offer made by the unit owner no later than 90 days before the 42
commencement of trial, the presiding judge may, in the judge 's discretion, 43
allow reasonable attorneys' fees to the duly licensed attorneys representing the 44
association obtaining a judgment for damages in said suit, in an amount not to 45
exceed ten thousand dollars ($10,000) or fifteen percent (15%) of the amount 46
recovered, whichever is greater, said attorneys' fees to be taxed as a part of the 47
court costs. When making an award of attorneys' fees under this subdivision, 48
the judge shall issue a written order including findings of fact detailing the 49
factual basis for the finding of an unwarranted refusal to negotiate or pay the 50
debt secured by the claim of lien , and setting forth the amount of the highest 51
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offer made by the unit owner 90 days or more before the commencement of 1
trial, and the amount of damages recovered, as well as the factual basis and 2
amount of any such attorneys' fees to be awarded. 3
(3) A unit owner may not be required to pay attorneys' fees and court costs until 4
the unit owner is notified in writing of the association's intent to seek payment 5
of attorneys' fees, costs, and expenses. The notice must be sent by first -class 6
mail to the physical address of the unit and the unit owner's address of record 7
with the association and, if different, to the address for the unit owner shown 8
on the county tax records for the unit. The association must make reasonable 9
and diligent efforts to ensure that its records contain the unit owner's current 10
mailing address. Notwithstanding anything to the contrary in this Chapter, 11
there shall be no requirement that notice under this subsection be mailed to an 12
address which is known to be a va cant unit or a unit for which there is no 13
United States postal address. The notice shall set out the outstanding balance 14
due as of the date of the notice and state that the unit owner has 15 days from 15
the mailing of the notice by first -class mail to pay th e outstanding balance 16
without the attorneys' fees and court costs. If the unit owner pays the 17
outstanding balance within this period, then the unit owner shall have no 18
obligation to pay attorneys' fees, costs, or expenses. The notice shall also 19
inform the unit owner of the opportunity to contact a representative of the 20
association to discuss a payment schedule for the outstanding balance as 21
provided in subsection (i) of this section and shall provide the name and 22
telephone number of the representative. 23
(f) Except as provided in subsection (h) of this section, the association, acting through 24
the executive board, may foreclose a claim of lien securing a d ebt consisting of sums due the 25
association other than fines or fine-related charges in like manner as a mortgage or deed of trust 26
on real estate under power of sale, as provided in Article 2A of Chapter 45 of the General Statutes, 27
if the assessment remains unpaid delinquency has continued for 90 180 days or more. The 28
association shall not foreclose the claim of lien unless the all of the following conditions are met: 29
(1) The executive board votes to commence the proceeding against the specific 30
unit. 31
(2) The amount of the lien is equal to or greater than six months of assessments 32
or equal to or greater than two thousand five hundred dollars ($2,500) , 33
whichever is less. 34
(3) The association offered the unit owner a reasonable opportunity to cure the 35
default by making payments under an installment schedule as authorized 36
under subsection (i) of this section, and the unit owner either did not accept 37
the offer or defaulted on payments required under the agreed installment 38
schedule. 39
(f1) The following provisions and procedures shall be applicable to and complied with in 40
every nonjudicial power of s ale foreclosure of a claim of lien, and these provisions and 41
procedures shall control to the extent they are inconsistent or in conflict with the provisions of 42
Article 2A of Chapter 45 of the General Statutes: 43
… 44
(5) After the association has filed a claim of lien and prior to the commencement 45
of a nonjudicial foreclosure, the association shall give to the unit owner notice 46
of the association's intention to commence a nonjudicial foreclosure to enforce 47
its claim of lien. The notice shall contain the informat ion required in 48
G.S. 45-21.16(c)(5a).G.S. 45-21.16(c)(5) and G.S. 45-21.16(c)(5a) and shall 49
specifically reference the unit owner 's right of redemption provided under 50
subdivision (8) of this subsection. The notice shall be sent by first-class mail 51
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to the physical address of the unit and the unit owner's address of record with 1
the association and, if different, to the address for the unit owner shown on 2
the county tax records for the unit. 3
(5a) The notice of hearing required pursuant to G.S. 45-21.16(a) shall be 4
accompanied by the association's certification of the actions it has taken to 5
give the owner notice of delinquent assessments in compliance with 6
subsection (b) of this section. 7
(5b) At the commencement of the hearing, the clerk shall inquire as to whether the 8
owner occupies the unit as the owner's principal residence. If it appears that 9
the owner does currently occupy the unit as a principal residence, the clerk 10
shall further inquire as to the efforts the association has made to communicate 11
with the owner and to attempt to resolve the matter voluntarily before the 12
foreclosure proceeding. The clerk 's inquiry shall not be required if the 13
association has submitted, at or before the hearin g, an affidavit briefly 14
describing any efforts that have been made to resolve the default with the 15
owner and the results of any such efforts. 16
(5c) The clerk shall order the hearing continued if the clerk finds that there is good 17
cause to believe that additional time or additional measures have a reasonable 18
likelihood of resolving the delinquency without foreclosure. In determining 19
whether to continue the hearing, the clerk may consider (i) whether the 20
association has offered the debtor an opportunity to res olve the foreclosure 21
under a payment schedule pursuant to subsection (i) of this section , (ii) 22
whether the association has engaged in actual responsive communication with 23
the owner, including telephone conferences or in -person meetings with the 24
owner or other actual two-party communications, (iii) whether the owner has 25
