N.C. Gen. Stat. § 47A-1...N.C. Gen. Stat. § 47A-3 (6) "Declaration" means the instrument, duly...

N.C. Gen. Stat. § 47A-1

Statutes current through the 2014 Regular Session

General Statutes of North Carolina > CHAPTER 47A. UNIT OWNERSHIP > ARTICLE 1.

UNIT OWNERSHIP ACT

§ 47A-1. Short title

This Article shall be known as the "Unit Ownership Act."

History

1963, c. 685, s. 1; 1983, c. 624, s. 2.

General Statutes of North Carolina

Copyright 2015 by Matthew Bender & Company, Inc. a member of the LexisNexis Group. All rights

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UNIT OWNERSHIP ACT

§ 47A-2. Declaration creating unit ownership; recordation

Unit ownership may be created by an owner or the co-owners of a building by an express declaration

of their intention to submit such property to the provisions of the Article, which declaration shall be

recorded in the office of the register of deeds of the county in which the property is situated.

History

1963, c. 685, s. 2; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-3. Definitions

Unless it is plainly evident from the context that a different meaning is intended, as used herein:

(1) "Association of unit owners" means all of the unit owners acting as a group in accordance

with the bylaws and declaration.

(1a) "Building" means a building, or a group of buildings, each building containing one or more

units, and comprising a part of the property; provided that the property shall contain not

less than two units.

(2) "Common areas and facilities," unless otherwise provided in the declaration or lawful

amendments thereto, means and includes:

a. The land on which the building stands and such other land and improvements thereon

as may be specifically included in the declaration, except any portion thereof included

in a unit;

b. The foundations, columns, girders, beams, supports, main walls, roofs, halls, corridors,

lobbies, stairs, stairways, fire escapes, and entrances and exits of the building;

c. The basements, yards, gardens, parking areas and storage spaces;

d. The premises for the lodging of janitors or persons in charge of property;

e. Installations of central services such as power, light, gas, hot and cold water, heating,

refrigeration, air conditioning and incinerating;

f. The elevators, tanks, pumps, motors, fans, compressors, ducts, and in general, all

apparatus and installations existing for common use;

g. Such community and commercial facilities as may be provided for in the declaration;

and

h. All other parts of the property necessary or convenient to its existence, maintenance

and safety, or normally in common use.

(3) "Common expenses" means and includes:

a. All sums lawfully assessed against the unit owners by the association of unit owners;

b. Expenses of administration, maintenance, repair or replacement of the common areas

and facilities;

c. Expenses agreed upon as common expenses by the association of unit owners;

d. Expenses declared common expenses by the provisions of this Article, or by the

declaration or the bylaws;

e. Hazard insurance premiums, if required.

(4) "Common profits" means the balance of all income, rents, profits, and revenues from the

common areas and facilities remaining after the deductions of the common expenses.

(5) "Condominium" means the ownership of single units in a multi-unit structure with common

areas and facilities.


(6) "Declaration" means the instrument, duly recorded, by which the property is submitted to

the provisions of this Article, as hereinafter provided, and such declaration as from time to

time may be lawfully amended.

(7) "Limited common areas and facilities" means and includes those common areas and

facilities which are agreed upon by all the unit owners to be reserved for the use of a

certain number of units to the exclusion of the other units, such as special corridors,

stairways and elevators, sanitary services common to the units of a particular floor, and the

like.

(8) "Majority" or "majority of unit owners" means the owners of more than fifty percent (50%)

of the aggregate interest in the common areas and facilities as established by the

declaration assembled at a duly called meeting of the unit owners.

(9) "Person" means individual, corporation, partnership, association, trustee, or other legal

entity.

(10) "Property" means and includes the land, the building, all improvements and structures

thereon and all easements, rights and appurtenances belonging thereto, and all articles of

personal property intended for use in connection therewith, which have been or are

intended to be submitted to the provisions of this Article.

(11) "Recordation" means to file of record in the office of the county register of deeds in the

county where the land is situated, in the manner provided by law for recordation of

instruments affecting real estate.

(12) "Unit" or "condominium unit" means an enclosed space consisting of one or more rooms

occupying all or a part of a floor or floors in a building of one or more floors or stories

regardless of whether it be designed for residence, for office, for the operation of any

industry or business, or for any other type of independent use and shall include such

accessory spaces and areas as may be described in the declaration, such as garage space,

storage space, balcony, terrace or patio, provided it has a direct exit to a thoroughfare or

to a given common space leading to a thoroughfare.

(13) "Unit designation" means the number, letter, or combination thereof designating the unit

in the declaration.

(14) "Unit owner" means a person, corporation, partnership, association, trust or other legal

entity, or any combination thereof, who owns a unit within the building.

History

1963, c. 685, s. 3; 1969, c. 848; 1971, c. 418; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-4. Property subject to Article

This Article shall be applicable only to property, the full owner or all of the owners of which submit the

same to the provisions hereof by duly executing and recording a declaration as hereinafter provided.

History

1963, c. 685, s. 4; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-5. Nature and incidents of unit ownership

Unit ownership as created and defined in this Article shall vest in the holder exclusive ownership and

possession with all the incidents of real property. A condominium unit in the building may be

individually conveyed, leased and encumbered and may be inherited or devised by will, as if it were

solely and entirely independent of the other condominium units in the building of which it forms a

part. Such a unit may be held and owned by more than one person either as tenants in common or

tenants by the entirety or in any other manner recognized under the laws of this State.

History

1963, c. 685, s. 5; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-6. Undivided interests in common areas and facilities; ratio fixed in declaration;

conveyance with unit

(a) Each unit owner shall be entitled to an undivided interest in the common areas and facilities in

the ratio expressed in the declaration. Such ratio shall be in the approximate relation that the

fair market value of the unit at the date of the declaration bears to the then aggregate fair

market value of all the units having an interest in said common areas and facilities.

(b) The ratio of the undivided interest of each unit owner in the common areas and facilities as

expressed in the declaration shall have a permanent character and shall not be altered except

with the unanimous consent of all unit owners expressed in an amended declaration duly

recorded.

(c) The undivided interest in the common areas and facilities shall not be separated from the unit

to which it appertains and shall be deemed conveyed or encumbered with the unit even though

such interest is not expressly mentioned or described in the conveyance or other instrument.

History

1963, c. 685, s. 6.



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UNIT OWNERSHIP ACT

§ 47A-7. Common areas and facilities not subject to partition or division

The common areas and facilities shall remain undivided and no unit owner or any other person shall

bring any action for partition or division of any part thereof, unless the property has been removed

from the provisions of this Article as provided in G.S. 47A-16 and 47A-25. Any covenant to the

contrary shall be null and void. This restraint against partition shall not apply to the individual

condominium unit.

History

1963, c. 685, s. 7; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-8. Use of common areas and facilities

Each unit owner may use the common areas and facilities in accordance with the purpose for which

they are intended, without hindering or encroaching upon the lawful rights of the other unit owners.

History

1963, c. 685, s. 8.



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UNIT OWNERSHIP ACT

§ 47A-9. Maintenance, repair and improvements to common areas and facilities; access to

units for repairs

The necessary work of maintenance, repair, and replacement of the common areas and facilities and

the making of any additions or improvements thereto shall be carried out only as provided herein and

in the bylaws. The association of unit owners shall have the irrevocable right, to be exercised by the

manager or board of directors, or other managing body as provided in the bylaws, to have access to

each unit from time to time during reasonable hours as may be necessary for the maintenance, repair

or replacement of any of the common areas and facilities therein or accessible therefrom, or for

making emergency repairs therein necessary to prevent damage to the common areas and facilities

or to another unit or units.

History

1963, c. 685, s. 9.



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UNIT OWNERSHIP ACT

§ 47A-10. Compliance with bylaws, regulations and covenants; damages; injunctions

Each unit owner shall comply strictly with the bylaws and with the administrative rules and

regulations adopted pursuant thereto, as either of the same may be lawfully amended from time to

time, and with the covenants, conditions and restrictions set forth in the declaration or in the deed to

his unit. Failure to comply with any of the same shall be grounds for an action to recover sums due,

for damages or injunctive relief, or both, maintainable by the manager or board of directors on behalf

of the association of unit owners or, in a proper case, by an aggrieved unit owner.

History

1963, c. 685, s. 10.



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UNIT OWNERSHIP ACT

§ 47A-11. Unit owners not to jeopardize safety of property or impair easements

No unit owner shall do any work which would jeopardize the soundness or safety of the property or

impair any easement or hereditament without in every such case the unanimous consent of all the

other unit owners affected being first obtained.

History

1963, c. 685, s. 11.



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UNIT OWNERSHIP ACT

§ 47A-12. Unit owners to contribute to common expenses; distribution of common profits

The unit owners are bound to contribute pro rata, in the percentages computed according to G.S.

47A-6 of this Article, toward the expenses of administration and of maintenance and repair of the

general common areas and facilities and, in proper cases of the limited common areas and facilities,

of the building and toward any other expense lawfully agreed upon. No unit owner may exempt

himself from contributing toward such expense by waiver of the use or enjoyment of the common

areas and facilities or by abandonment of the unit belonging to him.

Provided, however, that the common profits of the property, if any, shall be distributed among the

unit owners according to the percentage of the undivided interest in the common areas and facilities.

History

1963, c. 685, s. 12; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-13. Declaration creating unit ownership; contents; recordation

The declaration creating and establishing unit ownership as provided in G.S. 47A-3 of this Article,

shall be recorded in the office of the county register of deeds and shall contain the following

particulars:

(1) Description of the land on which the building and improvements are or are to be located.

(2) Description of the building, stating the number of stories and basements, the number of

units, and the principal materials of which it is constructed.

(3) The unit designation of each unit, and a statement of its location, approximate area,

number of rooms, and immediate common area to which it has access, and any other data

necessary for its proper identification.

(4) Description of the general common areas and facilities and the proportionate interest of

each unit owner therein.

(5) Description of the limited common areas and facilities, if any, stating what units shall share

the same and in what proportion.

(6) Statement of the purpose for which the building and each of the units are intended and

restricted as to use.

(7) The name of a person to receive service of process in the cases hereinafter provided,

together with the residence or the place of business of such person which shall be within

the city and county in which the building is located.

(8) Any further details in connection with the property which the person executing the

declaration may deem desirable to set forth consistent with this Article.

(9) The method by which the declaration may be amended, consistent with the provisions of

this Article.

History

1963, c. 685, s. 13; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT


Repealed by Session Laws 1981, c. 527, s. 1.



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N.C. Gen. Stat. § 47A-14.1



UNIT OWNERSHIP ACT

§ 47A-14.1. Deeds conveying units

(a) Any conveyance of a condominium unit executed on or after October 1, 1981, which complies

with the general requirements of the laws of this State concerning conveyances of real property

shall be valid.

(b) All conveyances of condominium units executed before October 1, 1981, which comply with

the general requirements of the laws of this State concerning conveyances of real property

shall be valid even though such conveyances failed to comply with one or more of the

particulars set out in former G.S. 47A-14.

History

1981, c. 527, ss. 2, 3.



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UNIT OWNERSHIP ACT

§ 47A-15. Plans of building to be attached to declaration; recordation; certificate of architect

or engineer

(a) There shall be attached to the declaration, at the time it is filed for record, a full and exact

copy of the plans of the building, which copy of plans shall be entered of record along with the

declaration. Said plans shall show graphically all particulars of the building, including, but not

limited to, the layout, location, ceiling and floor elevations, unit numbers and dimensions of the

units, stating the name of the building or that it has no name, area and location of the common

areas and facilities affording access to each unit, and such plans shall bear the verified

statement of a registered architect or licensed professional engineer certifying that it is an

accurate copy of portions of the plans of the building as filed with and approved by the

municipal or other governmental subdivision having jurisdiction over the issuance of permits for

the construction of buildings. If such plans do not include a verified statement by such architect

or engineer that such plans fully and accurately depict the layout, location, ceiling and floor

elevations, unit numbers and dimensions of the units, as built, there shall be recorded prior to

the first conveyance of any unit an amendment to the declaration to which shall be attached a

verified statement of a registered architect or licensed professional engineer certifying that the

plans theretofore filed, or being filed simultaneously with such amendment, fully depict the

layout, ceiling and floor elevations, unit numbers and dimensions of the units as built. Such

plans shall be kept by the register of deeds in a separate file, indexed in the same manner as a

conveyance entitled to record, numbered serially in the order of receipt, each designated "Unit

Ownership," with the name of the building, if any, and each containing a reference to the book

and page numbers and date of the recording of the declaration.

