NC lawmakers consider more oversight of HOAs

RALEIGH, N.C. (WNCN) – Aiming to address some people’s complaints about homeowners’ associations in North  Carolina, a state House committee began meeting Thursday to discuss various reforms the legislature could take up during this spring’s session.

Bipartisan proposals considered in the 2023 session did not pass, as lawmakers ultimately formed a study committee instead to hold hearings and study the issue. The committee has to issue a report by March.

“We’ve heard hundreds of complaints from HOA members. This is a sample,” said Rep. Frank Iler (R-Brunswick), holding up a stack of printed emails from constituents.

Iler noted the state has about 14,000 homeowners associations, a number which continues to grow as new neighborhoods are built to accommodate North Carolina’s growth.

Rep. Iler was the lead sponsor of a bipartisan bill that would have tasked the NC Attorney General’s Office with oversight of HOAs, noting no state agency currently oversees them.

Sunila Chilukuri, representing the AG’s office, told the committee her office backs various reforms, including improved transparency requirements for HOAs.

Rep. Ya Liu (D-Wake) said lawmakers have continued discussing that issue since last year’s session ended.

She said, “We’re trying to see what’s the best way to provide the oversight. Is that the attorney general’s office? The real estate commission? Is that a separate entity, government agency, consumer protection agency that we have to create?”

Timothy Hinds, who lives in Raleigh and owns a property at the coast, said he’s struggled to get documents from his homeowners association that neighbors are entitled to receive, including financial records.

His only recourse is to sue the HOA, which he said is prohibitively expensive and impractical.

“Well, a homeowner is not going to spend, ten, fifty, a hundred thousand dollars to take someone to court who is themselves and their neighbors. So, the HOA can essentially flout the law,” he said.

His group, the NC HOA Law Reform Coalition, has made a variety of recommendations to state law including establishing state-level oversight of HOAs.

“But, if the General Assembly were serious about making changes to protect homeowners, they would have done it instead of yet another study commission,” he said.

Rep. Liu has raised concerns about the power of HOA’s to place liens on people’s property over unpaid fines or dues.

In 2019, CBS 17 shared the story of Keith Williams Jr., who nearly lost his home for failing to pay his annual HOA fee, which was $177. A few months later, his HOA put a lien on his home, saying he owed $526 at that time.

He came home one day to find door locks changed and a notice from the Wake County Sheriff’s Office. He ended up raising enough money to get back into his home.

Rep. Liu proposed establishing a threshold of $2,500 or one year of HOA does (whichever is greater) before an HOA could place a lien on someone’s property. That proposal was amended down to $1,500 or one year of dues (whichever is lower). That legislation did not pass.

Weldon Jones, an attorney representing the NC chapter of the Community Association Institute, raised concerns about that idea.

“Setting an arbitrary number for associations with drastically varying degrees of budgets and operating expenses and reserves, we feel is just not the best policy,” he said.

Rep. Liu also said some property owners have reached out to her about their homes being foreclosed on without them even realizing they owed any money to the HOA. She said some landlords may not end up receiving written notices mailed to those properties if the tenants don’t share them. She added there should be more requirements regarding notifications.

“It’s not that homeowners don’t want to pay the dues. It’s really, they did not know they were behind on dues,” he said. “We want to strengthen the notice requirement, make sure homeowners get notified, right?”

Jones told lawmakers most of the issues he’s heard about between homeowners and HOAs could be resolved by improved education for board members and residents.

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