indicated that the owner has the intent and ability to resolve the delinquency 26
by making future payments under a payment plan, and (iv) whether the 27
initiation or continuance of good -faith voluntary resolution efforts between 28
the parties may resolve the matter without a foreclosure sale. Where good 29
cause exists to continue the hearing, the clerk shall order the hearing continued 30
to a date and time certain not more than 90 days from the date s cheduled for 31
the original hearing. Nothing in this part shall limit the authority of the clerk 32
to continue a hearing for other good cause shown. 33
… 34
(g) The provisions of subsection (f) of this section do not prohibit or prevent an 35
association from pursuing judicial foreclosure of a claim of lien, lien securing a debt consisting 36
of sums due the association other than fines and fine -related charges, from taking other actions 37
to recover the sums due the association, or from accepting a deed in lieu of foreclosure. Any 38
judgment, decree, or order in any judicial foreclosure or civil action relating to the collection of 39
assessments shall include an award of costs and reasonable attorneys' fees for the prevailing 40
party, which shall not be subject to the limitation provided in subdivision (f)(12) of this section. 41
(h) A claim of lien securing a debt consisting solely of fines imposed by the association, 42
interest on unpaid fines, or attorneys' fees incurred by the association solely associated with fines 43
imposed by the association or fine-related charges may only be enforced by judicial foreclosure, 44
as provided in Article 29A of Chapter 1 of the General Statutes. the filing of a civil action seeking 45
a judgment. In addition, an association shall not levy, charge, or attempt to collect a service, 46
collection, consulting, or administration fee from any unit owner unless the fee is expressly 47
allowed in the declaration, and any claim of lien securing a debt consisting solely of these fees 48
may only be enforced by judicial foreclosure, as provided in Article 29A of Chapter 1 of the 49
General Statutes.the filing of a civil action see king a judgment. Liens arising as a result of the 50
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entry of a judgment in favor of the associa tion in any such civil action shall relate back and be 1
effective as of the date the claim of lien was filed. 2
…." 3
SECTION 7. G.S. 47C-3-118 reads as rewritten: 4
"§ 47C-3-118. Association records. 5
(a) The association shall keep financial records sufficientl y detailed to enable the 6
association to comply with this chapter. All financial and other records, including records of 7
meetings of the association and executive board, shall be made reasonably available for 8
examination by any unit owner and the unit owner's authorized agents as required by the bylaws 9
and by Chapter 55A of the General Statutes if the association is a nonprofit corporation. If the 10
bylaws do not specify a shorter time, the association shall make the requested records reasonably 11
available for examination within 30 days of receiving the unit owner's written request. Except as 12
otherwise provided in the bylaws, the association is not required to make available for 13
examination financial records created more than three years before the date on which the 14
association receives the unit owner's written request . If the bylaws do not specify particular 15
records to be maintained, the association shall keep accurate records of all cash receipts and 16
expenditures and all assets and liabilities. In addition to any specific information that is required 17
by the bylaws to be assembled and reported to the unit owners at specified times, the association 18
shall make an annual income and expense statement and balance sheet available to all unit owners 19
at no charge and within 75 days after the close of the fiscal year to which the information relates. 20
Notwithstanding the bylaws, a more extensive compilation, review, or audit of the association's 21
books and records for the current or immediately preceding fiscal year may be required by a vote 22
of the majority of the executive board or by the affirmative vote of a majority of the unit owners 23
present and voting in person or by proxy at any annual meeting or any special meeting duly called 24
for that purpose. 25
(a1) A unit owner or the unit owner's authorized agent is entitled to inspect and copy, at a 26
reasonable time and location specified by the association, any contract entered into by the 27
association authorizing a managing agent to exercise any of the powers granted to the association 28
pursuant to G.S. 47C-3-102, if the unit owner gives the association written notice of the demand 29
at least five business days before the date on which the unit owner wishes to inspect and copy 30
and the request satisfies the conditions for inspection set forth in G.S. 55A-16-02(c). A demand 31
to inspect made pursuant to this subsection shall be presumed to have been made in good faith 32
and for a proper purpose. In any action to compel the inspection and copying of documents, the 33
court may awar d reasonable attorneys ' fees to the prevailing party. If the association does not 34
allow a unit owner who complies with this subsection to inspect and copy the requested contract, 35
and, if a court of competent jurisdiction thereafter enters an order compelling the association to 36
do so, the court shall also order the association to pay the unit owner's costs, including reasonable 37
attorneys' fees, incurred to obtain the order. 38
…." 39
SECTION 8. G.S. 47F-3-102 reads as rewritten: 40
"§ 47F-3-102. Powers of owners' association. 41
Unless the articles of incorporation or the declaration expressly provides to the contrary, the 42
association may do all of the following: 43
… 44
(3) Hire and discharge managing agents and other employees, agents, and 45
independent contractors. A contract between an association and a managing 46
agent shall not have a term exceeding one year and shall not contain an 47
automatic renewa l provision that requires the association to give notice of 48
nonrenewal more than 30 days prior to the contract 's anniversary date. Any 49
contract with a managing agent that is automatically renewed shall be 50
terminable by the association for any reason upon 60 days' notice. A managing 51
General Assembly Of North Carolina Session 2025
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agent shall not be compensated in whole or in part based on the amount of 1
