Homeowners associations in North Carolina are bound by certain state laws. Understanding these North Carolina HOA laws is the key to avoiding the risk of liability for your association.
How to Form an HOA in North Carolina
According to Section 47F-2-101 of the North Carolina Planned Community Act, a planned community can be created by executing a declaration in the same manner as a deed. This declaration must be recorded in all the counties where any part of the community is situated.
For Homeowners Associations
The North Carolina Planned Community Act governs the creation, alteration, management, and termination of planned communities established on or after January 1, 1999, in the state. There are some exceptions, though, found under Section 47-1-102 of the Act.
You can find the North Carolina Planned Community Act under Chapter 47F of the North Carolina General Statutes. It consists of four articles, each one divided further into sections.
Article 1 – General Provisions
Article 2 – Creation, Alteration, And Termination Of Planned Communities
- Creation of the planned community.
- Reserved for future codification purposes.
- Construction and validity of declaration and bylaws.
- Reserved for future codification purposes.
- Amendment of declaration. Modified by: SL 2019-177 (H264)
- Termination of planned community.
- Reserved for future codification purposes.
- Master associations.
- Merger or consolidation of planned communities.
Article 3 – Management Of Planned Community
- Organization of owners’ association.
- Powers of owners’ association. Modified by: SL 2020-90 (H902)
- Executive board members and officers.
- Transfer of special declarant rights.
- Termination of contracts and leases of declarant.
- Bylaws.
- Upkeep of planned community; responsibility and assessments for damages.
- Procedures for fines and suspension of planned community privileges or services.
- Meetings.
- Quorums.
- Voting; proxies.
- Tort and contract liability.
- Conveyance or encumbrance of common elements.
- Insurance.
- Surplus funds.
- Assessments for common expenses.
- Lien for sums due the association; enforcement.
- Validation of certain nonjudicial foreclosure proceedings and sales.
- Reserved for future codification purposes.
- Association records. Modified by: SL 2020-90 (H902)
- Association as trustee.
- Declaration limits on attorneys’ fees.
- American and State flags and political sign displays.
- Irrigation of landscaping.
For Condominiums
There are two Acts that govern condominium associations in North Carolina. The first is the North Carolina Condominium Act, which regulates the formation, alteration, and dissolution of condominiums established after October 1, 1986. It also provides guidance on the management and protection of purchasers. The second is the North Carolina Unit Ownership Act, which applies to condominium associations established prior to October 1, 1986.
North Carolina Condominium Act
You can find the North Carolina Condominium Act under Chapter 47C of the North Carolina General Statutes. It consists of four articles, each one divided further into sections.
Article 1 – General Provisions
- Short title.
- Applicability.
- Definitions.
- Variation; power of attorney or proxy to declarant.
- Separate titles and taxation.
- Applicability of local ordinances, regulations, and building codes.
- Eminent domain.
- Supplemental general principles of law applicable.
- Inconsistent time share provisions.
- Substantial compliance and marketability. Modified by: SL 2020-52 (H920)
Article 2 – Creation, Alteration, And Termination Of Condominiums
- Execution and recordation of declaration. Modified by: SL 2020-52 (H920)
- Unit boundaries.
- Construction and validity of declaration and bylaws.
- Description of units.
- Contents of declaration. Modified by: SL 2020-52 (H920)
- Leasehold condominiums.
- Allocation of common element, interests, votes, and common expense liabilities.
- Limited common elements.
- Plats and plans. Modified by: SL 2020-52 (H920)
- Exercise of development rights.
- Alterations of units.
- Relocation of boundaries between adjoining units.
- Subdivision of units.
- Monuments as boundaries. Modified by: SL 2020-52 (H920)
- Use for sales purposes.
- Easement to facilitate exercise of special declarant rights.
- Amendment of declaration. Modified by: SL 2020-52 (H920)
- Judicial reformation of declaration. Modified by: SL 2020-52 (H920)
- Termination of condominium.
- Reserved for future codification purposes.
- Master associations.
- Merger or consolidation of condominiums.
Article 3 – Management Of Condominium
- Organization of unit owners’ association.
- Powers of unit owners’ association. Modified by: SL 2020-90 (H902)
- Executive board members and officers. Modified by: SL 2020-52 (H920)
- Transfer of special declarant rights.
- Termination of contracts and leases of declarant.
- Bylaws.
- Upkeep; damages; assessments for damages, fines.
- Procedures for fines and suspension of condominium privileges or services.
- Meetings. Modified by: SL 2020-52 (H920)
- Quorums. Modified by: SL 2020-52 (H920)
- Voting; proxies.
- Tort and contract liability.
- Conveyance or encumbrance of common elements.
- Insurance.
- Surplus funds.
- Assessments for common expense. Modified by: SL 2020-52 (H920)
- Lien for sums due the association; enforcement.
- Validation of certain nonjudicial foreclosure proceedings and sales.
- Other liens affecting the condominium.
- Association records. Modified by: SL 2020-90 (H902)
- Association as trustee.
- Reserved for future codification purposes.
- American and State flags and political sign displays.
- Irrigation of landscaping.
Article 4 – Protection of Purchasers
- Applicability; waiver.
- Liability for public offering statement requirements.
- Public offering statement; general provisions.
- Same; condominiums subject to developmental rights.
- Same; time share.
- Conversion buildings.
- Same; condominium securities.
- Purchaser’s right to cancel.
- Resales of units.
- Escrow of deposits.
- Release of liens or encumbrances.
- Reserved for future codification purposes.
- Express warranties of quality.
- Implied warranties of quality.
