HOA reforms remain a priority for bipartisan group of NC lawmakers

A bipartisan group of North Carolina lawmakers plans to push forward with efforts to pass stricter laws regulating homeowners’ associations, even as pro-HOA lobbying defeated one such bill in the 2023 legislative session.

Homeowners from across North Carolina came to the legislature Thursday to speak in support of changes during a meeting of the House Select Committee on Homeowners’ Associations.

The committee is chaired by two Republicans, Reps. Frank Iler and Steve Tyson, as well as Democratic Rep. Ya Liu. Liu, a real estate lawyer and former Cary councilwoman, has made HOA reform a key priority in her single term at the legislature — a rare instance of bipartisan collaboration on a high-profile issue at the GOP-led General Assembly.

Liu filed a bill last year that would’ve stopped HOAs from seizing people’s houses over unpaid fines for uncut grass or similarly minor issues. It passed the House unanimously. And after multiple revisions — such as removing that entire original idea on foreclosure protections — a different version of the bill also passed the Senate, again by a unanimous vote. In the end, neither version became law as House and Senate leadership failed to agree on a compromise.

The committee that met Thursday is tasked with writing a report, due in March, to propose what should happen next on HOA reform. The group is scheduled to meet again on Jan. 24; the next legislative session is set to begin in April.

“We really wanted to study this issue, dig deep and see what’s the best solution that would allow homeowners to have a level playing field,” Liu said Thursday.

HOA bills garner bipartisan support. Critics say they could lead to higher costs, lower property values

Cautioning against any stricter rules is the Community Association Institute of North Carolina, a lobbying group for HOA board members and management companies. Industry representative Weldon Jones was the lone pro-HOA speaker at Thursday’s meeting. He said the Institute believes many of the problems people have with their HOAs can be fixed purely by educating residents and board members about existing rules and laws.

“We do feel very strongly that there are certain elements of homeowner disputes that can be resolved by better education for board members and homeowners,” he said. “These resources can take any number of ways to implement. We’re willing to work with the committee on a way to do that. But some of the issues that you’ve heard this morning may in fact be a product of homeowner misunderstanding, board member misunderstanding.”

Just prior to Weldon’s remarks, a number of anti-HOA speakers regaled the committee with allegations of insurance fraud, bait-and-switch techniques, home foreclosures and other complaints against their current or former HOAs. Several said they had served as HOA board members themselves and now feel compelled to speak out given what they saw behind the scenes.

“While I was on the board, I fought this illegal behavior as much as I could,” Charlotte resident Michael Farmakis said. “And I was voted off the board.”

State lawmakers propose more rules, oversight for HOAs

Aside from Liu and her local government experience in Cary — where HOAs are commonplace — the committee’s two Republican co-chairs bring additional perspectives.

Tyson, a Realtor and homebuilder from New Bern, noted Thursday that many new neighborhoods in North Carolina are required by local leaders to have an HOA due to the benefits that HOAs can bring their residents and the broader community, ranging from stormwater runoff aid to road maintenance, parks upkeep and more. About one-third of homes statewide are in HOAs, he said, a number that will only keep growing.

Iler, a longtime resident of Brunswick County — the fastest-growing county in the state, popular with retirees and just south of Wilmington — said he has heard from hundreds of local constituents over the years about complaints with their HOAs. He thinks the state needs to do more to give people recourse that doesn’t involve spending thousands of dollars to sue.

“You have little choice, unless you believe your issue is important enough to hire an attorney,” Iler said. “That’s been our advice to a lot of these folks. And, in my opinion, I’ve never thought that was quite good enough.”

Also interested in the push for stricter HOA rules is Attorney General Josh Stein, a Democrat who’s running for governor in 2024. Sunila Chirukuri, the lobbyist for Stein’s N.C. Department of Justice, attended Thursday’s meeting to offer support.

“We are aware that many North Carolinians are frustrated with their HOAs, and we support reforms,” Chirukuri said.