fines collected by the managing agent on behalf of the association and shall 2
not collect from the association or a lot owner any fee in connection with its 3
collection of a fine imposed by the association. 4
… 5
(6) Regulate the use, maintenance, repair, replacement, and modification of 6
common elements.elements; provided, however, that in the absence of an 7
express authorization in the declaration, an association shall not enforce any 8
restriction on parking of a personal vehicle on a public street or public road 9
for which the North Carolina Department of Transportation or local 10
government has assumed responsibility for maintenance and repairs , unless 11
the authority to regulate such parking has been expressly delegated to the 12
association by the Department of Transportation or local government under 13
terms prescribing the manner in which the association may exercise that 14
authority. Any such delegation shall be valid for a period not to exceed five 15
years, at which time the association must reapply to the delegating entity. As 16
used in this subdivision, "personal vehicle" means an automobile with a gross 17
weight of less than 26,001 pounds that is used for personal pleasure, travel, or 18
commuting to and from a place of work, and does not include a motor home 19
or self-propelled recreational vehicle, or an automobile that is otherwise used 20
primarily in connection with any commercial endeavor or business. 21
… 22
(12) After notice and an opportunity to be heard, impose reasonable fines or 23
suspend privileges or services provided by the association (except rights of 24
access to lots) for reasonable periods for violations of the declaration, bylaws, 25
and rules and regulations of the association. No fine shall be levied for 26
violation of a provision restricting or prohibiting tutoring, educational lessons, 27
academic lessons, or swimming lessons provided on the owner's lot to a group 28
of no more than five people at any one time, regardless of whether 29
compensation is received for such lessons. 30
… 31
(15a) Exercise any authority granted to it under the declarat ion to approve or 32
disapprove any proposed changes on a lot or l imited common element. In 33
exercising such authority, the association shall provide a fair, reasonable, and 34
expeditious procedure for making its decision , which procedure shall be set 35
forth in the association's governing documents. The procedures shall state the 36
maximum time for issuance of a ny decision on a proposal or a request for 37
reconsideration. At a minimum, a decision shall be made within 90 days after 38
the init ial submission of the proposal or submission of any additional 39
information or changes to the proposal requested b y the association in 40
response to the initial submission. A decision shall be in writing, shall be made 41
in good faith, and may not be unreasonable, arbitrary, or capricious. If the 42
proposal is disapproved, the decision shall include both an explanation of why 43
the proposal is disapproved and a description of the procedure for 44
reconsideration of the decision by the executive board. 45
…." 46
SECTION 9. G.S. 47F-3-107.1 reads as rewritten: 47
"§ 47F-3-107.1. Procedures for fines and suspension of planned community privileges or 48
services. 49
Unless a specific procedure for the imposition of fines or suspension of planned community 50
privileges or services is provided for in the declaration, a hearing shall be held before the 51
General Assembly Of North Carolina Session 2025
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executive board or an adjudicatory panel appointed by the executive board to determine if any 1
lot owner should be fined or if planned community privileges or services should be suspended 2
pursuant to the powers granted to the association in G.S. 47F-3-102(11) and (12). Any 3
adjudicatory panel appointed by the executive board shall be composed of members of the 4
association who are not officers of the association or members of the executive board. The lot 5
owner charged shall be given notice of the ch arge, opportunity to be heard and to present 6
evidence, and notice of the decision. A written notice of hearing shall be sent to the lot owner as 7
provided in G.S. 47F-3-116(e)(3) not less than 10 days prior to the scheduled hearing date. The 8
notice of hearing shall specify the date, time, and place of the hearing and shall include a general 9
description of each alleged violation and the action, if any, to cure each alleged violation. The lot 10
owner shall be given an opportunity to be heard and to present evidence at the hearing. A written 11
notice of the decision specifying each violation verified by the evidence and the action, if any, to 12
cure each verified violation shall be sent to the lot owner as provided in G.S. 47F-3-116(e)(3). If 13
it is decided that a fine should be imposed, a fine not to exceed one hundred dollars ($100.00) 14
may be imposed for the violation and without further hearing, for each day more than five days 15
after the decision that the violation occurs. occurs, up to a maximum fine of two t housand five 16
hundred dollars ($2,500). Such fines shall be assessments secured by liens under G.S. 47F-3-116. 17
If it is decided that a suspension of planned community privileges or services should be imposed, 18
the suspension may be continued without further hearing until the violation or delinquency is 19
cured. The lot owner may appeal the decision of an adjudicatory panel to the full executive board 20
by delivering written notice of appeal to the executive board within 15 days after the date of the 21
decision. The execut ive board may affirm, vacate, or modify the prior decision of the 22
adjudicatory body." 23
SECTION 10. G.S. 47F-3-116 reads as rewritten: 24
"§ 47F-3-116. Lien for sums due the association; enforcement. 25
(a) Any assessment attributable to a lot which remains unpaid for a period of 30 days or 26
longer shall constitute a lien on that lot when a claim of lien is filed of record in the office of the 27
clerk of superior court of the county in which the lot is located in the manner provided in this 28
section. A claim of lien securing a debt consisting of fines or fine-related charges shall be filed 29
separately from a claim of lien securing other sums due the association and shall be filed within 30
90 days after the date the fine was imposed. As used in this section, "fines or fine-related charges" 31
means fines imposed by the association, interest on unpaid fines , or attorneys' fees incurred by 32
