NCPC Act

North Carolina Legislature Adopts Changes to Planned Community and Condominium Act Effective January 1, 2006 That Impacts All Homeowners Associations

Effective January 1, 2006, townhome communities, planned unit developments and condominiums in North Carolina will be subject to several statutory changes in both the Planned Community Act of (Chapter 47F) and the Condominium Act of (Chapter 47C). We know that many of you have heard bits and pieces of news about these changes and have no doubt read the fairly inaccurate accounts concerning the “new law” in the newspaper.

A summary of the actual changes which will go into effect on January 1, 2006 are that the statute:

Sets the permissible late fee for assessments at a maximum of the greater of twenty dollars ($20.00) per month or ten percent (10%) of any assessment installment unpaid.
Reduces the allowable fine for covenant violations from One Hundred and Fifty Dollars ($150.00) to One Hundred Dollars ($100.00) per violation and requires a five (5) day cooling off period following the adjudicatory hearing before the fine may start to accrue. A lot owner may of appeal the decision from an adjudicatory panel (if any) to the full Executive Board within fifteen (15) days after the date of the decision.
Requires that if the association wishes to collect a debt consisting exclusivity of fines, it may do so and may foreclose any such lien by judicial foreclosure only. All other liens and assessments are fully enforceable as under current law.
Mandates that attorneys fees for collection of assessments in cases of uncontested collection actions in foreclosure will be limited to a maximum of Twelve Hundred ($1,200.00), not including costs for expenses incurred. A definition of “uncontested” is included in the legislation. There is no limit on attorneys’ fees in a contested matter.
Prohibits the charging by the association of “service, collection, consulting or administration fees” from the homeowner unless such fees are expressly allowed in the Declaration.
Requires the lot owner be given notice of its obligation to pay attorney’s fees and court costs through notice sent via first class mail including outstanding balance and a statement that the lot owner has fifteen days from the date of the mailing to pay the outstanding balance without incurring attorney’s fees and court costs.
Requires the Association to publish names and addresses of all Officers and Board members to the Association within thirty (30) days of the election.
Requires the Board to, at regular intervals, allow lot owners to attend a portion of Board meetings and to speak on issues or concerns, subject to reasonable restrictions on number of speakers and time to speak. Except as provided in the Bylaws, all meetings will be subject to Roberts Rules of Order Newly Revised.
Requires the association to keep financial records and records of meetings and they shall mean be made available for examination in accordance with current law. The association must keep accurate records of all cash receipts and expenditures and all assets and liabilities. The association shall make an annual income and expense statement and balance sheet available to all of the owners at no charge within 75 days after close of the fiscal year. The association, by a majority vote of the lot owners present and voting, may require a more extensive compilation, review or audit.
Prohibits any Officer or Board member or business or business associate thereof or relative from receiving financial payments, except as specifically provided in the Bylaws, or in payments for services for expenses paid on behalf of the Association which are approved in advance by the Executive Board.
Limits, for the first time, the right of an Association to regulate or prohibit the display of a flag of the United States or North Carolina or of a political sign within forty five (45) days of an election, subject to the requirements of the legislation.
Many technical differences between the Planned Community Act and the North Carolina Condominium Act are eliminated, through, among other changes, the addition of powers in condominiums to suspend association services for nonpayment of assessment and for condominiums to borrow money and pledge assessments as collateral, as is already provided in the Planned Community Act.

All planned communities are encouraged to review their current practices to determine how the statutory changes will affect their association operations and whether changes in procedures need to be made.