(b) In order to be recorded, plans filed for recording pursuant to subsection (a) shall:

(1) Be reproducible plans on cloth, linen, film or other permanent material and be submitted in

that form; and

(2) Have an outside marginal size of not more than 21 inches by 30 inches nor less than eight

and one-half inches by 11 inches, including one and one-half inches for binding on the left

margin and a one-half inch border on each of the other sides. Where size of the buildings,

or suitable scale to assure legibility require, plans may be placed on two or more sheets

with appropriate match lines.

(c) The fee for recording each plan sheet submitted pursuant to subsection (a) shall be as

prescribed by G.S. 161-10(a)(3).

History

1963, c. 685, s. 15; 1981, c. 587.



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UNIT OWNERSHIP ACT

§ 47A-16. Termination of unit ownership; consent of lienholders; recordation of instruments

(a) All of the unit owners may remove a property from the provisions of this Article by an

instrument to that effect, duly recorded, provided that the holders of all liens, affecting any of

the units consent thereto or agree, in either case by instruments duly recorded, that their liens

be transferred to the percentage of the undivided interest of the unit owner in the property as

hereinafter provided.

(b) Upon removal of the property from the provisions of this Article, the property shall be deemed

to be owned as tenants in common by the unit owners. The undivided interest in the property

owned as tenants in common which shall appertain to each unit owner shall be the percentage

of the undivided interest previously owned by such unit owner in the common areas and

facilities.

History

1963, c. 685, s. 16; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-17. Termination of unit ownership; no bar to reestablishment

The removal provided for in G.S. 47A-16 shall in no way bar the subsequent resubmission of the

property to the provisions of this Article.

History

1963, c. 685, s. 17; 1983, c. 624, s. 2; 2002-159, s. 10.



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UNIT OWNERSHIP ACT

§ 47A-18. Bylaws; annexed to declaration; amendments

The administration of every property shall be governed by bylaws, a true copy of which shall be

annexed to the declaration. No modification of or amendment to the bylaws shall be valid, unless set

forth in an amendment to the declaration and such amendment is duly recorded.

History

1963, c. 685, s. 18; 1973, c. 734.



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UNIT OWNERSHIP ACT

§ 47A-19. Bylaws; contents

The bylaws shall provide for the following:

(1) Form of administration, indicating whether this shall be in charge of an administrator,

manager, or of a board of directors or board of administration, independent corporate

body, or otherwise, and specifying the powers, manner of removal, and, where proper, the

compensation thereof.

(2) Method of calling or summoning the unit owners to assemble; what percentage, if other

than a majority of unit owners, shall constitute a quorum; who is to preside over the

meeting and who will keep the minute book wherein the resolutions shall be recorded.

(3) Maintenance, repair and replacement of the common areas and facilities and payments

therefor, including the method of approving payment vouchers.

(4) Manner of collecting from the unit owners their share of the common expenses.

(5) Designation and removal of personnel necessary for the maintenance, repair and

replacement of the common areas and facilities.

(6) Method of adopting and of amending administrative rules and regulations governing the

details of the operation and use of the common areas and facilities.

(7) Such restrictions on and requirements respecting the use and maintenance of the units and

the use of the common areas and facilities, not set forth in the declaration, as are designed

to prevent unreasonable interference with the use of their respective units and of the

common areas and facilities by the several unit owners.

(8) The percentage of votes required to amend the bylaws, and a provision that such

amendment shall not become operative unless set forth in an amended declaration and

duly recorded.

(9) A provision that all unit owners shall be bound to abide by any amendment upon the same

being passed and duly set forth in an amended declaration, duly recorded.

(10) Other provisions as may be deemed necessary for the administration of the property

consistent with this Article.

History

1963, c. 685, s. 19; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-20. Records of receipts and expenditures; availability for examination; annual audit

The manager or board of directors, or other form of administration provided in the bylaws, as the

case may be, shall keep detailed, accurate records in chronological order of the receipts and

expenditures affecting the common areas and facilities, specifying and identifying the maintenance

and repair expenses of the common areas and facilities and any other expense incurred. Both said

book and the vouchers accrediting the entries thereupon shall be available for examination by all the

unit owners, their duly authorized agents or attorneys, at convenient hours on working days that shall

be set and announced for general knowledge. All books and records shall be kept in accordance with

good and accepted accounting practices and an outside audit shall be made at least once a year.

History

1963, c. 685, s. 20.



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UNIT OWNERSHIP ACT

§ 47A-21. Units taxed separately

Each condominium unit and its percentage of undivided interest in the common areas and facilities

shall be deemed to be a parcel and shall be separately assessed and taxed by each assessing unit and

special district for all types of taxes authorized by law including but not limited to special ad valorem

levies and special assessments. Each unit holder shall be liable solely for the amount of taxes against

his individual unit and shall not be affected by the consequences resulting from the tax delinquency of

other unit holders. Neither the building, the property nor any of the common areas and facilities shall

be deemed to be a parcel.

History

1963, c. 685, s. 21.



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UNIT OWNERSHIP ACT

§ 47A-22. Liens for unpaid common expenses; recordation; priorities; foreclosure

(a) Any sum assessed by the association of unit owners for the share of the common expenses

chargeable to any unit, and remaining unpaid for a period of 30 days or longer, shall constitute

a lien on such unit when filed of record in the office of the clerk of superior court of the county

in which the property is located in the manner provided therefor by Article 8 of Chapter 44 of

the General Statutes. Upon the same being duly filed, such lien shall be prior to all other liens

except the following:

(1) Assessments, liens and charges for real estate taxes due and unpaid on the unit;

(2) All sums unpaid on deeds of trust, mortgages and other encumbrances duly of record

against the unit prior to the docketing of the aforesaid lien.

(3) Materialmen's and mechanics' liens.

(b) Provided the same is duly filed in accordance with the provisions contained in subsection (a) of

this section, a lien created by nonpayment of a unit owner's pro rata share of the common

expenses may be foreclosed by suit by the manager or board of directors, acting on behalf of

the unit owners, in like manner as a deed of trust or mortgage of real property. In any such

foreclosure the unit owner shall be required to pay a reasonable rental for the unit, if so

provided in the bylaws, and the plaintiff in such foreclosure shall be entitled to the appointment

of a receiver to collect the same. The manager or board of directors, acting on behalf of the

unit owners shall have power, unless prohibited by the declaration, to bid in the unit at

foreclosure sale, and to acquire and hold, lease, mortgage and convey the same. A suit to

recover a money judgment for unpaid common expenses shall be maintainable without

foreclosing or waiving the lien securing the same.

(c) Where the mortgagee of a first mortgage of record or other purchaser of a unit obtains title to

the unit as a result of foreclosure of the first mortgage, such purchaser, his successors and

assigns, shall not be liable for the share of the common expenses or assessments by the

association of unit owners chargeable to such unit which became due prior to the acquisition of

title to such unit by such purchaser. Such unpaid share of common expenses or assessments

shall be deemed to be common expenses collectible from all of the unit owners including such

purchaser, his successors and assigns.

History

1963, c. 685, s. 22.



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UNIT OWNERSHIP ACT

§ 47A-23. Liability of grantor and grantee of unit for unpaid common expenses

The grantee of a unit shall be jointly and severally liable with the grantor for all unpaid assessments

against the latter for his proportionate share of the common expenses up to the time of the grant or

conveyance, without prejudice to the grantee's right to recover from the grantor the amounts paid by

the grantee therefor. However, any such grantee shall be entitled to a statement from the manager

or board of directors, as the case may be, setting forth the amount of the unpaid assessments against

the grantor and such grantee shall not be liable for, nor shall the unit conveyed be subject to a lien

for, any unpaid assessments in excess of the amount therein set forth.

History

1963, c. 685, s. 23.



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UNIT OWNERSHIP ACT

§ 47A-24. Insurance on property; right to insure units

The manager of the board of directors, or other managing body, if required by the declaration, bylaws

or by a majority of the unit owners, shall have the authority to, and shall, obtain insurance for the

property against loss or damage by fire and such other hazards under such terms and for such

amounts as shall be required or requested. Such insurance coverage shall be written on the property

in the name of such manager or of the board of directors of the association of unit owners, as trustee

for each of the unit owners in the percentages established in the declaration. The trustee so named

shall have the authority on behalf of the unit owners to deal with the insurer in the settlement of

claims. The premiums for such insurance on the building shall be deemed common expenses.

Provision for such insurance shall be without prejudice to the right of each unit owner to insure his

own unit for his benefit.

History

1963, c. 685, s. 24.



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UNIT OWNERSHIP ACT

§ 47A-25. Damage to or destruction of property; repair or restoration; partition sale on

resolution not to restore

Except as hereinafter provided, damage to or destruction of the building shall be promptly repaired

and restored by the manager or board of directors, or other managing body, using the proceeds of

insurance on the building for that purpose, and unit owners shall be liable for assessment for any

deficiency; provided, however, if the building shall be more than two-thirds destroyed by fire or

other disaster and the owners of three-fourths of the building duly resolve not to proceed with

repair or restoration, then and in that event:

(1) The property shall be deemed to be owned as tenants in common by the unit owners;

(2) The undivided interest in the property owned by the unit owners as tenants in common

which shall appertain to each unit owner shall be the percentage of undivided interest

previously owned by such owner in the common areas and facilities;

(3) Any liens affecting any of the units shall be deemed to be transferred in accordance with

the existing priorities to the percentage of the undivided interest of the unit owner in the

property as provided herein; and

(4) The property shall be subject to an action for sale for partition at the suit of any unit

owner, in which event the net proceeds of sale, together with the net proceeds of insurance

policies, if any, shall be considered as one fund and shall be divided among all the unit

owners in proportion to their respective undivided ownership of the common areas and

facilities, after first paying off, out of the respective shares of unit owners, to the extent

sufficient for that purpose, all liens on the unit of each unit owner.

History

1963, c. 685, s. 25.



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UNIT OWNERSHIP ACT

§ 47A-26. Actions as to common interests; service of process on designated agent;

exhaustion of remedies against association

Without limiting the rights of any unit owner, actions may be brought by the manager or board of

directors, in either case in the discretion of the board of directors, on behalf of two or more of the unit

owners, as their respective interests may appear, with respect to any course of action relating to the

common areas and facilities or more than one unit. Service of process on two or more unit owners in

any action relating to the common areas and facilities or more than one unit may be made on the

person designated in the declaration to receive service of process. Any individual, corporation,

partnership, association, trustee, or other legal entity claiming damages for injuries without any

participation by a unit owner shall first exhaust all available remedies against the association of unit

owners prior to proceeding against any unit owner individually.

History

1963, c. 685, s. 26.



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UNIT OWNERSHIP ACT

§ 47A-27. Zoning regulations governing condominium projects

Whenever they deem it proper, the planning and zoning commission of any county or municipality

may adopt supplemental rules and regulations governing a condominium project established under

this Article in order to implement this program.

History

1963, c. 685, s. 27; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§ 47A-28. Persons subject to Article, declaration and bylaws; effect of decisions of association

of unit owners

(a) All unit owners, tenants of such owners, employees of owners and tenants, or any other

persons that may in any manner use the property or any part thereof submitted to the

provisions of this Article, shall be subject to this Article and to the declaration and bylaws of the

association of unit owners adopted pursuant to the provisions of this Article.

(b) All agreements, decisions and determinations lawfully made by the association of unit owners

in accordance with the voting percentages established in the Article, declaration or bylaws,

shall be deemed to be binding on all unit owners.

History

1963, c. 685, s. 28; 1983, c. 624, s. 2.



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UNIT OWNERSHIP ACT

§§ 47A-29 through 47A-33

Reserved for future codification purposes.



reserved




RENTERS IN CONVERSION BUILDINGS PROTECTED

§ 47A-34. Definitions

The definitions set out in G.S. 47A-3 also apply to this Article. As used in this Article, unless the

context requires otherwise, the term:

(1) "Conversion building" means a building that at any time before creation of the

condominium was occupied wholly or partially by persons other than purchasers and

persons who occupy with the consent of purchasers.

(2) "Declarant" means any person or group of persons acting in concert who, as part of a

common promotional plan, offers to dispose of his or its interest in a unit not previously

disposed of.

(3) "Dispose" or "disposition" means a voluntary transfer to a purchaser of any legal or

equitable interest in a unit, but does not include the transfer or release of a security

interest.