the association related to fines imposed by the association. Once filed, a claim of lien secures all 33
sums due the association through the date filed and any sums due to the association thereafter. 34
Unless the declaration provides otherwise, fees, charges, late charges, and other charges imposed 35
pursuant to G.S. 47F-3-102, 47F-3-107, 47F -3-107.1, and 47F -3-115 are subject to the claim 36
claims of lien provided for under this section as well as any other sums due and payable to the 37
association under the declaration, the provisions of this Chapter, or as the result of an arbitration, 38
mediation, or judicial decision. 39
(b) The association must provide proper notice of delinquent assessments to the lot owner 40
before filing a claim of lien. The association must make reasonable and diligent efforts to ensure 41
that its records contain the lot owner's current physical mailing address. address and current 42
electronic mailing address. No fewer than 15 days prior to filing the lien, the association shall 43
mail do all of the following: 44
(1) Mail a statement of the assessment amount due by first -class mail to the 45
physical address of the lot and the lot owner's add ress of record with the 46
association and, if different, to the address for the lot owner shown on the 47
county tax records for the lot. If the lot owner is a corporation or limited 48
liability company, the statement shall also be sent by first -class mail to the 49
mailing address of the registered agent for the corporation or limited liability 50
company. Notwithstanding anything to the contrary in this Chapter, the 51
General Assembly Of North Carolina Session 2025
House Bill 444-Third Edition Page 11
association is not required to mail a statement to an address known to be a 1
vacant lot on which no dwel ling has been constructed or to a lot for which 2
there is no United States postal address. 3
(2) Send a statement of the assessment amount due via electronic mail if the 4
owner has designated an email address as provided in G.S. 55A-1-70(b). 5
(c) A claim of lien shall set forth the name and address of the association, the name of 6
the record owner of the lot at the time the claim of lien is filed, a description of the lot, and the 7
amount of the lien claimed. A claim of lien may also appoint a trustee to conduc t a foreclosure, 8
as provided in subsection (f) of this section. The first page of the claim of lien shall contain the 9
following statement in print that is in boldface, capital letters, and no smaller than the largest 10
print used elsewhere in the document: 11
"THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY, AND IF THE 12
LIEN IS NOT PAID, THE HOMEOWNERS ASSOCIATION MAY PROCEED WITH 13
FORECLOSURE ENFORCEMENT AGAINST YOU AND YOUR PROPERTY IN LIKE 14
MANNER AS A MORTGAGE AS PERMITTED UNDER NORTH CAROLINA LAW." 15
The person signing the claim of lien on behalf of the association shall attach to and file with 16
the claim of lien a certificate of service attesting to the attempt of service on the record owner, 17
which service shall be attempted in accordance with G.S. 1A-1, Rule 4(j), for service of a copy 18
of a summons and a complaint. If the actual service is not achieved, the person signing the claim 19
of lien on behalf of the association shall be deemed to have met the requirements of this 20
subsection if service has been attem pted pursuant to both of the following: (i) G.S. 1A-1, Rule 21
4(j)(1)c, d, or e and (ii) by mailing a copy of the lien by regular, first-class mail, postage prepaid 22
to the physical address of the lot and the lot owner's address of record with the association , and, 23
if different, to the address for the lot owner shown on the county tax records and the county real 24
property records for the lot. The association shall also send the owner a copy of the claim of lien 25
and certificate of service by email if the owner has designated an email address as provided in 26
G.S. 55A-1-70(b). In the event that the owner of record is not a natural person, and actual service 27
is not achieved, the person signing the claim of lien on behalf of the association shall be deemed 28
to have met the requirements of this subsection if service has been attempted once pursuant to 29
the applicable provisions of G.S. 1A-1, Rule 4(j)(3) through G.S. 1A-1, Rule 4(j)(9). 30
Notwithstanding anything to the contrary in this Chapter, the associatio n is not required to mail 31
a claim of lien to an address which is known to be a vacant lot on which no dwelling has been 32
constructed or to a lot for which there is no United States postal address. A lien for unpaid 33
assessments is extinguished unless proceed ings to enforce the lien are instituted within three 34
years after the filing of the claim of lien in the office of the clerk of superior court. A lien securing 35
a debt consisting of fines or fine-related charges is extinguished unless proceedings to enforce 36
the lien are instituted within one year after the filing of the claim of lien in the office of the clerk 37
of superior court. 38
(d) A claim of lien filed under this section is prior to all liens and encumbrances on a lot 39
except (i) liens and encumbrances, specifically including, but not limited to, a mortgage or deed 40
of trust on the lot, recorded before the filing of the claim of lien in the office of the clerk of 41
superior court and (ii) liens for real estate taxes and other governmental assessments and charges 42
against the lot. This subsection does not affect the priority of mechanics' or materialmen's liens. 43
(e) Attorneys' Fees. – 44
(1) The association shall be entitled to recover the reasonable attorneys' fees and 45
costs it incurs in connection with the collection of any sums due. due, except 46
as otherwise provided in subdivision (2) of this subsection. 47
(2) In an action to enforce a claim of lien securing a debt consisting of fines or 48
fine-related charges, upon findings by the court (i) that there was an 49
unwarranted refusal by the lot owner to negotiate or pay the fines or 50
fine-related charges and (ii) that the amount of damages recovered exceeded 51
General Assembly Of North Carolina Session 2025
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the highest offer made by the lot owner no later than 90 days before the 1
commencement of trial, the presiding judge may, in the judge 's discretion, 2
allow reasonable attorneys' fees to the duly licensed attorneys representing the 3
association obtaining a judgment for damages in said suit, in an amount not to 4
exceed ten thousand dollars ($10,000) or fifteen percent (15%) of the amount 5
