NORTH CAROLINA — Rep. Frank Iler (R-Brunswick) is backing a new bill to increase transparency and oversight requirements for homeowner associations after pledging to continue earlier efforts stymied by industry pushback.
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Along with Rep. Ya Liu (D-Wake) and Rep. Mitchell Setzer (R-Catawba), Iler introduced H.B. 444 last week, which includes broad-ranging provisions to reform homeowner association regulations in North Carolina.
The bill maps out various requirements, such as:
- Mediation between HOAs and community members before litigation
- Associations would not be able to foreclose on a property unless unpaid dues equal six months of payment or $2,500
- Department of Justice collecting and publishing data on homeowner complaints against associations to the General Assembly; the DOJ would not mediate or arbitrate disputes
- HOAs obtaining authorization from the Department of Transportation or a local government to enforce parking restrictions
- HOAs providing community members certain records within 30 days
Iler’s legislative assistant Carla Langdon told Port City Daily Tuesday he was not immediately available for comment on H.B. 444 but noted the local representative credited Liu as the lead sponsor of the new bill.
Iler told PCD last year HOA-related issues are among the most common complaints he receives from constituents. Groups such as Leland-based NC Citizens for HOA Reform argue HOA boards in North Carolina act without transparency and oversight.
“There’s 14,000 HOAs [in North Carolina],” Iler said last summer. “Almost three million people live in them. There are issues, whether they think there are or not.”
Homeowner associations operate similarly to local governments. They can elect board members, charge fines, collect monthly fees, place liens on property, contract services, maintain roads, and make rules about property uses.
But no government agency is responsible for oversight of the organizations, leading the Secretary of State to recommend residents consult an attorney for HOA disputes.
“Generally, HOAs are covered by chapter 55A of the General Statutes,” the Secretary of State’s office wrote in a FAQ page. “We can’t tell you for sure. Another law that often applies to HOAs is chapter 55 of the general statutes.”
Iler has sponsored multiple HOA reform bills in recent years, including H.B. 311, which would have created a Community Association Oversight Division in the Department of Justice. The bill didn’t pass, but it triggered the creation of the House Select Committee on Homeowners’ Associations last year. Iler served as co-chair and heard recommendations from citizens advocating reform, as well as industry groups representing HOAs.
New Hanover County resident Al Bennett submitted a recommendation to the House Select Committee on Homeowners’ Associations to prohibit using homeowners’ money to finance the Community Association Institute. He argued the lobby group serves the interests of industries that profit from HOAs — including management companies, attorneys, insurance brokers, and developers — rather than residents and homeowners.
Iler and Liu sponsored a bill, H.B. 959, based on some of the committee’s recommendations last year, but it stalled amid pushback from the Community Association Institute. PCD reached out to the HOA lobby group but did not receive a response by press.
“They take credit for slowing it down but it’s not done,” Iler said last summer. “Next year is coming. They need to be quiet. I’m not going to go too far with my language but they didn’t make us happy. The way they approached it was ridiculous.”
Law Firm Carolinas partner Jim Slaughter — former president of the North Carolina chapter of the Community Association Institute — published a legislative update last Tuesday about the House’s newest HOA reform bill, as well as a Senate reform bill introduced last week. Slaughter donated $3,000 to the CAI’s political action committee in January, its largest single donation since its registration with the State Board of Elections last year.
“North Carolina has both small, two-home associations and massive developments with thousands of members,” Slaughter wrote. “A one-size-fits-all approach to community association law could have serious consequences. Our firm represents associations across the state and understands the challenges these communities face. We are happy to provide guidance and insights to legislators as they review this bill.”
Slaughter argued some updates to HOA law are necessary but expressed concerns new requirements would hurt HOAs’ finances and prevent them from enforcing rules homeowners agreed to when purchasing their property.
Last summer, Iler told Port City Daily industry representatives pushed back on provisions within a 2023 reform bill he co-sponsored, H.B. 542, and the 2024 bill produced from study committee recommendations.
“Their lobbyists came and brought people in and said: ‘[Community members] are going to be complaining to the [Attorney General] about geese coming out of the pond,’” Iler said. “I said, ‘Well, I think this other issue in your neighborhood — a $14-million amenity center without a vote of the people — that may be a little bit of a bigger deal than geese coming out of the pond.’”
Previously proposed reform bills included similar provisions to the new legislation. Last year’s H.B. 959 required the Department of Justice to publish an annual report of HOA complaints, mandated prelitigation meditation between HOAs and their members, expanded pre-conditions on HOA-imposed foreclosures, require HOAs to respond to records’ requests within 30 days, and necessitate community-wide majority votes to ratify HOA budgets increasing members’ financial obligations by more than 10%.
“There’s some very basic things we had in it,” Iler noted last year. “The limit on what you can foreclose on — you can’t take grandma’s condo for $300. And transparency: requiring you to do a budget to show members, to produce documents in a reasonable time period, which [for] now they’re doing nothing. The president of the HOA can say: ‘You can’t have that.’ It’s just dictatorial things that should be basic. But it’s kind of like a government. Someone gets a little authority and they think they’re king of their fiefdom.”
HB 444 passed its first reading last week and was referred to the House Committee on Housing and Development.
Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.
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