(4) "Offering" means any advertisement, inducement, solicitation, or attempt to encourage any

person to acquire any interest in a unit, other than as security for an obligation.

(5) "Residential purposes" means use for dwelling or recreational purposes, or both.

History

1983, c. 624, s. 1.



reserved





§ 47A-35. Offering statement

An offering statement must contain or fully and accurately disclose:

(1) The name and principal address of the declarant;

(2) A general description of the condominium including, to the extent possible, a listing of any

improvements and amenities that declarant anticipates including in the condominium, and

declarant's schedule of completion of construction on buildings;

(3) The terms and significant limitations of any warranties provided by the declarant; and

(4) Any other information made available to the general public in connection with the offering.

History

1983, c. 624, s. 1.



reserved





§ 47A-36. Time to vacate; right of first refusal to purchase

(a) A declarant of a condominium containing conversion buildings, and any person in the business

of selling real estate for his own account who intends to offer units in such a condominium,

shall provide each of the residential tenants and any residential subtenant in possession of a

portion of a conversion building notice of the conversion as well as an offering statement as

provided in G.S. 47A-35 no later than 90 days before the tenant or subtenant are required to

vacate. The notice shall set forth generally the rights of tenants and subtenants under this

section and section (b) of G.S. 47A-36. This notice shall be hand-delivered to the unit or mailed

by prepaid United States mail to the tenant and subtenant at the address of the unit or any

other mailing address provided by a tenant. No tenant or subtenant may be required to vacate

upon less than 90 days' notice, except by reason of nonpayment of rent, waste, conduct that

disturbs other tenants' peaceful enjoyment of the premises or breach of lease giving rise to the

right of repossession of the unit by the declarant, and the terms of the tenancy may not be

altered during that period. Failure to give notice as required by this section is a defense to an

action for possession.

(b) For 30 days after the delivery of the notice described in subsection (a), the person required to

give the notice shall offer to convey each unit or proposed unit occupied for residential use to

the tenant who leases that unit. The tenant can accept an offer under this section by entering

into an agreement to purchase within the 30-day period. The tenant shall be allowed a 30-day

period after acceptance in which to complete a purchase transaction. This subsection does not

apply to any unit in a conversion building if that unit will be restricted exclusively to

nonresidential use or the boundaries of the converted unit do not substantially conform to the

dimensions of the residential unit before conversion.

(c) If a declarant, in violation of subsection (b), conveys a unit to a purchaser, recordation of the

deed conveying the unit extinguishes any right a tenant may have under subsection (b) to

purchase that unit, but does not affect any other right of a tenant.

History

1983, c. 624, s. 1.



reserved





§ 47A-37. Applicability

This Article applies to condominiums of five or more units created on or after January 1, 1984.

History

1983, c. 624, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-101


General Statutes of North Carolina > CHAPTER 47C. NORTH CAROLINA

CONDOMINIUM ACT > ARTICLE 1. GENERAL PROVISIONS

§ 47C-1-101. Short title

This chapter shall be known and may be cited as the North Carolina Condominium Act.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-102




§ 47C-1-102. Applicability

(a) This Chapter applies to all condominiums created within this State after October 1, 1986. G.S.

47C-1-105 (Separate Titles and Taxation), 47C-1-106 (Applicability of Local Ordinances,

Regulations, and Building Codes), 47C-1-107 (Eminent Domain), 47C-2-103 (Construction and

Validity of Declaration and Bylaws), 47C-2-104 (Description of Units), 47C-2-121 (Merger or

Consolidation of Condominiums), 47C-3-102(a)(1) through (6) and (11) through (16)(Powers

of Unit Owners' Association), 47C-3-103 (Executive board members and officers), 47C-3-107.1

(Procedures for fines and suspension of condominium privileges or services), 47C-3-108

(Meetings), 47C-3-111 (Tort and Contract Liability), 47C-3-112 (Conveyance or Encumbrance

of Common Elements), 47C-3-116 (Lien for Assessments), 47C-3-118 (Association Records),

47C-3-121 (American and State flags and political sign displays), and 47C-4-117 (Effect of

Violation on Rights of Action; Attorney's Fees), and G.S. 47C-1-103 (Definitions), to the extent

necessary in construing any of those sections, apply to all condominiums created in this State

on or before October 1, 1986, unless the declaration expressly provides to the contrary. Those

sections apply only with respect to events and circumstances occurring after October 1, 1986,

and do not invalidate existing provisions of the declarations, bylaws, or plats or plans of those

condominiums.

(b) The provisions of Chapter 47A, the Unit Ownership Act, do not apply to condominiums created

after October 1, 1986 and do not invalidate any amendment to the declaration, bylaws, and

plats and plans of any condominium created on or before October 1, 1986 if the amendment

would be permitted by this chapter. The amendment must be adopted in conformity with the

procedures and requirements specified by those instruments and by Chapter 47A, the Unit

Ownership Act. If the amendment grants to any person any rights, powers, or privileges

permitted by this chapter, all correlative obligations, liabilities, and restrictions in this chapter

also apply to that person.

(c) This chapter does not apply to condominiums or units located outside this State, but the public

offering statement provisions (G.S. 47C-4-102 through 47C-4-108) apply to all contracts for

the dispositions thereof signed in this State by any party unless exempt under G.S. 47C-4-

101(b).

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 1995, c. 509, s. 135.1(h); 2002-112, s. 1; 2004-109, s. 1;

2005-422, s. 19.



reserved

N.C. Gen. Stat. § 47C-1-103




§ 47C-1-103. Definitions

In the declaration and bylaws, unless specifically provided otherwise or the context otherwise

requires, and in this chapter:

(1) "Affiliate of a declarant" means any person who controls, is controlled by, or is under

common control with a declarant. A person "controls" a declarant if the person (i) is a

general partner, officer, director, or employer of the declarant, (ii) directly or indirectly or

acting in concert with one or more other persons, or through one or more subsidiaries,

owns, controls, holds with power to vote, or holds proxies representing, more than twenty

percent (20%) of the voting interests in the declarant, (iii) controls in any manner the

election of a majority of the directors of the declarant, or (iv) has contributed more than

twenty percent (20%) of the capital of the declarant. A person "is controlled by" a

declarant if the declarant (i) is a general partner, officer, director, or employer of the

person, (ii) directly or indirectly or acting in concert with one or more other persons, or

through one or more subsidiaries, owns, controls, holds with power to vote, or holds

proxies representing, more than twenty percent (20%) of the voting interests in the

person, (iii) controls in any manner the election of a majority of the directors of the person,

or (iv) has contributed more than twenty percent (20%) of the capital of the person.

Control does not exist if the powers described in this paragraph are held solely as security

for an obligation and are not exercised.

(2) "Allocated interests" means the undivided interests in the common elements, the common

expense liability, and votes in the association allocated to each unit.

(3) "Association" or "unit owners' associations" means the unit owners' associations organized

under G.S. 47C-3-101.

(4) "Common elements" means all portions of a condominium other than the units.

(5) "Common expenses" means expenditures made by or financial liabilities of the association,

together with any allocations to reserves.

(6) "Common expense liability" means the liability for common expenses allocated to each unit

pursuant to G.S. 47C-2-107.

(7) "Condominium" means real estate, portions of which are designated for separate ownership

and the remainder of which is designated for common ownership solely by the owners of

those portions. Real estate is not a condominium unless the undivided interests in the

common elements are vested in the unit owners.

(8) "Conversion building" means a building that at any time before creation of the

condominium was occupied wholly or partially by persons other than purchasers or by

persons who occupy with the consent of purchasers.

(9) "Declarant" means any person or group of persons acting in concert who (i) as part of a

common promotional plan offers to dispose of his or its interest in a unit not previously

disposed of or (ii) reserves or succeeds to any special declarant right.

(10) "Declaration" means any instruments, however denominated, which create a

condominium, and any amendments to those instruments.

N.C. Gen. Stat. § 47C-1-103

(11) "Development rights" means any right or combination of rights reserved by a declarant in

the declaration to add real estate to a condominium; to create units, common elements, or

limited common elements within a condominium; to subdivide units or convert units into

common elements; or to withdraw real estate from a condominium.

(12) "Dispose" or "disposition" means a voluntary transfer to a purchaser of any legal or

equitable interest in a unit, but does not include the transfer or release of a security

interest.

(13) "Executive board" means the body, regardless of name, designated in the declaration to

act on behalf of the association.

(14) "Identifying number" means a symbol or address that identifies only one unit in a

condominium.

(15) "Leasehold condominium" means a condominium in which all or a portion of the real

estate is subject to a lease the expiration or termination of which will terminate the

condominium or reduce its size.

(16) "Limited common element" means a portion of the common elements allocated by the

declaration or by operation of G.S. 47C-2-102(2) or (4) for the exclusive use of one or

more but fewer than all of the units.

(17) "Master association" means an organization described in G.S. 47C-2-120, whether or not

it is also an association described in G.S. 47C-3-101.

(18) "Offering" means any advertisement, inducement, solicitation, or attempt to encourage

any person to acquire any interest in a unit, other than as security for an obligation. An

advertisement in a newspaper or other periodical of general circulation, or in any broadcast

medium to the general public, of a condominium not located in this State, is not an offering

if the advertisement states that an offering may be made only in compliance with the law of

the jurisdiction in which the condominium is located.

(19) "Person" means a natural person, corporation, business trust, estate, trust, partnership,

association, joint venture, government, governmental subdivision or agency, or other legal

or commercial entity.

(20) "Purchaser" means any person, other than a declarant or a person in the business of

selling real estate for his own account, who by means of a voluntary transfer acquires a

legal or equitable interest in a unit other than (i) a leasehold interest (including renewal

options) of less than five years, or (ii) as security for an obligation.

(21) "Real estate" means any leasehold or other estate or interest in, over, or under land,

including structures, fixtures, and other improvements and interests which by custom,

usage, or law, pass with a conveyance of land though not described in the contract of sale

or instrument of conveyance. "Real estate" includes parcels, with or without upper or lower

boundaries, and spaces that may be filled with air or water.

(22) "Residential purposes" means use for dwelling or recreational purposes, or both.

(23) "Special declarant rights" means rights reserved for the benefit of a declarant to complete

improvements indicated on plats and plans filed with the declaration (G.S. 47C-2-109); to

exercise any development right (G.S. 47C-2-110); to maintain sales offices, management

offices, signs advertising the condominium, and models (G.S. 47C-2-115); to use

easements through the common elements for the purpose of making improvements within

the condominium or within real estate which may be added to the condominium (G.S. 47C-

2-116); to make the condominium part of a larger condominium (G.S. 47C-2-121); or to

appoint or remove any officer of the association or any executive board member during any

period of declarant control (G.S. 47C-3-103(d)).

N.C. Gen. Stat. § 47C-1-103

(24) "Time share" means a "time share" as defined in G.S. 93A-41(9).

(25) "Unit" means a physical portion of the condominium designated for separate ownership or

occupancy, the boundaries of which are described pursuant to (G.S. 47C-2-105(a)(5).

(26) "Unit owner" means a declarant or other person who owns a unit, or a lessee of a unit in

a leasehold condominium whose lease expires simultaneously with any lease the expiration

or termination of which will remove the unit from the condominium, but does not include a

person having an interest in a unit solely as security for an obligation.

(27) "Lessee" means the party entitled to present possession of a leased unit whether lessee,

sublessee or assignee.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-104




§ 47C-1-104. Variation; power of attorney or proxy to declarant

(a) Except as specifically provided in specific sections of this chapter, the provisions of this chapter

may not be varied by the declaration or bylaws.

(b) The provisions of this chapter may not be varied by agreement; however, after breach of a

provision of this chapter, rights created hereunder may be knowingly waived in writing.

(c) If a declarant, in good faith, has attempted to comply with the requirements of this chapter

and has substantially complied with the chapter, nonmaterial errors or omissions shall not be

actionable.

(d) Notwithstanding any other provision of this chapter, a declarant may not act under a power of

attorney or proxy or use any other device to evade the limitations or prohibitions of this

chapter, the declaration, or the bylaws.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-105




§ 47C-1-105. Separate titles and taxation

(a) If there is any unit owner other than a declarant, each unit that has been created, together

with its interest in the common elements, constitutes for all purposes a separate parcel of real

estate.

(b) If there is any unit owner other than a declarant, each unit must be separately taxed and

assessed, and no separate tax or assessment may be rendered against any common elements

for which a declarant has reserved no developmental rights.