recovered, whichever is greater, said attorneys' fees to be taxed as a part of the 6
court costs. When the presiding judge determines that an award of attorneys ' 7
fees is to be made under this subsection in an action to enforce a claim of lien 8
securing a debt consisting of fines or fine-related charges, the judge shall issue 9
a written order including findings of fact detailing the factual basis for the 10
finding of an unwarranted refusal to negotiate or pay the debt secured by the 11
claim of lien, and setting forth the amount of the highest offer made by the lot 12
owner 90 days or more before the commencement of trial, and the amount of 13
damages recovered, as well as the factual basis and amount of any such 14
attorneys' fees to be awarded. 15
(3) A lot owner may not be required to pay attorneys' fees and court costs until 16
the lot owner is notified in writing of the association's intent to seek payment 17
of attorneys' fees, costs, and expenses. The notice must be sent by first -class 18
mail to the physical address of the lot and the lot owner's address of record 19
with the association and, if different, to the address for the lot owner shown 20
on the county tax records for the lot. The association must make reasonable 21
and diligent efforts to ensure that its records contain the lot owner's current 22
mailing address. Notwithstandin g anything to the contrary in this Chapter, 23
there shall be no requirement that notice under this subsection be mailed to an 24
address which is known to be a vacant lot on which no dwelling has been 25
constructed or a lot for which there is no United States pos tal address. The 26
notice shall set out the outstanding balance due as of the date of the notice and 27
state that the lot owner has 15 days from the mailing of the notice by first-class 28
mail to pay the outstanding balance without the attorneys' fees and court costs. 29
If the lot owner pays the outstanding balance within this period, then the lot 30
owner shall have no obligation to pay attorneys' fees, costs, or expenses. The 31
notice shall also inform the lot owner of the opportunity to contact a 32
representative of th e association to discuss a payment schedule for the 33
outstanding balance, as provided in subsection (i) of this section, and shall 34
provide the name and telephone number of the representative. 35
(f) Except as provided in subsection (h) of this section, the ass ociation, acting through 36
the executive board, may foreclose a claim of lien securing a debt consisting of sums due the 37
association other than fines or fine-related charges in like manner as a mortgage or deed of trust 38
on real estate under power of sale, as provided in Article 2A of Chapter 45 of the General Statutes, 39
if the assessment remains unpaid delinquency has continued for 90 180 days or more. The 40
association shall not foreclose the claim of lien unless the all of the following conditions are met: 41
(1) The executive board votes to commence the proceeding against the specific 42
lot. 43
(2) The amount of the lien is equal to or greater than six months of assessments 44
or equal to or greater than two thousand five hundred dollars ($2,500), 45
whichever is less. 46
(3) The association offered the lot owner a reasonable opportunity to cure the 47
default by making payments under an installment schedule as authorized 48
under subsection (i) of this section, and the lot owner either did not accept the 49
offer or defaulted on payments required under the agreed installment schedule. 50
General Assembly Of North Carolina Session 2025
House Bill 444-Third Edition Page 13
(f1) The following provisions and procedures shall be applicable to and complied with in 1
every nonjudicial power of sale foreclosure of a claim of lien, and these provisions and 2
procedures shall control to the extent they are inconsistent or in conflict with the provisions of 3
Article 2A of Chapter 45 of the General Statutes: 4
… 5
(5) After the association has filed a claim of lien and prior to the commencement 6
of a nonjudicial foreclosure, the association shall give to the lot owner notice 7
of the association's intention to commence a nonjudicial foreclosure to enforce 8
its claim of lien. The notice shall contain the information required in 9
G.S. 45-21.16(c)(5a).G.S. 45-21.16(c)(5) and G.S. 45-21.16(c)(5a) and shall 10
specifically reference the lot owner's right of redemption provided under 11
subdivision (8) of this subsection. The notice shall be sent by first -class mail 12
to the physical address of the lot and the lot owner's address of record with the 13
association and, if different, to the address for the lot owner shown on the 14
county tax records for the lot. 15
(5a) The notice of hearing required pursuant to G.S. 45-21.16(a) shall be 16
accompanied by the association 's certification of the actions it has taken to 17
give the owner notice of delinquent assessments in compliance with 18
subsection (b) of this section. 19
(5b) At the commencement of the hearing, the clerk shall inquire as to whether the 20
owner occupies the lot as the owner's principal residence. If it appears that the 21
owner does currently occupy the lot as a principal residence, the clerk shall 22
further inquire as to the efforts the association has made to communicate with 23
the owner and to attempt to resolve the matter volunta rily before the 24
foreclosure proceeding. The clerk 's inquiry shall not be required if the 25
association has submitted, at or before the hearing, an affidavit briefly 26
describing any efforts that have been made to resolve the default with the 27
owner and the results of any such efforts. 28
(5c) The clerk shall order the hearing continued if the clerk finds that there is good 29
cause to believe that additional time or additional measures have a reasonable 30
likelihood of resolving the delinquency without foreclosure. In d etermining 31
whether to continue the hearing, the clerk may consider (i) whether the 32
association has offered the owner an opportunity to resolve the foreclosure 33
under a payment schedule pursuant to subsection (i) of this section , (ii) 34
whether the association has engaged in actual responsive communication with 35
the owner, including telephone conferences or in -person meetings with the 36
owner or other actual two-party communications, (iii) whether the owner has 37
indicated that the owner has the intent and ability t o resolve the delinquency 38
by making future payments under a payment plan, and (iv) whether the 39
initiation or continuance of good -faith voluntary resolution efforts between 40
