NC GENERAL STATUTES, HOMEOWNER PRIMER-PART 3

ADMINISTRATION (CONTINUED)
31. Does the Association have the authority to adopt rules and regulations? By law or by statute?
Both the NC Planned Community Act (NCGS § 47F-3-102(1)) and the Condominium Act (NCGS § 47C-3-102(1)) provide that unless the articles of incorporation or the declaration expressly provides to the contrary, the association may adopt and amend rules and regulations. These two statutes apply retroactively to older associations.

32. Does the Association have the authority to assess charges or fines for violations by Members? Does the Association have the right to suspend the right of use of the common elements or common areas in the event of a violation? To suspend the right of a Member to vote or otherwise participate in the Association in the event of a violation?
Both the NC Planned Community Act (NCGS § 47F-3-102(12)) and the NC Condominium Act (NCGS § 47C-3-102(12)) provide that the association, after notice and opportunity to be heard, may impose reasonable fines or suspend privileges or services provided by the association (except rights of access) for reasonable periods for violations of the declaration, bylaws, and rules and regulations of the association. The procedures for fines and suspension of services is further defined in NCGS § 47F-3-107.1 for planned communities and NCGS § 47C-3-107.1 for condominiums. These two statutes apply retroactively to older associations.
Generally, the right of a member to vote is not considered to be suspendable unless clearly defined in the declaration (which typically gives an owner the right to vote).

33. Is there a requirement to have an internal administrative Complaint or Dispute Process? Is it mandatory and/or a prerequisite to other legal action?
There is no statutory requirement to have an internal administrative complaint or dispute process. However, both the NC Planned Community Act (NCGS § 47F-3-107.1) and the NC Condominium Act (NCGS § 47C-3-107.1) require that certain steps be taken prior to the imposition of fines or suspension of planned community privileges or services.
NCGS § 7A-38.3F mandates that associations notify members each year of the right to request voluntary mediation of disputes; however, either party may decline mediation. (NOTE: Disputes related solely to a member’s failure to timely pay an association assessment or any fines or fees associated with the levying or collection of an association assessment are not covered by the mediation statute.)

34. Does any applicable statute provide for the removal of a Board Member, several Board members, or the entire Board? Under what conditions? Who decides upon their successors and when?
Both the Planned Community Act (NCGS § 47F-3-103) and the Condominium Act (NCGS § 47C-3-103) provide that notwithstanding any provision of the declaration or bylaws to the contrary, the owners, by a majority vote (67% vote for condominium associations) of all persons present and entitled to vote at any meeting of the owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant. Any proposal to remove a director must be include in the notice of the meeting. (NCGS § 47F-3-108(a); NCGS § 47C-3-108(a)) The executive board is authorized to fill vacancies in its membership for the unexpired portion of any term. (NCGS § 47F-3-103(b); NCGS § 47C-3-103(b)) Generally, it is understood that if the entire board of directors is removed at a meeting, the members would need to fill the vacancies for the unexpired portion of the term. These two statutes apply retroactively to older associations.

35. Can an association be placed into receivership by a Court under state law?
Neither the NC Planned Community Act nor the Condominium Act has provisions for receivership. The NC Nonprofit Act has provisions for receivership of nonprofit corporations pertaining to judicial proceedings brought to dissolve a corporation. (NCGS § 55A-14-32)

36. Does state statute provide for condemnation of common property?
For planned communities created on or after January 1, 1999, and governed by the NC Planned Community Act, if part of the common elements is acquired through eminent domain, the portion of the award attributable to the common elements taken must be paid to the association. Unless otherwise provided in the declaration, any portion of the award attributable to the acquisition of a limited common element must be apportioned among the owners of the lots to which that limited common element was allocated at the time of acquisition based on their allocated interest in the common elements before the taking. (NCGS § 47F-1-107(d)) Almost identical statutory language exists for condominium associations, which also applies retroactively to older associations. (NCGS § 47C-1-107(d))