(c) Any portion of the common elements for which the declarant has reserved any developmental

right must be separately taxed and assessed against the declarant, and the declarant alone is

liable for payment of those taxes.

(d) If there is no unit owner other than a declarant, the real estate comprising the condominium

may be taxed and assessed in any manner provided by law.

(e) Except as provided in subsection (c) of this section, extraterritorial common property taxed

pursuant to G.S. 105-277.8 shall be assessed, pro rata, among the unit owners based on the

number of the units in the association.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2012-157, s. 2.



reserved

N.C. Gen. Stat. § 47C-1-106




§ 47C-1-106. Applicability of local ordinances, regulations, and building codes

A zoning, subdivision, or building code or other real estate use law, ordinance, or regulation may not

prohibit the condominium form of ownership or impose any requirement upon a condominium which it

would not impose upon a substantially similar development under a different form of ownership.

Otherwise, no provision of this chapter invalidates or modifies any provision of any zoning,

subdivision, or building code or other real estate use law, ordinance, or regulation. No local ordinance

or regulation may require the recordation of a declaration prior to the date required by this chapter.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-107




§ 47C-1-107. Eminent domain

(a) If a unit is acquired by eminent domain, or if part of a unit is acquired by eminent domain

leaving the unit owner with a remnant which may not practically or lawfully be used for any

purpose permitted by the declaration, the award must compensate the unit owner for his unit

and its interest in the common elements, whether or not any common elements are acquired.

Unless the condemnor acquires the right to use the unit's interest in common elements, that

unit's allocated interests are automatically reallocated to the remaining units in proportion to

the respective allocated interests of those units before the taking exclusive of the unit taken,

and the association shall promptly prepare, execute, and record an amendment to the

declaration reflecting the reallocations. Any remnant of a unit remaining after part of a unit is

taken under this subsection is thereafter a common element.

(b) Except as provided in subsection (a), if part of a unit is acquired by eminent domain, the

award must compensate the unit owner for the reduction in value of the unit and of its interest

in the common elements, whether or not any common elements are acquired. Upon acquisition,

unless the decree otherwise provides, (1) that unit's allocated interests are reduced in

proportion to the reduction in the size of the unit, or on any other basis specified in the

declaration, and (2) the portion of the allocated interests divested from the partially acquired

unit is automatically reallocated to that unit and the remaining units in proportion to the

respective allocated interests of those units before the taking, with the partially acquired unit

participating in the reallocation on the basis of its reduced allocated interests.

(c) If part of the common elements is acquired by eminent domain, the portion of the award not

payable to unit owners under subsection (a) must be paid to the association. Unless the

declaration provides otherwise, any portion of the award attributable to the acquisition of a

limited common element must be apportioned among the owners of the units to which that

limited common element was allocated at the time of acquisition.

(d) The court decree shall be recorded in every county in which any portion of the condominium is

located.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-108




§ 47C-1-108. Supplemental general principles of law applicable

The principles of law and equity supplement the provisions of this chapter, except to the extent

inconsistent with this chapter.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-1-109




§ 47C-1-109. Inconsistent time share provisions

The provisions of this Chapter shall apply, so far as appropriate, to every time share program or

project created within this State after October 1, 1986, except to the extent that specific statutory

provisions in Chapter 93A are inconsistent with this Chapter, in which case the provisions of Chapter

93A shall prevail.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-101



CONDOMINIUM ACT > ARTICLE 2. CREATION, ALTERATION, AND TERMINATION OF

CONDOMINIUMS

§ 47C-2-101. Execution and recordation of declaration

(a) A declaration creating a condominium shall be executed in the same manner as a deed, shall

be recorded in every county in which any portion of the condominium is located.

(b) A declaration or an amendment to a declaration adding units to a condominium, may not be

recorded unless all structural components and mechanical systems of all buildings containing or

comprising any units thereby created are substantially completed in accordance with the plans,

as evidenced by a recorded certificate of completion executed by an architect licensed under

the provisions of Chapter 83 [83A] of the General Statutes or an engineer registered under the

provisions of Chapter 89C of the General Statutes.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2012-18, s. 1.5.



reserved

N.C. Gen. Stat. § 47C-2-102




CONDOMINIUMS

§ 47C-2-102. Unit boundaries

Except as provided by the declaration:

(1) If walls, floors or ceilings are designated as boundaries of a unit, then all lath, furring,

wallboard, plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring and any

other materials constituting any part of the finished flooring, and any other materials

constituting any part of the finished surfaces thereof are a part of the unit; and all other

portions of such walls, floors, or ceilings are a part of the common elements.

(2) If any chute, flue, duct, wire, conduit, bearing wall, bearing column, or any other fixture

lies partially within and partially outside the designated boundaries of a unit, any portion

thereof serving only that unit is a limited common element allocated exclusively to that

unit, and any portion thereof serving more than one unit or any portion of the common

elements is a part of the common elements.

(3) Subject to the provisions of paragraph (2), all spaces, interior partitions, and other fixtures

and improvements within the boundaries of a unit are a part of the unit.

(4) Any shutters, awnings, window boxes, doorsteps, stoops, decks, porches, balconies, patios,

and all exterior doors and windows or other fixtures designed to serve a single unit but

located outside the unit's boundaries are limited common elements allocated exclusively to

that unit.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-103




CONDOMINIUMS

§ 47C-2-103. Construction and validity of declaration and bylaws

(a) All provisions of the declaration and bylaws are severable.

(b) The rule against perpetuities may not be applied to defeat any provision of the declaration,

bylaws, or rules and regulations adopted pursuant to G.S. 47C-3-102(a)(1).

(c) In the event of a conflict between the provisions of the declaration and the bylaws, the

declaration prevails except to the extent the declaration is inconsistent with this chapter.

(d) Title to a unit and common elements is not rendered unmarketable or otherwise affected by

reason of an insubstantial failure of the declaration to comply with this chapter. Whether a

substantial failure to comply with this chapter impairs marketability shall be determined by the

law of this State relating to marketability.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-104




CONDOMINIUMS

§ 47C-2-104. Description of units

A description of a condominium unit which sets forth the name of the condominium, the recording

data for the declaration, and the identifying number of the unit or which otherwise complies with the

general requirements of the laws of this State concerning description of real property is sufficient

legal description of that unit and all rights, obligations, and interests appurtenant to that unit which

were created by the declaration or bylaws.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-105




CONDOMINIUMS

§ 47C-2-105. Contents of declaration

(a) The declaration for a condominium must contain:

(1) The name of the condominium, which must include the word "condominium" or be followed

by the words "a condominium", and the name of the association;

(2) The name of every county in which any part of the condominium is situated;

(3) A legally sufficient description of the real estate included in the condominium;

(4) A statement of the maximum number of units which the declarant reserves the right to

create;

(5) A description (by reference to the plats or plans described in G.S. 47C-2-109) of the

boundaries of each unit created by the declaration, including the unit's identifying number;

(6) A description of any limited common elements, other than those specified in subsections

47C-2-102(2) and (4), as provided in G.S. 47C-2-109(b)(7);

(7) A description of any real estate (except real estate subject to development rights) which

may be allocated subsequently as limited common elements, other than limited common

elements specified in subsections 47C-2-102(2) and (4), together with a statement that

they may be so allocated;

(8) A description of any development rights and other special declarant rights reserved by the

declarant, together with a legally sufficient description of the real estate to which each of

those rights applies, and a time limit within which each of those rights must be exercised;

(9) If any development right may be exercised with respect to different parcels of real estate

at different times, a statement to that effect, together with (i) either a statement fixing the

boundaries of those portions and regulating the order in which those portions may be

subjected to the exercise of each development right or a statement that no assurances are

made in those regards, and (ii) a statement as to whether, if any development right is

exercised in any portion of the real estate subject to that development right, that

development right must be exercised in all or in any other portion of the remainder of that

real estate;

(10) Any other conditions or limitations under which the rights described in paragraph (8) may

be exercised or will lapse;

(11) An allocation to each unit of the allocated interests in the manner described in G.S. 47C-

2-107;

(12) Any restrictions on use, occupancy, or alienation of the units;

(13) The recording data for recorded easements and licenses appurtenant to or included in the

condominium or to which any portion of the condominium is or may become subject by

virtue of a reservation in the declaration; and

N.C. Gen. Stat. § 47C-2-105

(14) All matters required by G.S. 47C-2-106, 47C-2-107, 47C-2-108, 47C-2-109, 47C-2-115,

47C-2-116, and 47C-3-103(d).

(b) The declaration may contain any other matters the declarant deems appropriate.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-106




CONDOMINIUMS

§ 47C-2-106. Leasehold condominiums

(a) Any lease, or a memorandum thereof, the expiration or termination of which may terminate

the condominium or reduce its size shall be recorded. Every lessor of those leases must sign

the declaration, and the declaration shall state:

(1) Where the complete lease may be inspected;

(2) The date on which the lease is scheduled to expire;

(3) A legally sufficient description of the real estate subject to the lease;

(4) Any right of the unit owners to redeem the reversion and the manner whereby those rights

may be exercised or a statement that they do not have those rights;

(5) Any right of the unit owners to remove any improvements after the expiration or

termination of the lease or a statement that they do not have those rights; and

(6) Any rights of the unit owners to renew the lease and the conditions of any renewal or a

statement that they do not have those rights.

(b) After the declaration for a leasehold condominium is recorded, neither the lessor nor his

successor in interest may terminate the leasehold interest of a unit owner who, after demand,

makes timely payment of his share of the rent determined in proportion to his common

element interest and otherwise complies with all covenants which, if violated, would entitle the

lessor to terminate the lease. A unit owner's leasehold interest is not affected by failure of any

other person to pay rent or fulfill any other covenant under the lease.

(c) Acquisition of the leasehold interest of any unit owner by the owner of the reversion or

remainder does not merge the leasehold and fee simple interests unless the leasehold interests

of all unit owners subject to that reversion or remainder are acquired.

(d) If the expiration or termination of a lease decreases the number of units in a condominium,

the allocated interests shall be reallocated in accordance with G.S. 47C-1-107(a) as though

those units had been taken by eminent domain. Reallocations shall be confirmed by an

amendment to the declaration prepared, executed, and recorded by the association.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-107




CONDOMINIUMS

§ 47C-2-107. Allocation of common element, interests, votes, and common expense liabilities

(a) The declaration shall allocate a fraction or percentage of undivided interests in the common

elements and in the common expenses of the association and a portion of the votes in the

association to each unit and state the formulas used to establish those allocations. Those

allocations may not discriminate in favor of units owned by the declarant.

(b) If units may be added to or withdrawn from the condominium, the declaration must state the

formulas to be used to reallocate the allocated interests among all units included in the

condominium after the addition or withdrawal.

(c) The declaration may provide: (i) that different allocations of votes shall be made to the units

on particular matters specified in the declaration; (ii) for cumulative voting only for the purpose

of electing members of the executive board; and (iii) for class voting on specified issues

affecting the class if necessary to protect valid interests of the class. A declarant may not utilize

cumulative or class voting for the purpose of evading any limitation imposed on declarants by

this chapter nor may units constitute a class because they are owned by a declarant.

(d) Except for minor variations due to rounding, the sum of the undivided interests in the common

elements and common expense liabilities allocated at any time to all the units must each equal

one if stated as fractions or one hundred percent (100%) if stated as percentages. If the

declaration allocates to each of the units a fraction or percentage of ownership of the common

elements that results in an actual total of such fractions or percentages that is greater or less

than the actual whole of such ownership, each unit's ownership of the common elements shall

be automatically reallocated so that each unit is allocated the same fraction or percentage of

ownership of the actual whole as that unit had of the actual total that was greater or less than

the actual whole. The declarant or the association shall file an amendment to the declaration

reflecting such reallocation which amendment need not be executed by any other party.

(e) The common elements are not subject to partition, and any purported conveyance,

encumbrance, judicial sale, or other voluntary or involuntary transfer of an undivided interest in

the common elements made without the unit to which that interest is allocated is void.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-108




CONDOMINIUMS

§ 47C-2-108. Limited common elements

(a) Except for the limited common elements described in subsections 47C-2-102(2) and (4), the

declaration shall specify to which unit or units each limited common element is allocated. That

allocation may not be altered without the unanimous consent of the unit owners whose units

are affected.

(b) Except as the declaration otherwise provides, a limited common element may be reallocated

by an amendment to the declaration executed by all the unit owners between or among whose

units the reallocations is made. The persons executing the amendment shall provide a copy

thereof to the association, which shall record it. The amendment shall be recorded in the same

manner as a deed in the names of the parties and the condominium.