the parties may resolve the matter without a foreclosure sale. Where good 41
cause exists to continue the hearing, the clerk shall order the hearing continued 42
to a date and time certain not more than 90 days from the date scheduled for 43
the original hearing. Nothing in this part shall limit the authority of the clerk 44
to continue a hearing for other good cause shown. 45
… 46
(g) The provisions of subsection (f) of this section do not prohibit or prevent an 47
association from pursuing judicial foreclosure of a claim of lien, lien securing a debt consisting 48
of sums due the association other than fines and fine-related charges, from taking other actions 49
to recover the sums due the association, or from accepting a deed in lieu of foreclosure. Any 50
judgment, decree, or order in any judicial foreclosure or civil action relating to the collection of 51
General Assembly Of North Carolina Session 2025
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assessments shall include an award of costs and reasonable attorneys' fees for the prevailing 1
party, which shall not be subject to the limitation provided in subdivision (f)(12) of this section. 2
(h) A claim of lien securing a debt consisting solely of fines imposed by the association, 3
interest on unpaid fines, or attorneys' fees incurred by the association solely associated with fines 4
imposed by the association or fine-related charges may only be enforced by judicial foreclosure, 5
as provided in Article 29A of Chapter 1 of the General Statutes. the filing of a civil action seeking 6
a judgment. In addition, an association shall not levy, charge, or attempt to collect a service, 7
collection, consulting, or administration fee from any lot owner unless the fee is expressly 8
allowed in the declaration, and any claim of lien securing a debt consisting solely of these fees 9
may only be enforced by judicial foreclosure, as provided in Article 29A of Chapter 1 of the 10
General Statutes.the filing of a civil action seeking a judgment. Liens arising as a result of the 11
entry of a judgment in favor of the association in any such civil action shall relate back and be 12
effective as of the date the claim of lien was filed. 13
…." 14
SECTION 11. G.S. 47F-3-118 reads as rewritten: 15
"§ 47F-3-118. Association records. 16
(a) The association shall keep financial records sufficiently detailed to enable the 17
association to comply with this Chapter. All financial and other records, including records of 18
meetings of the association and executive board, shall be made reasonably available for 19
examination by any lot owner and the lot owner's authorized agents as required in the bylaws and 20
Chapter 55A of the General Statutes. If the bylaws do not specify a shorter time, the association 21
shall make records reasonably a vailable for examination within 30 days of receiving the lot 22
owner's written request. Except as otherwise provided in the bylaws, the association is not 23
required to make available for examination financial records created more than three years before 24
the date on which the association receives the lot owner's written request. If the bylaws do not 25
specify particular records to be maintained, the association shall keep accurate records of all cash 26
receipts and expenditures and all assets and liabilities. In ad dition to any specific information 27
that is required by the bylaws to be assembled and reported to the lot owners at specified times, 28
the association shall make an annual income and expense statement and balance sheet available 29
to all lot owners at no charg e and within 75 days after the close of the fiscal year to which the 30
information relates. Notwithstanding the bylaws, a more extensive compilation, review, or audit 31
of the association's books and records for the current or immediately preceding fiscal year may 32
be required by a vote of the majority of the executive board or by the affirmative vote of a 33
majority of the lot owners present and voting in person or by proxy at any annual meeting or any 34
special meeting duly called for that purpose. 35
(a1) A lot owner or the lot owner's authorized agent is entitled to inspect and copy, at a 36
reasonable time and location specified by the association, any contract entered into by the 37
association authorizing a managing agent to exercise any of the powers granted to the association 38
pursuant to G.S. 47F-3-102 if the lot owner gives the association written notice of the demand at 39
least five business days before the date on which the lot owner wishes to inspect and copy and 40
the request satisfies the conditions for inspection set forth in G.S. 55A-16-02(c). A demand to 41
inspect made pursuant to this subsection shall be presumed to have been made in good faith and 42
for a proper purpose. In any action to compel the inspection and copying of documents, the court 43
may award reasonable attorneys' fees to the prevailing party. If the association does not allow a 44
lot owner who complies with this subsection to inspect and copy the requested contract, and, if a 45
court of competent jurisdiction thereafter enters an order compelling the association to do so, the 46
court shall also order the association to pay the lot owner's costs, including reasonable attorneys' 47
fees, incurred to obtain the order. 48
…." 49
SECTION 12.(a) G.S. 7A-38.3F reads as rewritten: 50
General Assembly Of North Carolina Session 2025
House Bill 444-Third Edition Page 15
"§ 7A-38.3F. Prelitigation mediation of condominium and homeowners owners' association 1
disputes. 2
(a) Definitions. – The following definitions apply in this section: 3
(1) Association. – An association of unit or lot owners organized as allowed under 4
North Carolina law, including G.S. 47C-3-101 and G.S. 47F-3-101. 5
(2) Dispute. – Any matter relating to real estate under the jurisdiction of an 6
association about which the member and association cannot agree. The term 7
"dispute" does not include matte rs expressly exempted in subsection (b) of 8
this section. 9
(3) Executive board. – The body, regardless of name, designated in the 10
declaration to act on behalf of an association. 11
(4) Mediator. – A neutral person who acts to encourage and facilitate a resolution 12
of a dispute between an association and a member. 13
(5) Member. – A person who is a member of an association of unit or lot owners 14
organized as allowed under North Carolina law, including G.S. 47C-3-101 15
and G.S. 47F-3-101. 16
(6) Party or parties. – An association or member who is involved in a dispute, as 17
that term is defined in subdivision (2) of this subsection. 18