- Exclusion of modification of implied warranties of quality.
- Statute of limitations for warranties.
- Effect of violations on rights of action; attorney’s fees.
- Labeling of promotional material.
- Declarant’s obligation to complete.
- Substantial completion of units.
North Carolina Unit Ownership Act
You can find the North Carolina Unit Ownership Act under Chapter 47A of the North Carolina General Statutes. It contains only two articles, which are further broken down into sections.
Article 1 – Unit Ownership Act
- Short title.
- Declaration creating unit ownership; recordation.
- Definitions.
- Property subject to Article.
- Nature and incidents of unit ownership.
- Undivided interests in common areas and facilities; ratio fixed in declaration; conveyance with unit.
- Common areas and facilities not subject to partition or division.
- Use of common areas and facilities.
- Maintenance, repair and improvements to common areas and facilities; access to units for repairs.
- Compliance with bylaws, regulations and covenants; damages; injunctions.
- Unit owners not to jeopardize safety of property or impair easements.
- Unit owners to contribute to common expenses; distribution of common profits.
- Declaration creating unit ownership; contents; recordation.
- Repealed by Session Laws 1981, c. 527, s. 1, effective October 1, 1981.
- Deeds conveying units.
- Plans of building to be attached to declaration; recordation; certificate of architect or engineer.
- Termination of unit ownership; consent of lienholders; recordation of instruments.
- Termination of unit ownership; no bar to reestablishment.
- Bylaws; annexed to declaration; amendments.
- Bylaws; contents.
- Records of receipts and expenditures; availability for examination; annual audit.
- Units taxed separately.
- Liens for unpaid common expenses; recordation; priorities; foreclosure.
- Liability of grantor and grantee of unit for unpaid common expenses.
- Insurance on property; right to insure units.
- Damage to or destruction of property; repair or restoration; partition sale on resolution not to restore.
- Actions as to common interests; service of process on designated agent; exhaustion of remedies against association.
- Zoning regulations governing condominium projects.
- Persons subject to Article, declaration and bylaws; effect of decisions of association of unit owners.
- Reserved for future codification purposes.
Article 2 – Renters In Conversion Buildings Protected
North Carolina HOA Laws on Corporate Governance
The North Carolina Nonprofit Corporation Act regulates all non-profit corporations in the state in terms of corporate procedure, structure, and management. In North Carolina, all homeowners associations must be incorporated. And, all associations formed after January 1, 1999, must establish themselves as non-profit corporations. Therefore, such associations must comply with the provisions set forth in the North Carolina Nonprofit Corporation Act. Condominium associations, on the other hand, can choose to form as either non-profit or for-profit corporations.
You can find the North Carolina Nonprofit Corporation Act under Chapter 55A of the North Carolina General Statutes. It contains 18 articles, namely:
- General Provisions.
- Organization.
- Purposes and Powers.
- Names.
- Office and Agent.
- Members and Memberships.
- Members’ Meetings and Voting; Derivative Proceedings.
- Directors and Officers.
- Amendment of Articles of Incorporation and Bylaws.
- Merger.
- Conversions.
- Transfer of Assets.
- Distributions.
- Dissolution.
- Reorganization.
- Foreign Corporations.
- Records and Reports.
- Transition and Curative Provisions.
North Carolina HOA Laws on Mediation for Disputes
According to the HOA laws of North Carolina, associations must inform members of their right to initiate a mediation. These associations must do this at least every year. If a dispute arises, members or HOAs can request a mediator from the Mediation Network of North Carolina. They can also request a mediator from the North Carolina Dispute Resolution Commission. But, if the dispute is exclusively the result of a member’s delinquency, then this section does not apply.
North Carolina HOA Laws on Solar Rights
According to Section 22B-20 of the North Carolina General Statutes, homeowners associations can’t prohibit members from using or installing solar collectors such as solar panels. Any covenants, restrictions, or rules that prevent homeowners from installing such devices are deemed void and unenforceable. However, associations can impose reasonable restrictions, such as screening and placement of such devices.
North Carolina HOA Laws on Records Inspection
Members have a right to inspect association records, such as financial records and minutes of board meetings (including executive session minutes). Associations must make these records reasonably available for review by any lot owner upon their request. The written request must be submitted at least 5 business days in advance. And, the association may charge a fee to produce copies of the records requested, provided it does not exceed the estimated material and labor costs.
North Carolina HOA Laws on Fair Debt Collection
The North Carolina Debt Collection Act protects consumers from unfair, misleading, or abusive debt collection practices. It works somewhat similarly to the federal Fair Debt Collection Practices Act.
Under both the federal and state-level Acts, homeowners are considered consumers, and HOA dues are considered debts. The difference, though, is that the FDCPA does not consider homeowners associations as debt collectors. But, the North Carolina Act also applies to creditors, not just debt collectors, which means it might cover homeowners associations as well.
Victims of prohibited debt collection practices can lodge a complaint with the Federal Trade Commission, the Consumer Financial Protection Bureau, or the Attorney General’s Office.
Fair Housing
The North Carolina State Fair Housing Act protects people from housing discrimination based on national origin, color, race, sex, religion, familial status, or handicapping condition. It functions in the same way as the federal Fair Housing Act.
The state also provides protection to persons with disabilities under the Persons With Disabilities Protection Act. This applies to public accommodations, such as homeowners associations with common areas open to the public. The Act works similarly to the Americans with Disabilities Act.
Housing discrimination victims can report violations to the U.S. Department of Housing and Urban Development or the Housing Discrimination Section of the North Carolina Civil Rights Division. Victims can also file a lawsuit in federal district court.
