Legislature considering licensing, fees, audits
Published: June 14, 2012
Time posted: 3:25 pm
In the housing downturn, homeowners associations found themselves on many people’s most-hated list.
HOAs cracked down on those who couldn’t pay their dues because of losing a job or some other recession-related reason, resulting in many people fighting to save their homes from foreclosure.
Now, North Carolina HOAs are in the crosshairs of the General Assembly, which is considering new regulations for the associations. Lake Norman Homes for Sale.
Under consideration includes a requirement that HOA managers be licensed by the state. Then there’s the proposal that HOAs in communities of a certain size conduct audits and register with the state.
Those possible HOA regulations and others are being considered during the General Assembly’s “short” session that began last month. Although the regulations haven’t been put into a bill yet, the House Select Committee on Homeowners Associations has produced a draft document that outlines the proposals.
Rep. Beverly Earle, a Democrat who represents Mecklenburg County, is among lawmakers open to the idea of more regulations for HOAs. Last year, she sponsored House Bill 165, which amended the state’s Planned Community Act and Condominium Act. For one, the bill, which became law, requires sellers to provide buyers with a statement that discloses whether a home is governed by an HOA.
“I still don’t think that we have gotten the associations under any kind of control,” Earle said.
State law grants homeowners the right to attend HOA meetings, she said. But, she said, not every HOA in the state has been complying with the law.
“Some associations I know of don’t give any kind of notice as to when the meetings will be,” she said. “I think the HOAs are out of control, and the attorneys that work for them have been able to come to Raleigh and kind of sidetrack or get around legislation that has been proposed.”
Under the proposed regulations: Lake Norman Homes for Sale
• HOAs would be required to complete a financial review within 90 days of the end of each fiscal year. HOAs with a budget of $400,000 or more could also be required to have an audit each fiscal year if their bylaws or a majority of members request it;
• the state would license HOA managers and require them to pass a state-administered exam or get certified by a nationally recognized property-management organization. Managers would also be required to have insurance or a fidelity bond of at least $20,000 and comply with continuing-education requirements;
• HOAs would have to cancel a lien filed against a property within 30 days of the payment of the debt or face a $1,000 fine; and
• an HOA that oversees 20 or more homes or lots would have to register with the state and pay an annual fee of $50.
Earle said she was not sure if a bill containing the proposed requirements would be brought before the full House during the short session. But she said she hoped the House Select Committee on Homeowners Associations would be able to draft legislation for when the legislature convenes next year.
Jim Lane, founder of the North Carolina chapter of the National Coalition for Homeowner Association Reform, supports the idea of the state reining in HOAs.
Lane’s HOA in Huntersville, the Gilead Ridge Homeowners Association, slapped him with fines after he planted pansies in a park across the street from his townhouse in the fall of 2010.
The HOA told him that he had altered a common area without permission, and it began fining him $100 a day until he removed the flowers. Lake Norman Homes for Sale.
The fines grew to nearly $9,000, including attorneys fees, when the HOA placed a lien on his home. Lane has since paid the fine, but he’s been fighting HOAs ever since, starting the state chapter last year.
“I am trying to get people to understand what an HOA really is and what power they have over you,” Lane said. “There is no recourse for a homeowner in North Carolina.”
Some of the proposed regulations are a good idea, while others could harm HOAs, said Sara Stubbins, executive director for the North Carolina chapter of the Community Associations Institute.
“The manager-licensing bill is a need whose time has come, and we fully support that,” she said. “But a few others might have unintended consequences, especially the bill allowing voting by proxy and absentee. That could be an administrative nightmare for many associations that are just run by volunteers.” Lake Norman Homes for Sale.
Stubbins said the CAI supports using fees for manager licensing and HOA registration to set up and fund a state-run manager-licensing board.
“Also, that registration fee is a great way to make sure we have current contact information for all of the HOAs in the state,” she said. “Right now, some of those records with the secretary of state still have the contact listed as the developer from 25 years ago or the first HOA president from 30 years ago.”
That old contact information can make it hard for her organization to communicate important information to North Carolina HOAs, she said.
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