(a1) Disputes related solely to a member's failure to timely pay an association assessment 19
or any fines or fees associated with the levying or collection of an association assessment are not 20
covered under this section. 21
(b) Voluntary Prelitigation Mediation. – Prior to filing a civil action, the The parties to a 22
dispute arising under Chapter 47C of the General Statutes (North Carolina Condominium Act), 23
Chapter 47F of the General Statutes (North Carolina Planned Community Act), or an 24
association's declaration, bylaws, or rules and regulations are encouraged to initiate mediation 25
pursuant to this section. However, disputes related solely to a member's failure to timely pay an 26
association assessment or any fines or fees associated with the levying or collection of an 27
association assessment are not covered under this section.may agree at any time to mediation of 28
the dispute pursuant to this section. 29
(b1) Mandatory Prelitigation Mediation. – Prior to filing a civil action arising under 30
Chapter 47C of the General Statutes (North Carolina Condominium Act), Cha pter 47F of the 31
General Statutes (North Carolina Planned Community Act), or an association 's declaration, 32
bylaws, or rules and regulations , a party shall initiate mediation pursuant to this section. If an 33
action is initiated, it shall, upon the motion of any party prior to trial, be dismissed without 34
prejudice by the court unless any one or more of the following apply: 35
(1) The nonmoving party has satisfied the requirements of this section , and this 36
fact is indicated in the mediator's certification issued under subsection (g) of 37
this section. 38
(2) The court finds that a mediator failed to issue a mediator's certification under 39
subsection (g) of this section indicating that the nonmoving party satisfied the 40
requirements of this section. 41
(3) The court finds good cause for a failure to attempt mediation. Good cause 42
includes a determination that the time delay required for mediation would 43
likely result in irreparable harm or that injunctive relief is otherwise 44
warranted. 45
(c) Initiation of Mediation. – Either an association or a member may contact the North 46
Carolina Dispute Resolution Commission or the Mediation Network of North Carolina for the 47
name of a mediator or community mediation center. Upon contacting a mediator, either the 48
association or member may supply to the mediator the physical address of the other party, or the 49
party's representative, and the party's telephone number and e -mail address, if known. The 50
mediator shall contact the party, or the party's representative, to notify him or her the party of the 51
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request to mediate. If the parties agree to mediate, they Unless the mediation is waived pursuant 1
to subsection (e) of this section, the parties shall request in writing that the mediator schedule the 2
mediation. The mediator shall then notify the parties in writing of the date, time, and location of 3
the mediation, which shall be scheduled not later than 25 days after the mediator receives the 4
written request from the parties. 5
(d) Mediation Procedure. – The following procedures shall apply to mediation under this 6
section: 7
(1) Attendance. – The mediator shall determine who may attend mediation. The 8
mediator may require the executive board or a large group of members to 9
designate one or more persons to serve as their representatives in the 10
mediation. 11
(2) All parties are expected to attend mediation. The mediator may allow a party 12
to participate in mediation by telephone or other electronic means if the 13
mediator determines that the party has a compelling reason to do so. 14
(3) If the parties cannot reach a fin al agreement in mediation because to do so 15
would require the approval of the full executive board or the approval of a 16
majority or some other percentage of the members of the association, the 17
mediator may recess the mediation meeting to allow the executive board or 18
members to review and vote on the agreement. 19
(e) Decline Mediation. – Either party to a dispute may decline mediation under this 20
section. If either party declines mediation after mediation has been initiated under subsection (c) 21
of this section b ut mediation has not been held, the party declining mediation shall inform the 22
mediator and the other party in writing of his or her decision to decline mediation. No costs shall 23
be assessed to any party if either party declines mediation prior to the occu rrence of an initial 24
mediation meeting.Waiver of Mediation. – The parties to a dispute may agree to waive mediation 25
required by this section by informing the mediator of the waiver in writing. 26
(f) Costs of Mediation. – The costs of mediation, including the mediator's fees, shall be 27
shared equally by the parties unless otherwise agreed to by the parties. Fees shall be due and 28
payable at the end of each mediation meeting. A mediator may charge a reaso nable fee, as 29
applicable, to prepare a mediator's certification required under subsection (g) of this section when 30
parties to a dispute agree to waive mediation pursuant to subsection (e) of this section or when 31
one or more parties failed or refused withou t good cause to attend the mediation meetings or 32
otherwise participate in the mediation. When an attorney represents a party to the mediation, that 33
party shall pay his or her the attorneys' fees. 34
(g) Certification That Mediation Concluded. – Upon a waiver of the mediation under 35
subsection (e) of this section or upon the conclusion of mediation, the mediator shall prepare a 36
certification stating the date on which the mediation was concluded and a statement of the general 37
results of the mediation, including, as applicable, that the parties waived the mediation, that an 38
agreement was reached or reached, that mediation was attempted but an agreement was not 39
reached. reached, or that one or more parties failed or refused without good cause to attend the 40
mediation meetings or otherwise participate in the mediation . If both parties participate in 41
mediation and a cause of action involving the dispute mediated is later filed, either party may file 42
the certificate with the clerk of court, and the parties shall not be required to mediate again under 43
any provision of law. The Supreme Court may adopt additional rules and standards to implement 44
this section, including an exemption from the provisions of G.S. 7A-38.1 for cases in which 45
