Pending Bill Would Impose New Requirements on Subdivision Developers and Associations
Proposed
Amendment to the Planned Community Act Seeks to Hem in Developers,
Raise an HOA's Record-keeping Requirements, and Liberalize an
Association's Authority to Amend its Declaration
Manifesting
a continuing interest on the part of legislators in tweaking the North
Carolina Planned Community Act (PCA), a bill currently pending in the
state legislature, if enacted, would impose significant new requirements
on Declarants and HOA Leaders.
First,
House Bill 882 would add an entirely new section to the PCA (§
47F-2-105) that would set forth specific provisions that must be
included in every HOA Declaration. Among the more notable
requirements are:
• The Declarant would be required to state the maximum
number of lots that it is reserving the right to create in the planned
community;
• The Declarant would be required to describe all
development rights together with a time limit within which to exercise
each of those rights; and
• The boundaries of each lot would have to be described within the Declaration itself.
Second, the Bill would also cap the maximum threshold
that an Association can require to pass an amendment to the Declaration
at 80%. Currently, § 47F-2-117(a) imposes a minimum threshold of
67% while allowing the Declaration to require anything above that
percentage.
Third, the time in which an enacted amendment may be
legally challenged under § 47F-2-117(d) would be tripled from the one
year to three years.
Finally, HB 882 would impose upon HOA leadership
significantly higher record-keeping requirements including, among
others, “detailed records of receipts and expenditures,” all financial
statements, audits, and tax returns for the preceding three years, and
all records of the Board or Architectural review committee approving or
denying requests for design or architectural approval submitted by
owners.
Notably, the “live” version of the Bill replaces an
earlier version that would have established a “recovery” fund – funded
by new annual HOA fees – to compensate an association or other
“aggrieved person” in the event a property manager or executive board
commits “certain” but unspecified “acts.” In addition, the earlier
version of the Bill would have required association officers and
directors to complete a minimum of four hours of education on the laws
related to community associations. These provisions appear dead
for the moment, however.
Since the enactment of the Planned Community
Act in 1999, the Legislature has enacted amendments to it in 2002, 2004,
2005, 2006, 2012, 2013 and 2014.
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