(c) A common element not previously allocated as a limited common element may not be so

allocated except by unanimous consent or pursuant to provisions in the declaration made in

accordance with G.S. 47C-2-105(a)(7). All such allocations shall be made by amendments to

the declaration and shall become effective in accordance with G.S. 47C-2-117(c).

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-109




CONDOMINIUMS

§ 47C-2-109. Plats and plans

(a) The declarant shall file with the register of deeds in each county where the condominium is

located the condominium's plat or plan prepared in accordance with this section. The plat or

plan shall be considered a part of the declaration but shall be recorded separately, and the

declaration shall refer by number to the file where such plat or plan is recorded. Each plat or

plan must contain a certification by an architect licensed under the provisions of Chapter 83A of

the General Statutes or an engineer registered under the provisions of Chapter 89C of the

General Statutes that it contains all of the information required by this section.

(b) Each plat or plan or combination thereof must show:

(1) The name and a survey or general schematic map of the entire condominium;

(2) The location and dimensions of all real estate not subject to development rights or subject

only to the development right to withdraw and the location and dimensions of all existing

improvements within that real estate;

(3) The location and dimensions of any real estate subject to development rights, labeled to

identify the rights applicable to each parcel;

(4) The extent of any encroachments by or upon any portion of the condominium;

(5) The location and dimensions of all easements having specific location and dimensions and

serving or burdening any portion of the condominium;

(6) The verified statement of an architect licensed under the provisions of Chapter 83A of the

General Statutes or an engineer registered under the provisions of Chapter 89C of the

General Statutes certifying that such plats or plans fully and accurately depict the layout,

location, ceiling and floor elevations, unit numbers and dimensions of the units, as built;

(6a) The certificate by a registered land surveyor licensed under the provisions of Chapter 89C

of the General Statutes stating that the plats or plans accurately depict the legal

boundaries and the physical location of the units and other improvements relative to those

boundaries;

(7) The locations and dimensions of limited common elements; however, parking spaces and

the limited common elements described in subsections 47C-2-102(2) and (4) need not be

shown, except for decks, stoops, porches, balconies, and patios;

(8) A legally sufficient description of any real estate in which the unit owners will own only an

estate for years, labeled as "leasehold real estate";

(9) The distance between noncontiguous parcels of real estate comprising the condominium;

(10) Any unit in which the declarant has reserved the right to create additional units or

common elements.

(c) A plat may also show the intended location and dimensions of any contemplated improvement

to be constructed anywhere within the condominium. Any contemplated improvement shown

must be labeled either "MUST BE BUILT" or "NEED NOT BE BUILT".

N.C. Gen. Stat. § 47C-2-109

(d) Upon exercising any development right, the declarant shall record either new plats and plans

necessary to conform to the requirements of subsections (a), (b), and (c) or new certifications

of plats and plans previously recorded if those plats and plans otherwise conform to the

requirements of those subsections.

(e) In order to be recorded, plats or plans filed shall:

(1) Be reproducible plats or plans on cloth, linen, film, or other permanent material and be

submitted in that form; and

(2) Have an outside marginal size of not more than 21 inches by 30 inches nor less than eight

and one-half inches by 11 inches, including one and one-half inches for binding on the left

margin and a one-half inch border on each of the other sides. Where size of the buildings or

suitable scale to assure legibility require, plats or plans may be placed on two or more

sheets with appropriate match lines.

(f) The fee for recording each plat or plan sheet submitted shall be as prescribed by G.S. 161-

10(a)(3).

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 1987, c. 282, s. 8; 1989, c. 571; 2012-18, s. 1.6.



reserved

N.C. Gen. Stat. § 47C-2-110




CONDOMINIUMS

§ 47C-2-110. Exercise of development rights

(a) To exercise any development right reserved under G.S. 47C-2-105(a)(8), the declarant shall

record an amendment to the declaration (G.S. 47C-2-117) and comply with G.S. 47C-2-109.

The declarant is the unit owner of any units thereby created. The amendment to the

declaration must assign an identifying number to each new unit created and, except in the case

of subdivision or conversion of units described in subsection (c), reallocate the allocated

interests among all units. The amendment must describe any common elements and any

limited common elements thereby created and, in the case of limited common elements,

designate the unit to which each is allocated to the extent required by G.S. 47C-2-108 (Limited

Common Elements).

(b) Development rights may be reserved within any real estate added to the condominium if the

amendment adding that real estate includes all matters required by, and is in compliance with,

G.S. 47C-2-105 and, if a leasehold condominium, G.S. 47C-2-106 and also if the plats and

plans include all matters required by G.S. 47C-2-109. This provision does not extend the limit

on the exercise of developmental rights imposed by the declaration pursuant to G.S. 47C-2-

105(a)(8).

(c) When a declarant exercises a development right to subdivide or convert a unit previously

created into additional units, common elements, or both:

(1) If the declarant converts the unit entirely to common elements, the amendment to the

declaration must reallocate all the allocated interests of that unit among the other units as

if that unit had been taken by eminent domain; or

(2) If the declarant subdivides the unit into two or more units, whether or not any part of the

unit is converted into common elements, the amendment to the declaration must reallocate

all the allocated interests of the unit among the units created by the subdivision in any

reasonable manner prescribed by the declarant.

(d) If the declaration provides pursuant to G.S. 47C-2-105(a)(8) that all or a portion of the real

estate is subject to the development right of withdrawal:

(1) If all the real estate is subject to withdrawal, and the declaration does not describe

separate portions of real estate subject to that right, no part of the real estate may be

withdrawn after a unit has been conveyed to a purchaser; and

(2) If a portion or portions are subject to withdrawal, no part of a portion may be withdrawn

after a unit in that portion has been conveyed to a purchaser.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-111




CONDOMINIUMS

§ 47C-2-111. Alterations of units

Subject to the provisions of the declaration and other provisions of law, a unit owner:

(1) May make any improvements or alterations to his unit that do not impair the structural

integrity or mechanical systems or lessen the support of any portion of the condominium;

(2) May not change the appearance of the common elements or the exterior appearance of a

unit or any other portion of the condominium without permission of the association; and

(3) May, after acquiring an adjoining unit, remove or alter any intervening partition or create

apertures therein, even if the partition is a common element, if those acts do not impair the

structural integrity or mechanical systems or lessen the support of any portion of the

condominium. Removal of partitions or creation of apertures under this paragraph is not an

alteration of boundaries.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-112




CONDOMINIUMS

§ 47C-2-112. Relocation of boundaries between adjoining units

(a) Subject to the provisions of the declaration and other provisions of law, the boundaries

between adjoining units may be relocated upon application to the association by the owners of

those units. Any such application to the association must be in such form and contain such data

as may be reasonably required by the association and be accompanied by a plat prepared by

an architect licensed under the provisions of Chapter 83 [83A] of the General Statutes or an

engineer registered under the provisions of Chapter 89C of the General Statutes detailing the

relocation of the boundaries between the affected units. If the owners of the adjoining units

have specified a reallocation between their units of their allocated interests, the application

must state the proposed reallocations. Unless the executive board determines within 30 days

that the reallocations are unreasonable, the association, at the expense of the owners filing the

application, shall prepare and record an amendment to the declaration that identifies the units

involved, states the reallocations, is executed by those unit owners and the association,

contains words of conveyance, and is indexed in the name of the grantor and the grantee by

the register of deeds.

(b) The association, at the expense of the unit owners filing the application, shall prepare and

record plats or plans necessary to show the altered boundaries between adjoining units and

their dimensions and identifying numbers.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-113




CONDOMINIUMS

§ 47C-2-113. Subdivision of units

(a) If the declaration expressly so permits, a unit may be subdivided into two or more units.

Subject to the provisions of the declaration and other provisions of law, upon application of a

unit owner to subdivide a unit, the association, at the expense of the unit owner, shall prepare,

execute, and record an amendment to the declaration, including the plats and plans,

subdividing that unit.

(b) The amendment to the declaration must be executed by the owner of the unit to be

subdivided, assign an identifying number to each unit created, and reallocate the allocated

interests formerly allocated to the subdivided unit to the new units in any reasonable manner

prescribed by the owner of the subdivided unit.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-114




CONDOMINIUMS

§ 47C-2-114. Easement for encroachments

(a) To the extent that any unit or common element encroaches on any other unit or common

element, a valid easement for the encroachment exists. The easement does not relieve a unit

owner of liability in case of his willful misconduct nor relieve a declarant or any other person of

liability for failure to adhere to the plats and plans.

(b) With respect to all condominiums created prior to October 1, 1986, the provisions of

subsection (a) of this section shall be deemed to apply to such condominiums, unless an action

asserting otherwise shall have been brought within six months from October 1, 1986.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-115




CONDOMINIUMS

§ 47C-2-115. Use for sales purposes

A declarant may maintain sales offices, management offices, and models in units or on common

elements in the condominium only if the declaration so provides and specifies the rights of a declarant

with regard to the number, size, location, and relocation thereof. Any sales office, management office,

or model not designated a unit by the declaration is a common element, and if a declarant ceases to

be a unit owner, he ceases to have any rights with regard thereto unless it is removed promptly from

the condominium in accordance with a right to remove reserved in the declaration. Subject to any

limitations in the declaration, a declarant may maintain signs on the common elements advertising

the condominium. The provisions of this section are subject to the provisions of other State law and

to local ordinances.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-116




CONDOMINIUMS

§ 47C-2-116. Easement to facilitate exercise of special declarant rights

Subject to the provisions of the declaration, a declarant has such easements through the common

elements as may be reasonably necessary for the purpose of discharging a declarant's obligations or

exercising special declarant rights whether arising under this Chapter or reserved in the declaration.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-117




CONDOMINIUMS

§ 47C-2-117. Amendment of declaration

(a) Except in cases of amendments that may be executed by a declarant under G.S. 47C-2-109(d)

or 47C-2-110, the association under G.S. 47C-1-107, 47C-1-106(d) [47C-2-106(d)], 47C-2-

112(a), or 47C-2-113, or certain unit owners under G.S. 47C-2-108(b), 47C-2-112(a), 47C-2-

113(b), or 47C-2-118(b), and except as limited by subsection (d), the declaration may be

amended only by affirmative vote of or a written agreement signed by, unit owners of units to

which at least sixty-seven percent (67%) of the votes in the association are allocated or any

larger majority the declaration specifies. The declaration may specify a smaller number only if

all of the units are restricted exclusively to nonresidential use.

(b) No action to challenge the validity of an amendment adopted by the association pursuant to

this section may be brought more than one year after the amendment is recorded.

(c) Every amendment to the declaration must be recorded in every county in which any portion of

the condominium is located and is effective only upon recordation. An amendment shall be

indexed in the Grantee's index in the name of the condominium and the association and in the

Grantor's index in the name of the parties executing the amendment.

(d) Except to the extent expressly permitted or required by other provisions of this Chapter, no

amendment may create or increase special declarant rights, increase the number of units, or

change the boundaries of any unit, the allocated interest of a unit, or the uses to which any

unit is restricted, in the absence of unanimous consent of the unit owners.

(e) Amendments to the declaration required by this Chapter to be recorded by the association

shall be prepared, executed, recorded, and certified on behalf of the association by any officer

of the association designated for that purpose or, in the absence of designation, by the

president of the association.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-118




CONDOMINIUMS

§ 47C-2-118. Termination of condominium

(a) Except in the case of a taking of all the units by eminent domain (G.S. 47C-1-107), a

condominium may be terminated only by agreement of unit owners of units to which at least

eighty percent (80%) of the votes in the association are allocated, or any larger percentage the

declaration specifies. The declaration may specify a smaller percentage only if all of the units in

the condominium are restricted exclusively to nonresidential uses.

(b) An agreement to terminate must be evidenced by the execution of a termination agreement,

or ratifications thereof, in the same manner as a deed, by the requisite number of unit owners.

The termination agreement must specify a date after which the agreement will be void unless

recorded before that date. A termination agreement and all ratifications thereof must be

recorded in every county in which a portion of the condominium is situated, and is effective

only upon recordation.

(c) In the case of a condominium containing only units having horizontal boundaries described in

the declaration, a termination agreement may provide that all the common elements and units

of the condominium shall be sold following termination. If, pursuant to the agreement, any real

estate in the condominium is to be sold following termination, the termination agreement must

set forth the minimum terms of the sale.