UNIT/LOT OWNER ISSUES
37. What action(s) can an association take in the event of non-payment of association assessments? Is foreclosure an option? Under what circumstances? (Please address judicial and non-judicial foreclosure.)
For collection of delinquent assessments, both the NC Planned Community Act (NCGS § 47F-3-116) and the NC Condominium Act (NCGS § 47C-3-116) permit an association to foreclose a claim of lien in like matter as a mortgage or deed of trust on real estate under power of sale, as provided in Article 2A of Chapter 45 of the General Statutes. Numerous statutory steps are required both before and following the filing of the claim of lien. If the debt securing the lien consists solely of fines imposed by the association, interest on unpaid fines, or attorneys’ fees incurred by the association solely associated with fines, the association may not use this process, but must enforce the lien by judicial foreclosure as provided in Article 29A of Chapter 1 of the North Carolina General Statutes. The statutes governing collection of assessments apply retroactively to older associations.

38. Are there state laws that regulate whether a Member can be assessed a charge or otherwise fined by my association for violations? What violations trigger this authority? What procedures must be followed?

1. What actions can the association take to collect these charges or fines;
2. Can my association foreclosure on my property for non-payment of these charges or fines?
Both the NC Planned Community Act (NCGS § 47F-3-107.1) and the NC Condominium Act (NCGS § 47C-3-107.1) provide that unless a specific procedure for the imposition of fines or suspension of planned community privileges or services is provided for in the declaration, a hearing must be held before the executive board or an adjudicatory panel appointed by the executive board. Any adjudicatory panel appointed by the executive board must be composed of members of the association who are not officers of the association or members of the executive board. The lot owner charged must be given notice of the charge, an opportunity to be heard and to present evidence, and notice of the decision. If it is decided that a fine should be imposed, a fine not to exceed $100 may be imposed for the violation and without further hearing, for each day more than five days after the decision that the violation occurs. The lot owner may appeal the decision of an adjudicatory panel to the full executive board by delivering written notice of appeal to the executive board within 15 days after the date of the decision, which may affirm, vacate, or modify the prior decision of the adjudicatory body. The statutes governing violation hearings apply retroactively to older associations.

As discussed in Question #37, if the debt securing a lien consists solely of fines, interest on unpaid fines, or attorneys’ fees incurred by the association solely associated with fines, the association can only enforce such a lien by judicial foreclosure as provided in Article 29A of Chapter 1 of the North Carolina General Statutes.

39. What, if any, other internal administrative enforcement options can the association take in the event of a violation of the state statute, association’s governing documents, or the rules and regulations of the association?
Both the NC Planned Community Act (NCGS § 47F-3-107.1) and the NC Condominium Act (NCGS § 47C-3-107.1) permit an association to suspend planned community privileges or services following a hearing as outlined in Question #38. The statutes governing violation hearings apply retroactively to older associations.
Also, for planned communities created on or after January 1, 1999, and governed by the NC Planned Community Act, there is a statutory provision for a hearing when damage by a lot owner to the common elements or by the association to a lot is less than the jurisdictional amount for a small claims hearing. In such instances, any aggrieved party may request that a hearing be held before an adjudicatory panel appointed by the executive board (if the executive board fails to appoint an adjudicatory panel, hearings are held before the executive board). Such a panel must accord to the party charged with causing damages notice of the charge, an opportunity to be heard and to present evidence, and notice of the decision. This panel may assess liability against each lot owner charged or against the association not in excess of the jurisdictional amount established for small claims. (NCGS § 47F-3-107(d))

For condominium associations created on or after October 1, 1986, the bylaws of the association may provide for a hearing before an adjudicatory panel when the claim involves damage by a unit owner to the common elements or by the association to a unit of $500 or less. Such a panel must accord to the party charged with causing damages notice of the charge, an opportunity to be heard and to present evidence, and notice of the decision. This panel may assess a liability for each damage incident not in excess of $500 against each unit owner charged or against the association. (NCGS § 47C-3-107(d))

40. Does any applicable statute regulate the flying of the American Flag?
Both the NC Planned Community Act (NCGS § 47F-3-121) and the NC Condominium Act (NCGS § 47C-3-121) forbid the regulation or prohibition of the display of the flag of the United State or North Carolina, except in limited instances based on the language of the restriction and whether the restriction was registered prior to or after October 1, 2005. The statutes governing the display of flags apply retroactively to older associations.