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News & Press: Legislative/Advocacy

LAC initiates bill to protect community associations

Friday, April 28, 2017  
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CAI’s NC Legislative Action Committee (LAC) helped write and fully supports HB 625 - HOA/Condo Crime & Fidelity Insurance Policies.

This bill is intended to help protect association funds from theft without creating a state agency. The bill also requires larger associations to have annual audits performed by a CPA firm which CAI believes contributes to transparency and good financial management.  

 It requires that managers carry up to $2 million fidelity insurance and that associations (subject to funds involved) also carry fidelity insurance for their association funds. HB 625 also provides for certain (larger) associations to have annual audits. You can view HB 625 at 

The bill, sponsored by Representatives Linda Hunt Williams, John R. Bell, John R. Bradford and Jason Saine and is pending in the Senate. has passed in the NC House and is pending in the NC Senate.

LAC votes unanimously to oppose two House bills

While both bills would substantially impact community associations in NC, to the LAC’s knowledge no professional or volunteer industry leaders were consulted in the formulation of either bill.

The Planned Community Act (PCA), adopted in 1999, was based to a large extent on the North Carolina Condominium Act, which has been the law and served condominiums well since 1986. The PCA was studied for more than two years and proposed by a NC Bar Association committee of experienced attorneys concentrating in planned community and condominium practice, who received substantial input from community managers and volunteer leaders. Since the adoption of the PCA, the NC courts have handled many Association cases and developed a significant body of law.

HB 814 -- Planned Community Act Changes
The proposed bill would make wholesale changes to the PCA without thorough study, unnecessarily raising questions and significantly increasing costs for communities and their members. The bill would:
Reduce Associations’ ability to enforce their covenants, thereby raising costs and slowing enforcement.
Make it harder and much more expensive for Associations to collect assessments, putting more of an unfair burden on members who pay assessments in a timely manner.
Take away much of developers’ flexibility to develop property and make it more difficult and expensive to do so.
Create unnecessary conflicts between the Association and its developers and between a Board of Directors and Association members.

HB 865 -- Community Association Property Management Act
The proposed bill would require a real estate broker’s license to manage community associations in NC, and would: 
Authorize only licensed real estate brokers to perform community management services, even though the vast preponderance of their training is based on handling sales and rental of real estate, not community associations operations. 

Ignore a broad group of nationally certified experienced companies and credentialed professional managers who serve thousands of community associations across the state.

Delegate oversight to the NC Real Estate Licensing Commission, which has no background or expertise with associations and has never been in favor of overseeing community association managers (even after substantial formal study).

The commission will be ill-equipped and insufficiently funded to handle an onslaught of community member complaints when it disagrees with decisions of elected association boards.

The handling and administration of community association funds will be subject in all respects to the accounting rules of the commission, which are not consistent with many community governing documents.

Provide only $20,000 fidelity bond requirement for managers. This is not an accurate representation of the kind of protection that is needed; the CAI-sponsored HB 625 would provide much more protection. 

Require registration of community associations along with a $100 registration fee and several items of information. Most associations would see no benefit for this new association tax.

Mandate all board members to complete a minimum of four hours of education at a cost of $75 each or be subject to a disciplinary fine. This will make it extremely difficult to recruit and retain board members in North Carolina. 


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