(d) In the case of a condominium containing any units not having horizontal boundaries described

in the declaration, a termination agreement may provide for sale of the common elements, but

may not require that the units be sold following termination, unless the declaration as originally

recorded provided otherwise or unless all the unit owners consent to the sale.

(e) The association, on behalf of the unit owners, may contract for the sale of real estate in the

condominium, but the contract is not binding on the unit owners until approved pursuant to

subsections (a) and (b). If any real estate in the condominium is to be sold following

termination, title to that real estate, upon termination, vests in the association as trustee for

the holders of all interests in the units. Thereafter, the association has all powers necessary

and appropriate to effect the sale. Until the sale has been concluded and the proceeds thereof

distributed, the association continues in existence with all powers it had before termination.

Proceeds of the sale must be distributed to unit owners and lienholders as their interests may

appear, in proportion to the respective interests of unit owners as provided in subsection (h).

Unless otherwise specified in the termination agreement, as long as the association holds title

to the real estate, each unit owner and his successors in interest have an exclusive right to

occupancy of the portion of the real estate that formerly constituted his unit. During the period

of that occupancy, each unit owner and his successors in interest remain liable for all

assessments and other obligations imposed on unit owners by this Chapter or the declaration.

(f) If the real estate constituting the condominium is not to be sold following termination, title to

the common elements and, in a condominium containing only units having horizontal

boundaries described in the declaration, title to all the real estate in the condominium, vests in

the unit owners upon termination as tenants in common in proportion to their respective

interests as provided in subsection (h), and liens on the units shift accordingly. While the

N.C. Gen. Stat. § 47C-2-118

tenancy in common exists, each unit owner and his successors in interest have an exclusive

right to occupancy of the portion of the real estate that formerly constituted his unit.

(g) Following termination of the condominium, the proceeds of any sale of real estate, together

with the assets of the association, are held by the association as trustee for unit owners and

holders of liens on the units as their interests may appear. Following termination, creditors of

the association holding liens on the units, which were recorded before termination, may enforce

those liens in the same manner as any lienholder. All other creditors of the association are to

be treated as if they had perfected liens on the units immediately before termination.

(h) The respective interests of unit owners referred to in subsections (e), (f) and (g) are as

follows:

(1) Except as provided in paragraph (2), the respective interests of unit owners are the fair

market value of their units, limited common elements, and common element interests

immediately before the termination, as determined by one or more independent appraisers

selected by the association. The decision of the independent appraisers shall be distributed

to the unit owners and becomes final unless disapproved within 30 days after distribution

by unit owners of units to which twenty-five percent (25%) of the votes in the association

are allocated. The proportion of any unit owner's interest to that of all unit owners is

determined by dividing the fair market value of that unit owner's unit and common element

interest by the total fair market values of all the units and common elements.

(2) If any unit or any limited common element is destroyed to the extent that an appraisal of

the fair market value thereof prior to destruction cannot be made, the interests of all unit

owners are their respective common element interests immediately before the termination.

(i) Except as provided in subsection (j), foreclosure or enforcement of a lien or encumbrance

against the entire condominium does not of itself terminate the condominium, and foreclosure

or enforcement of a lien or encumbrance against a portion of the condominium, other than

withdrawable real estate, does not withdraw that portion from the condominium. Foreclosure or

enforcement of a lien or encumbrance against withdrawable real estate does not of itself

withdraw that real estate from the condominium, but the person taking title thereto has the

right to require from the association, upon request, an amendment excluding the real estate

from the condominium.

(j) If a lien or encumbrance against a portion of the real estate comprising the condominium has

priority over the declaration, and the lien or encumbrance has not been released, the parties

foreclosing the lien or encumbrance may upon foreclosure, record an instrument excluding the

real estate subject to that lien or encumbrance from the condominium.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-119




CONDOMINIUMS

N.C. Gen. Stat. § 47C-2-119




reserved

N.C. Gen. Stat. § 47C-2-120




CONDOMINIUMS

§ 47C-2-120. Master associations

(a) If the declaration for a condominium provides that any of the powers described in G.S. 47C-3-

102 are to be exercised by or may be delegated to a profit or nonprofit corporation (or

unincorporated association) which exercises those or other powers on behalf of one or more

condominiums or for the benefit of the unit owners of one or more condominiums, all provisions

of this chapter applicable to unit owners' associations apply to any such corporation (or

unincorporated association), except as modified by this section.

(b) Unless a master association is acting in the capacity of an association described in G.S. 47C-3-

101, it may exercise the powers set forth in G.S. 47C-3-102(a)(2) only to the extent expressly

permitted in the declarations of condominiums which are part of the master association or

expressly described in the delegations of power from those condominiums to the master

association.

(c) If the declaration of any condominium provides that the executive board may delegate certain

powers to a master association, the members of the executive board have no liability for the

acts or omissions of the master association with respect to those powers following delegation.

(d) The rights and responsibilities of unit owners with respect to the unit owners' association set

forth in G.S. 47C-3-103, 47C-3-108, 47C-3-109, and 47C-3-110 apply in the conduct of the

affairs of a master association only to those persons who elect the board of a master

association, whether or not those persons are otherwise unit owners within the meaning of this

Chapter.

(e) Notwithstanding the provisions of G.S. 47C-3-103(f) with respect to the election of the

executive board of an association by all unit owners after the period of declarant control ends

and even if a master association is also an association described in G.S. 47C-3-101, the

certificate of incorporation or other instrument creating the master association and the

declaration of each condominium, the powers of which are assigned by the declaration or

delegated to the master association, may provide that the executive board of the master

association must be elected after the period of declarant control in any of the following ways:

(1) All unit owners of all condominiums subject to the master association may elect all

members of that executive board.

(2) All members of the executive boards of all condominiums subject to the master association

may elect all members of that executive board.

(3) All unit owners of each condominium subject to the master association may elect specified

members of that executive board.

(4) All members of the executive board of each condominium subject to the master association

may elect specified members of that executive board.

N.C. Gen. Stat. § 47C-2-120

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-2-121




CONDOMINIUMS

§ 47C-2-121. Merger or consolidation of condominiums

(a) Any two or more condominiums may, by agreement of the unit owners as provided in

subsection (b), be merged or consolidated into a single condominium. In the event of a merger

or consolidation, unless the agreement otherwise provides, the resultant condominium shall be,

for all purposes, the legal successor of all of the pre-existing condominiums, and the operations

and activities of all associations of the pre-existing condominiums shall be merged or

consolidated into a single association which shall hold all powers, rights, obligations, assets and

liabilities of all pre-existing associations.

(b) An agreement of two or more condominiums to merge or consolidate pursuant to subsection

(a) must be evidenced by an agreement prepared, executed, recorded and certified by the

president of the association of each of the pre-existing condominiums following approval by

owners of units to which are allocated the percentage of votes in each condominium required to

terminate that condominium. Any such agreement must be executed in the same manner as a

deed and recorded in every county in which a portion of the condominium is located and is not

effective until recorded.

(c) Every merger or consolidation agreement must provide for the reallocation of the allocated

interests in the new association among the units of the resultant condominium either (i) by

stating such reallocations or the formulas upon which they are based or (ii) by stating the

percentage of overall allocated interests of the new condominium which are allocated to all of

the units comprising each of the pre-existing condominiums and providing that the portion of

such percentages allocated to each unit formerly comprising a part of such pre-existing

condominium shall be equal to the percentages of allocated interests allocated to such unit by

the declaration of the pre-existing condominiums.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-101



CONDOMINIUM ACT > ARTICLE 3. MANAGEMENT OF THE CONDOMINIUM

§ 47C-3-101. Organization of unit owners' association

A unit owners' association shall be organized no later than the date the first unit in the condominium

is conveyed. The membership of the association at all times shall consist exclusively of all the unit

owners, or following termination of the condominium, of all persons entitled to distributions of

proceeds under G.S. 47C-2-118. The association shall be organized as a profit or nonprofit

corporation or as an unincorporated nonprofit association.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2006-226, s. 4.



reserved

N.C. Gen. Stat. § 47C-3-102




§ 47C-3-102. Powers of unit owners' association

(a) Unless the declaration expressly provides to the contrary, the association, even if

unincorporated, may:

(1) Adopt and amend bylaws and rules and regulations;

(2) Adopt and amend budgets for revenues, expenditures, and reserves and collect

assessments for common expenses from unit owners;

(3) Hire and terminate managing agents and other employees, agents, and independent

contractors;

(4) Institute, defend, or intervene in its own name in litigation or administrative proceedings

on matters affecting the condominium;

(5) Make contracts and incur liabilities;

(6) Regulate the use, maintenance, repair, replacement, and modification of common

elements;

(7) Cause additional improvements to be made as a part of the common elements;

(8) Acquire, hold, encumber, and convey in its own name any right, title, or interest to real or

personal property, provided that common elements may be conveyed or subjected to a

security interest only pursuant to G.S. 47C-3-112;

(9) Grant easements, leases, licenses, and concessions through or over the common elements;

(10) Impose and receive any payments, fees, or charges for the use, rental, or operation of

the common elements other than limited common elements described in subsections 47C-

2-102(2) and (4) and for services provided to unit owners;

(11) Impose charges for late payment of assessments, not to exceed the greater of twenty

dollars ($ 20.00) per month or ten percent (10%) of any assessment installment unpaid

and, after notice and an opportunity to be heard, suspend privileges or services provided

by the association (except rights of access to lots) during any period that assessments or

other amounts due and owing to the association remain unpaid for a period of 30 days or

longer, and levy reasonable fines not to exceed one hundred dollars ($ 100.00) (G.S. 47C-

3-107.1) for violations of the declaration, bylaws, and rules and regulations of the

association.

(12) Impose reasonable charges for the preparation and recordation of amendments to the

declaration, resale certificates required by G.S. 47C-4-109, or statements of unpaid

assessments;

(13) Provide for the indemnification of and maintain liability insurance for its officers, executive

board, directors, employees and agents;

(14) Assign its right to future income, including the right to receive common expense

assessments.

(15) Exercise all other powers that may be exercised in this State by legal entities of the same

types as the association; and

N.C. Gen. Stat. § 47C-3-102

(16) Exercise any other powers necessary and proper for the governance and operation of the

association.

(b) Notwithstanding subsection (a), the declaration may not impose limitations on the power of

the association to deal with the declarant that are more restrictive than the limitations imposed

on the power of the association to deal with other persons.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2004-109, s. 2; 2005-422, ss. 10, 11.



reserved

N.C. Gen. Stat. § 47C-3-103




§ 47C-3-103. Executive board members and officers

(a) Except as provided in the declaration, the bylaws, or subsection (b) or other provisions of this

chapter, the executive board may act in all instances on behalf of the association. In the

performance of their duties, the officers and members of the executive board shall be deemed

to stand in a fiduciary relationship to the association and the unit owners and shall discharge

their duties in good faith, and with that diligence and care which ordinarily prudent men would

exercise under similar circumstances in like positions.

(b) The executive board may not act on behalf of the association to amend the declaration (G.S.

47C-2-117), to terminate the condominium (G.S. 47C-2-118), or to elect members of the

executive board or determine the qualifications, powers and duties, or terms of office of

executive board members (G.S. 47C-3-103(e) and (f)), but the executive board may fill

vacancies in its membership for the unexpired portion of any term. Notwithstanding any

provision of the declaration or bylaws to the contrary, the unit owners, by at least sixty-seven

percent (67%) vote of all persons present and entitled to vote at any meeting of the unit

owners at which a quorum is present, may remove any member of the executive board with or

without cause, other than members appointed by the declarant.

(c) Within 30 days after adoption of any proposed budget for the condominium, the executive

board shall provide a summary of the budget to all the unit owners, and shall set a date for a

meeting of the unit owners to consider ratification of the budget not less than 14 nor more than

30 days after mailing of the summary. There shall be no requirement that a quorum be present

at the meeting. The budget is ratified unless at that meeting a majority of all the unit owners or

any larger vote specified in the declaration rejects the budget. In the event the proposed

budget is rejected, the periodic budget last ratified shall be continued until such time as the

unit owners ratify a subsequent budget proposed by the executive board.

(d) Subject to subsection (e), the declaration may provide for a period of declarant control of the

association, during which period a declarant, or persons designated by him, may appoint and

remove the officers and members of the executive board. Regardless of the period provided in

the declaration, a period of declarant control terminates no later than the earlier of: (i) 120

days after conveyance of seventy-five percent (75%) of the units (including units which may be

created pursuant to special declarant rights) to unit owners other than a declarant; (ii) two

years after all declarants have ceased to offer units for sale in the ordinary course of business;

or (iii) two years after any development right to add new units was last exercised. A declarant

may voluntarily surrender the right to appoint and remove officers and members of the

executive board before termination of that period, but in that event he may require, for the

duration of the period of declarant control, that specified actions of the association or executive

board, as described in a recorded instrument executed by the declarant, be approved by the

declarant before they become effective.