mediation was attempted under this sect ion. The sanctions in G.S. 7A-38.1(g) do not apply to 46
prelitigation mediation conducted under this section. 47
… 48
(j) Association Duty to Notify. – Each association shall, in writing, shall notify the 49
members of the association each year annually in writing that they may initiate mediation under 50
this section to try to resolve a dispute with the association. The association shall publish the 51
General Assembly Of North Carolina Session 2025
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notice required in this subsection on the association's Web site; but if the association does not 1
have a Web site, the association website, or it shall publish the notice at the same time and in the 2
same manner as the names and addresses of all officers and board members of the association 3
are published as provided in G.S. 47C-3-103 and G.S. 47F-3-103." 4
SECTION 12.(b) This section becomes effective October 1, 2025, and applies to 5
actions filed on or after that date. 6
SECTION 13.(a) Article 1 of Chapter 114 of the General Statutes is amended by 7
adding a new section to read: 8
"§ 114-8.8. Collection and report of owners' association complaint data. 9
(a) The Department of Justice shall receive and record complaints by members of 10
associations of unit owners or lot owners concerning disputes with their associations as required 11
by this section. For the purposes of this section , the term "association" means an association of 12
unit or lot owners organized under Chapter 47C or Chapter 47F of the General Statutes. The 13
Department of Justice shall publish a complaint form providing for electronic submission of those 14
complaints on its website. When the Department receives a complaint via phone, mail, or online 15
submission, it shall collect the following information from the complainant: 16
(1) The name and contact information of the complainant. 17
(2) The name and contact information of the other party or parties to the dispute 18
giving rise to the complaint. 19
(3) The name, address, and contact information of the association management 20
company, if any, involved in the dispute. 21
(4) Details on whether the association member involved in the dispute (i) was 22
informed of the requirement of membership in the association as a condition 23
of unit or lot ownership and, if so informed, when and by whom; (ii) received 24
a copy of the governing documents of the association before obtaining title to 25
the property; (iii) was denied access to the association's governing documents; 26
and (iv) understood the rights and obligations of owners and the association 27
under the governing documents. 28
(5) The nature of the complaint. 29
(6) The background information regarding the dispute , including whether the 30
member and association communicated about the dispute and whether all 31
other remedies available under the association's governing documents were 32
exhausted before the complaint was made. 33
(7) The complainant's understanding of the rights and obligations under the 34
association's governing documents as they relate to the dispute. 35
(8) The complainant's desired remedy regarding the dispute. 36
(b) Upon receiving the complaint, the Department shall provide a copy of the complaint 37
to the party complained against informing the party of the complaint made against it and allowing 38
for the party to respond. 39
(c) The Department shall publish the following information on its website: 40
(1) Information on the process to submit complaints pursuant to this section. 41
(2) Information about the laws and documents governing associations of unit 42
owners and lot owners in North Carolina. 43
(3) General information about roles, rights, and responsibilities of associations of 44
unit owners and lot owners, their members, and other related parties. 45
(4) Any other information the Department deems relevant to understanding the 46
rights and obligations of associations of unit owners and lot owners and 47
members of such associations. 48
(d) The Department is prohibited from promulgating regulations or issuing guidelines 49
concerning the administration, governance, or governing documents of associations of unit 50
General Assembly Of North Carolina Session 2025
Page 18 House Bill 444-Third Edition
owners or lot owners . The Department shall not serve as an arbiter in disputes between an 1
association of unit owners or lot owners and its members. 2
(e) By July 1 of each year, the Department shall submit a report to the House Standing 3
Committee on Commerce and Economic Deve lopment, the Senate Standing Committee on 4
Commerce and Insurance, and the Fiscal Research Division and shall also publish the report on 5
its website. The report shall include, at a minimum, a summary of all of the following: 6
(1) The total number of complaints received pursuant to this section. 7
(2) The number of those complaints submitted by unit owners or lot owners. 8
(3) The number of complaints originating in each county of this State. 9
(4) The number of complaints that involved association management companies. 10
(5) The nature of the disputes reflected in the complaints, including: 11
a. Access to association records. 12
b. Access to executive board meetings. 13
c. Assessments. 14
d. Executive board transparency. 15
e. Fines. 16
f. Collections of delinquent accounts. 17
g. Liens. 18
h. Foreclosures. 19
i. Content of restrictive covenants. 20
j. Enforcement of restrictive covenants. 21
(6) A ranking of the top five disputes based on the nature of the dispute reflected 22
in the complaints. 23
(7) The number of responses to the complaints received by the Department. 24
The information summarized in the report must be categorized, filterable, and searchable . 25
The Department must redact any personal or private information from the report, such as names, 26
addresses, and telephone numbers of indivi duals. This redaction requirement does not apply to 27
information concerning a homeowners association or a homeowners association management 28
company." 29
SECTION 13.(b) This section becomes effective July 1, 2025. 30
SECTION 14. Sections 6 and 10 of this act become effective December 1, 2025, and 31
apply to claims of lien filed and instruments presented for registration on or after that date. Except 32
as otherwise provided, the remainder of this act is effective when it becomes law, and the 33
provisions in Sections 3 a nd 8 of this act relating to managing agent compensation apply to 34
contracts between an association and a managing agent entered into on or after that date. 35