By Matt Tomsic, Star-News, Wilmington, N.C.
Jan. 20—A General Assembly House committee approved a draft bill Wednesday that would provide more stringent rules governing how home owners associations conduct business.
Member of the House Select Committee on Home Owners Associations debated the draft legislation and added to it during its final committee meeting.
Rep. Jennifer Weiss, D-Wake, said the draft legislation should get bipartisan support when it’s introduced to the General Assembly.
“I’m hoping it will be legislation that Democrats and Republicans will work on together,” Weiss said.
She also said the legislation provides more protections for home owners who are governed by a home owners association.
The draft bill, entitled the Planned Community Act, would create additional factors HOA boards would have to consider when determining to enforce covenants; require boards to open their meetings and records; and change the lien and foreclosure process. The legislation will also require the Attorney General’s Office to collect complaints lodged against home owners associations.
If the law is enacted, home owners association board members will have to consider if the covenant or rule is inconsistent with the law, if it’s justifiable to spend association resources to punish the violator and if it’s in the association’s best interest to enforce the covenant, among other criteria, when determining whether to penalize home owners who violate covenants.
The draft bill also requires board meetings to be open and gives home owners recourse if the board ignores a request for a special meeting from 10 percent of the association’s home owners. In that case, the home owners can notify the rest of the community and hold the meeting without the board. The draft law also requires associations to keep “detailed records of receipts and expenditures,” accounting records, minutes of all meetings, financial statements and tax returns and copies of current contracts, among other records.
The board also has to make those records available after a 15-day notice from a lot owner or home owner.
The draft bill also changes the process associations can use to file liens and foreclose on a home. The bill requires assessments to be 90 days late before an association can begin the lien process, and the board must offer home owners a payment plan for past due bills. The draft bill requires the board to vote on foreclosing on a specific lot or home. The board also can’t begin foreclosure proceedings unless the debt is past due and the home owner refused to accept a payment plan.
Committee members also made changes to the draft legislation during the meeting, requiring parallel changes to be made to the Condominium Act, tasking the Attorney General’s Office with keeping and tracking home owner complaints, defining payment plans, clarifying that late fees stop when a payment plan is adopted and requiring boards to keep meetings of executive, or closed, sessions.
Weiss said she and co-chairman Rep. Bill McGee will find co-sponsors to the bill and eventually introduce it during the General Assembly’s session.
She thinks the draft bill has good transparency measures.
“We’ve got a lot of work ahead of us to keep this legislation moving forward,” Weiss said. “We’ve taken a big step with this proposal.”
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