(e) Not later than 60 days after conveyance of twenty-five percent (25%) of the units (including

units which may be created pursuant to special rights) to unit owners other than a declarant, at

least one member and not less than twenty-five percent (25%) of the members of the

executive board shall be elected by unit owners other than the declarant. Not later than 60

days after conveyance of fifty percent (50%) of the units (including units which may be

N.C. Gen. Stat. § 47C-3-103

created pursuant to special declarant rights) to unit owners other than a declarant, not less

than thirty-three percent (33%) of the members of the executive board shall be elected by unit

owners other than the declarant.

(f) Not later than the termination of any period of declarant control, the unit owners shall elect an

executive board of at least three members, at least a majority of whom must be unit owners.

The executive board shall elect the officers. The executive board members and officers shall

take office upon election.

(g) The association shall publish the names and addresses of all officers and board members of

the association within 30 days of the election.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2005-422, ss. 12, 13.



reserved

N.C. Gen. Stat. § 47C-3-104




§ 47C-3-104. Transfer of special declarant rights

(a) No special declarant right (G.S. 47C-1-103(23)) created or reserved under this chapter may

be transferred except by an instrument evidencing the transfer recorded in every county in

which any portion of the condominium is located. The instrument is not effective unless

executed by the transferee.

(b) Upon transfer of any special declarant right, the liability of a transferor declarant is as follows:

(1) A transferor is not relieved of any obligation or liability arising before the transfer,

including, but not limited to, liability or obligations relating to warranties. Lack of privity

does not deprive any unit owner of standing to bring an action to enforce any obligation of

the transferor.

(2) If the successor to any special declarant right is an affiliate of a declarant (G.S. 47C-1-

103(1)), the transferor is jointly and severally liable with the successor for any obligation or

liability of the successor which relates to the condominium.

(3) If a transferor retains any special declarant right, but transfers other special declarant

rights to a successor who is not an affiliate of the declarant, the transferor is liable for any

obligations or liabilities imposed on a declarant by this chapter or by the declaration

relating to the retained special declarant rights and arising after the transfer.

(4) A transferor has no liability for any act or omission or any breach of a contractual or

warranty obligation arising from the exercise of a special declarant right by a successor

declarant who is not an affiliate of the transferor.

(c) Unless otherwise provided in a mortgage instrument or deed of trust, in case of foreclosure of

a mortgage, tax sale, judicial sale, sale by a trustee under a deed of trust, or sale under

Bankruptcy Code or receivership proceedings, of any units owned by a declarant, or real estate

in a condominium subject to development rights, a person acquiring title to all the real estate

being foreclosed or sold, but only upon his request, succeeds to all special declarant rights

related to that real estate held by that declarant, or only to any rights reserved in the

declaration and held by that declarant to maintain models, sales offices and signs. The

judgment or instrument conveying title shall provide for transfer of only the special declarant

rights requested.

(d) Upon foreclosure, tax sale, judicial sale, sale by a trustee under a deed of trust, or sale under

Bankruptcy Code or receivership proceedings, of all units and other real estate in a

condominium owned by a declarant the declarant ceases to have any special declarant rights.

(e) The liabilities and obligations of persons who succeed to special declarant rights are as follows:

(1) A successor to any special declarant right who is an affiliate of a declarant is subject to all

obligations and liabilities imposed on the transferor related to the condominium.

(2) A successor to any special declarant right, other than a successor described in paragraphs

(3) and (4) who is not an affiliate of a declarant, is subject to all obligations and liabilities:

N.C. Gen. Stat. § 47C-3-104

a. On a declarant which relate to his exercise or nonexercise of special declarant rights; or

b. On his transferor, other than:

(i) Misrepresentations by any prior declarant;

(ii) Warranty obligations on improvements made by any previous declarant, or made

before the condominium was created;

(iii) Breach of any fiduciary obligation by any previous declarant or his appointees to

the executive board; or

(iv) Any liability or obligation imposed on the transferor as a result of the transferor's

acts or omissions after the transfer.

(3) A successor to only a right reserved in the declaration to maintain models, sales offices,

and signs (G.S. 47C-2-115), if he is not an affiliate of a declarant, may not exercise any

other special declarant right, and is not subject to any liability or obligation as a declarant,

except the obligation to provide a public offering statement, and any liability arising as a

result thereof.

(4) A successor to all special declarant rights held by his transferor who is not an affiliate of

that declarant and who succeeded to those rights pursuant to a deed in lieu of foreclosure

or a judgment or instrument conveying title to units under subsection (c), may declare his

intention in a recorded instrument to hold those rights solely for transfer to another person.

Thereafter, until transferring all special declarant rights to any person acquiring title to any

unit owned by the successor, or until recording an instrument permitting exercise of all

those rights other than the right held by his transferor to control the executive board in

accordance with the provisions of G.S. 47C-3-103(d) for the duration of any period of

declarant control, and any attempted exercise of those rights is void. So long as a

successor declarant may not exercise special declarant rights under this subsection, he is

not subject to any liability or obligation as a declarant other than liability for his acts and

omissions under G.S. 47C-3-103(d).

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-105




§ 47C-3-105. Termination of contracts and leases of declarant

If entered into by or on behalf of the association before the executive board elected by the unit

owners pursuant to G.S. 47C-3-103(f) takes office, (1) any management contract, employment

contract, or lease of recreational or parking areas or facilities, (2) any other contract or lease between

the association and a declarant or an affiliate of a declarant, or (3) any contract or lease that is not

bona fide or was unconscionable to the unit owners at the time entered into under the circumstances

then prevailing may be terminated without penalty by the association at any time after the executive

board elected by the unit owners pursuant to G.S. 47C-3-103(f) takes office upon not less than 90

days' notice to the other party. Notice of the substance of the provisions of this section shall be set

out in each contract entered into by or on behalf of the association before the executive board elected

by the unit owners pursuant to G.S. 47C-3-103(f) takes office. Failure of the contract to contain such

a provision shall not effect the rights of the association under this section. This section does not apply

to any lease the termination of which would terminate the condominium or reduce its size, unless the

real estate subject to that lease was included in the condominium for the purpose of avoiding the

right of the association to terminate a lease under this section.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-106




§ 47C-3-106. Bylaws

(a) The bylaws of the association shall provide for:

(1) The number of members of the executive board and the titles of the officers of the

association;

(2) Election by the executive board of the officers of the association;

(3) The qualifications, powers and duties, terms of office, and manner of electing and removing

executive board members and officers and filling vacancies;

(4) Which, if any, of its powers the executive board or officers may delegate to other persons

or to a managing agent;

(5) Which of its officers may prepare, execute, certify, and record amendments to the

declaration on behalf of the association; and

(6) The method of amending the bylaws.

(b) Any other matters the association deems necessary or appropriate.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-107




§ 47C-3-107. Upkeep; damages; assessments for damages, fines

(a) Except as provided in G.S. 47C-3-113(h), the association is responsible for causing the

common elements to be maintained, repaired, and replaced when necessary and to assess the

unit owners as necessary to recover the costs of such maintenance, repair, or replacement

except that the cost of maintenance, repair or replacement of a limited common element shall

be assessed as provided in G.S. 47C-3-115(b). Each unit owner is responsible for maintenance,

repair and replacement of his unit. Each unit owner shall afford to the association and when

necessary to another unit owner access through his unit or the limited common element

assigned to his unit reasonably necessary for any such maintenance, repair or replacement

activity.

(b) If damage, for which a unit owner is legally responsible and which is not covered by insurance

provided by the association pursuant to G.S. 47C-3-113 is inflicted on any common element or

limited common element, the association may direct such unit owner to repair such damage or

the association may itself cause the repairs to be made and recover the costs thereof from the

responsible unit owner.

(c) If damage is inflicted on any unit by an agent of the association in the scope of his activities as

such agent, the association is liable to repair such damage or to reimburse the unit owner for

the cost of repairing such damages. The association shall also be liable for any losses to the

unit owner.

(d) The bylaws of the association may in cases when the claim under subsection (b) or (c) is five

hundred dollars ($ 500.00) or less provide for hearings before an adjudicatory panel to

determine if a unit owner is responsible for damages to any common element or whether the

association is responsible for damages to any unit. Such panel shall accord to the party charged

with causing damages notice of the charge, 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 five hundred dollars ($ 500.00) against each unit owner charged or against the

association. Liabilities of unit owners so assessed shall be assessments secured by lien under

G.S. 47C-3-116. Liabilities of the association may be offset by the unit owner against sums

owing the association and if so offset shall reduce the amount of any lien of the association

against the unit at issue.

(e) The declarant alone is liable for maintenance, repair and all other expenses in connection with

real estate subject to development rights.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2013-34, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-107.1




§ 47C-3-107.1. Procedures for fines and suspension of condominium privileges or services

Unless a specific procedure for the imposition of fines or suspension of condominium privileges or

services is provided for in the declaration, a hearing shall be held before the executive board or an

adjudicatory panel appointed by the executive board to determine if any unit owner should be fined or

if condominium privileges or services should be suspended pursuant to the powers granted to the

association in G.S. 47C-3-102(11). Any adjudicatory panel appointed by the executive board shall be

composed of members of the association who are not officers of the association or members of the

executive board. The unit owner charged shall be given notice of the charge, 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 one hundred dollars ($ 100.00) may be imposed for the violation and without

further hearing, for each day more than five days after the decision that the violation occurs. Such

fines shall be assessments secured by liens under G.S. 47C-3-116. If it is decided that a suspension

of condominium privileges or services should be imposed, the suspension may be continued without

further hearing until the violation or delinquency is cured. A unit owner may appeal a 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. The executive board may affirm, vacate, or

modify the prior decision of the adjudicatory body.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 1997-456, s. 27; 2005-422, s. 14.



reserved

N.C. Gen. Stat. § 47C-3-108




§ 47C-3-108. Meetings

(a) A meeting of the association shall be held at least once each year. Special meetings of the

association may be called by the president, a majority of the executive board, or by unit

owners having twenty percent (20%) or any lower percentage specified in the bylaws of the

votes in the association. Not less than 10 nor more than 50 days in advance of any meeting,

the secretary or other officer specified in the bylaws shall cause notice to be hand-delivered or

sent prepaid by United States mail to the mailing address of each unit or to any other mailing

address designated in writing by the unit owner, or sent by electronic means, including by

electronic mail over the Internet, to an electronic mailing address designated in writing by the

unit owner. The notice of any meeting must state the time and place of the meeting and the

items on the agenda, including the general nature of any proposed amendment to the

declaration or bylaws, any budget changes, and any proposal to remove a director or officer.

(b) Meetings of the executive board shall be held as provided in the bylaws. At regular intervals,

the executive board meeting shall provide unit owners an opportunity to attend a portion of an

executive board meeting and to speak to the executive board about their issues and concerns.

The executive board may place reasonable restrictions on the number of persons who speak on

each side of an issue and may place reasonable time restrictions on persons who speak.

(c) Except as otherwise provided for in the bylaws, meetings of the association and executive

board shall be conducted in accordance with the most recent edition of Robert's Rules of Order

Newly Revised.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2004-109, s. 5; 2005-422, s. 15.



reserved

N.C. Gen. Stat. § 47C-3-109




§ 47C-3-109. Quorums

(a) Unless the bylaws provide otherwise, a quorum is deemed present throughout any meeting of

the association if persons entitled to cast twenty percent (20%) of the votes which may be cast

for election of the executive board are present in person or by proxy at the beginning of the

meeting.

(b) Unless the bylaws specify a larger percentage, a quorum is deemed present throughout any

meeting of the executive board of persons entitled to cast fifty percent (50%) of the votes on

that board are present at the beginning of the meeting.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-110




§ 47C-3-110. Voting; proxies

(a) If only one of the multiple owners of a unit is present at a meeting of the association, he is

entitled to cast all the votes allocated to that unit. If more than one of the multiple owners are

present, the votes allocated to that unit may be cast only in accordance with the agreement of

a majority in interest of the multiple owners, unless the declaration or bylaws expressly

provides otherwise. Majority agreement is conclusively presumed if any one of the multiple

owners casts the votes allocated to that unit without protest being made promptly to the

person presiding over the meeting by any of the other owners of the unit.

