In the realm of property management and homeowners' associations (HOAs) in North Carolina, the introduction of House Bill 542, titled "HOA Revisions/Foreclosure Trustee Auctions," marks a significant shift. This bill, aimed at amending existing laws concerning HOAs, brings forth a set of revisions that could reshape how these associations operate and interact with homeowners.
At its core, House Bill 542 seeks to regulate and potentially restrict certain actions of HOAs, particularly in relation to the foreclosure process and the management of common properties. A key aspect of this bill is the enhanced protection it offers to homeowners, including the imposition of restrictions on the ability of HOAs to file liens for delinquent assessments. This legislation has navigated through numerous amendments and voting sessions in both the House and the Senate, reflecting its complexity and the varied interests it impacts.
One of the standout features of the bill is the strengthened notice requirements. These amendments are designed to ensure homeowners receive detailed and clear notifications of delinquent assessments, including specific information and references to the owner's right of redemption. This change signifies a move towards greater transparency and fairness in the dealings between homeowners and HOAs.
Additionally, the bill makes significant strides in expanding homeowners' access to HOA records. By allowing owners to view these records, subject to reasonable costs, the bill empowers homeowners to be more informed and involved in the governance of their communities.
A notable innovation introduced by House Bill 542 is the establishment of procedures for remote bidding at foreclosure sales. This modern approach provides an alternative to traditional in-person bidding, aligning with the evolving technological landscape and potentially broadening the pool of bidders.
The bill's impact extends to property management companies as well. For instance, managing agents are prohibited from being compensated based on the amount of fines collected, a measure aimed at eliminating conflicts of interest. The bill also places limitations on the terms of contracts between associations and managing agents, guiding the contractual relationships within the HOA framework.
The implications of House Bill 542 are multifaceted, affecting not just the operational aspects of HOAs but also the rights and responsibilities of homeowners. As these changes take effect, with varying effective dates, it's essential for all parties involved – from property managers to homeowners – to stay informed and adapt to the evolving legal landscape. This bill represents a step towards more balanced and transparent governance in HOAs, potentially setting a precedent for future legislation in this area.
SUMMARY
The key amendments proposed in House Bill 542 include the following:
Strengthened Notice Requirements: The bill introduces provisions to strengthen the required notice of delinquent assessments given by associations to apprise owners 1. This includes specifying the information to be included in the notice and referencing the lot owner's right of redemption.
Expansion of Owners' Access to HOA Records: House Bill 542 allows homeowners to access association records, subject to reasonable charges not exceeding the actual cost of photocopying the records 3.
Remote Bidding at Foreclosure Sales: The bill establishes procedures for remote bidding at a foreclosure sale, providing an alternative to in-person bidding.
Effective Dates: Different sections of the bill have specific effective dates, with some provisions becoming effective on December 1, 2023, and others on October 1, 2023.
These amendments aim to address various aspects of homeowners' association governance, including notice requirements, access to records, and foreclosure procedures, among others.
Impact property management companies in several ways:
Managing Agent Compensation: The bill prohibits managing agents from being compensated based on the amount of fines collected by the managing agent on behalf of the association. This provision aims to prevent potential conflicts of interest and ensure that managing agents are not incentivized to aggressively pursue fines.
Contract Terms: The bill imposes limitations on the terms of contracts between associations and managing agents, including restrictions on contract renewal provisions and the duration of contracts. These limitations provide guidelines for the contractual relationship between associations and managing agents.
Access to Association Records: The expansion of owners' access to HOA records may also impact property management companies, as they may be required to facilitate homeowners' access to these records, subject to reasonable charges.
Current status of HB 542: Conf Com Appointed on 10/5/2023.
Click Here to Read the full bill
Pamela Greene
Master Property Manager