(b) Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner. If a

unit is owned by more than one person, each owner of the unit may vote or register protest to

the casting of votes by the other owners of the unit through a duly executed proxy. A unit

owner may not revoke a proxy given pursuant to this section except by written notice of

revocation delivered to the person presiding over a meeting of the association. A proxy is void

if it is not dated. A proxy terminates one year after its date, unless it specifies a shorter term.

(c) If the declaration requires that votes on specified matters affecting the condominium be cast

by lessees rather than unit owners of leased units: (i) the provisions of subsection (a) and (b)

apply to lessees as if they were unit owners; (ii) unit owners who have leased their units to

other persons may not cast votes on those specified matters; and (iii) lessees are entitled to

notice of meetings, access to records, and other rights respecting those matters as if they were

unit owners. Unit owners must also be given notice, in the manner provided in G.S. 47C-3-108,

of all meetings at which lessees may be entitled to vote.

(d) No votes allocated to a unit owned by the association may be cast.

(e) The declaration may provide that on specified issues only a defined subgroup of unit owners

may vote provided:

(1) The issue being voted on is of special interest solely to members of the subgroup; and

(2) All except de minimis costs that will be incurred based on the vote taken will be assessed

solely against those unit owners entitled to vote.

(f) For purposes of subdivision (e)(1) above an issue to be voted on is not of special interest solely

to a subgroup if it substantially affects the overall appearance of the condominium or

substantially affects living conditions of unit owners not included in the voting subgroup.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-111




§ 47C-3-111. Tort and contract liability

(a) Neither the association nor any unit owner except the declarant is liable for that declarant's

torts in connection with any part of the condominium which that declarant has the

responsibility to maintain.

(b) An action alleging a wrong done by the association must be brought against the association

and not against a unit owner.

(c) If an action is brought against the association for a wrong which occurred during any period of

declarant control, and if the association gives the declarant who then controlled the association

reasonable notice of and an opportunity to defend against the action, such declarant is liable to

the association:

(1) for all tort losses not covered by insurance carried by the association suffered by the

association or that unit owner, and

(2) for all losses which the association would not have incurred but for a breach of contract.

Nothing in this subsection shall be construed to impose strict or absolute liability upon the

declarant for wrongs or actions which occurred during the period of declarant control.

(d) In any case where the declarant is liable to the association under this section, the declarant is

also liable for all litigation expenses, including reasonable attorneys' fees, incurred by the

association. Any statute of limitation affecting the association's right of action under this

section is tolled until the period of declarant control terminates. A unit owner is not precluded

from bringing an action contemplated by this section because he is a unit owner or a member

or officer of the association. Liens resulting from judgments against the association are

governed by G.S. 47C-3-117 (Other Liens Affecting the Condominium).

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-112




§ 47C-3-112. Conveyance or encumbrance of common elements

(a) Portions of the common elements may be conveyed or subjected to a security interest by the

association if persons entitled to cast at least eighty percent (80%) of the votes in the

association, including eighty percent (80%) of the votes allocated to units not owned by a

declarant, or any larger percentage the declaration specifies, agree to that action; provided,

that all the owners of units to which any limited common element is allocated must agree in

order to convey that limited common element or subject it to a security interest. The

declaration may specify a smaller percentage only if all of the units are restricted exclusively to

nonresidential uses. Distribution of the proceeds of the sale of a limited common element shall

be as provided by agreement between the unit owners to which it is allocated and the

association. Proceeds of the sale or financing of a common element (other than a limited

common element) shall be an asset of the association.

(b) An agreement to convey common elements or subject them to a security interest must be

evidenced by the execution of an agreement, or ratifications thereof, in the same manner as a

deed, by the requisite number of unit owners. The agreement must specify a date after which

the agreement will be void unless recorded before that date. The agreement and all

ratifications thereof must be recorded in every county in which a portion of the condominium is

situated, and is effective only upon recordation.

(c) The association, on behalf of the unit owners, may contract to convey common elements, or

subject them to a security interest, but the contract is not enforceable against the association

until approved pursuant to subsections (a) and (b). Thereafter, the association has all powers

necessary and appropriate to effect the conveyance or encumbrance, including the power to

execute deeds or other instruments.

(d) Any purported conveyance, encumbrance, judicial sale or other voluntary transfer of common

elements, unless made pursuant to this section, is void.

(e) A conveyance or encumbrance of common elements pursuant to this section shall not deprive

any unit of its rights of access and support.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-113




§ 47C-3-113. Insurance

(a) Commencing not later than the time of the first conveyance of a unit to a person other than a

declarant, the association shall maintain, to the extent available:

(1) Property insurance on the common elements insuring against all risks of direct physical

loss commonly insured against including fire and extended coverage perils. The total

amount of insurance after application of any deductibles shall be not less than eighty

percent (80%) of the replacement cost of the insured property at the time the insurance is

purchased and at each renewal date, exclusive of land, excavations, foundations and other

items normally excluded from property policies; and

(2) Liability insurance in reasonable amounts, covering all occurrences commonly insured

against death, bodily injury and property damage arising out of or in connection with the

use, ownership, or maintenance of the common elements.

(b) In the case of a building containing units having horizontal boundaries described in the

declaration, the insurance maintained under subdivision (a)(1), to the extent reasonably

available, shall include the units, but need not include improvements and betterments installed

by unit owners.

(c) If the insurance described in subsection (a) or (b) of this section is not reasonably available,

the association promptly shall cause notice of that fact to be hand-delivered or sent prepaid by

United States mail to all unit owners. The declaration may require the association to carry any

other insurance, and the association in any event may carry any other insurance it deems

appropriate to protect the association or the unit owners.

(d) Insurance policies carried pursuant to subsection (a) must provide that:

(1) Each unit owner is an insured person under the policy with respect to liability arising out of

his interest in the common elements or membership in the association;

(2) The insurer waives its right to subrogation under the policy against any unit owner or

members of his household;

(3) No act or omission by any unit owner, unless acting within the scope of his authority on

behalf of the association, will preclude recovery under the policy; and

(4) If, at the time of a loss under the policy, there is other insurance in the name of a unit

owner covering the same risk covered by the policy, the association's policy provides

primary insurance.

(e) Any loss covered by the property policy under subsections (a)(1) and (b) shall be adjusted

with the association, but the insurance proceeds for that loss shall be payable to any insurance

trustee designated for that purpose, or otherwise to the association, and not to any mortgagee

or beneficiary under a deed of trust. The insurance trustee or the association shall hold any

insurance proceeds in trust for unit owners and lienholders as their interests may appear.

Subject to the provisions of subsection (h), the proceeds shall be disbursed first for the repair

or restoration of the damaged property, and unit owners and lienholders are not entitled to

receive payment of any portion of the proceeds unless there is a surplus of proceeds after the

property has been completely repaired or restored, or the condominium is terminated.

N.C. Gen. Stat. § 47C-3-113

(f) An insurance policy issued to the association does not prevent a unit owner from obtaining

insurance for his own benefit.

(g) An insurer that has issued an insurance policy under this section shall issue certificates or

memoranda of insurance to the association and, upon written request, to any unit owner,

mortgagee, or beneficiary under a deed of trust. The insurer issuing the policy may not cancel

or refuse to renew it until 30 days after notice of the proposed cancellation or nonrenewal has

been mailed to the association, each unit owner and each mortgagee or beneficiary under a

deed of trust to whom certificates or memoranda of insurance have been issued at their

respective last known addresses.

(h) Any portion of the condominium for which insurance is required under this section which is

damaged or destroyed shall be repaired or replaced promptly by the association unless (1) the

condominium is terminated, (2) repair or replacement would be illegal under any State or local

health or safety statute or ordinance, or (3) the unit owners decide not to rebuild by an eighty

percent (80%) vote, including one hundred percent (100%) approval of owners of units not to

be rebuilt or owners assigned to limited common elements not to be rebuilt. The cost of repair

or replacement in excess of insurance proceeds and reserves is a common expense. If the

entire condominium is not repaired or replaced, (1) the insurance proceeds attributable to the

damaged common elements shall be used to restore the damaged area to a condition

compatible with the remainder of the condominium, (2) the insurance proceeds attributable to

units and limited common elements which are not rebuilt shall be distributed to the owners of

those units and the owners of the units to which those limited common elements were allocated

or to lienholders, as their interest may appear, and (3) the remainder of the proceeds shall be

distributed to all the unit owners or lienholders, as their interest may appear, in proportion to

their common element interest. If the unit owners vote not to rebuild any unit, that unit's

allocated interests are automatically reallocated upon the vote as if the unit had been

condemned under G.S. 47C-1-107(a), and the association promptly shall prepare, execute, and

record an amendment to the declaration reflecting the reallocations. Notwithstanding the

provisions of this subsection, G.S. 47C-2-118 governs the distribution of insurance proceeds if

the condominium is terminated.

(i) The provisions of this section may be varied or waived in the case of a condominium all of

whose units are restricted to nonresidential use.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 1998-211, s. 8(a)-(c).



reserved

N.C. Gen. Stat. § 47C-3-114




§ 47C-3-114. Surplus funds

Unless otherwise provided in the declaration, any surplus funds of the association remaining after

payment of or provisions for common expenses and any prepayment of reserves must be paid to the

unit owners in proportion to their common expense liabilities or credited to them to reduce their

future common expense assessments.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-115




§ 47C-3-115. Assessments for common expense

(a) Until the association makes a common expense assessment, the declarant shall pay all the

common expenses. After any assessment has been made by the association, assessments

thereafter must be made at least annually by the association.

(b) Except for assessments under subsections (c), (d), and (e), all common expenses must be

assessed against all the units in accordance with the allocations set forth in the declaration

pursuant to G.S. 47C-2-107(a). Any past due common expense assessment or installment

thereof bears interest at the rate established by the association not exceeding eighteen percent

(18%) per year.

(c) To the extent required by the declaration:

(1) Any common expense associated with the maintenance, repair, or replacement of a limited

common element must be assessed against the units to which that limited common

element is assigned, equally, or in any other proportion that the declaration provides;

(2) Any common expense or portion thereof benefiting fewer than all of the units must be

assessed exclusively against the units benefited; and

(3) The costs of insurance must be assessed in proportion to risk and the costs of utilities must

be assessed in proportion to usage.

(d) Assessments to pay a judgment against the association (G.S. 47C-3-117(a)) may be made

only against the units in the condominium at the time the judgment was entered, in proportion

to their common expense liabilities.

(e) If any common expense is caused by the misconduct of any unit owner, the association may

assess that expense exclusively against his unit.

(f) If common expense liabilities are reallocated, common expense assessments and any

installment thereof not yet due shall be recalculated in accordance with the reallocated

common expense liabilities.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-116




§ 47C-3-116. Lien for sums due the association; enforcement

(a) Any assessment attributable to a unit which remains unpaid for a period of 30 days or longer

shall constitute a lien on that unit when a claim of lien is filed of record in the office of the clerk

of superior court of the county in which the unit is located in the manner provided in this

section. Once filed, a claim of lien secures all sums due the association through the date filed

and any sums due to the association thereafter. Unless the declaration provides otherwise,

fees, charges, late charges and other charges imposed pursuant to G.S. 47C-3-102, 47C-3-

107, 47C-3-107.1, and 47C-3-115 are subject to the claim of lien under this section as well as

any other sums due and payable to the association under the declaration, the provisions of this

Chapter, or as the result of an arbitration, mediation, or judicial decision.

(b) The association must make reasonable and diligent efforts to ensure that its records contain

the unit owner's current mailing address. No fewer than 15 days prior to filing the lien, the

association shall mail a statement of the assessment amount due by first-class mail to the

physical address of the unit and the unit owner's address of record with the association and, if

different, to the address for the unit owner shown on the county tax records for the unit. If the

unit owner is a corporation or limited liability company, the statement shall also be sent by

first-class mail to the mailing address of the registered agent for the corporation or limited

liability company. Notwithstanding anything to the contrary in this Chapter, the association is

not required to mail a statement to an address known to be a vacant unit or to a unit for which

there is no United States postal address.

(c) A claim of lien shall set forth the name and address of the association, the name of the record

owner of the unit at the time the claim of lien is filed, a description of the unit, and the amount

of the lien claimed. A claim of lien may also appoint a trustee to conduct a foreclosure as

provided in subsection (f) of this section. The first page of the claim of lien shall contain the

following statement in print that is in boldface, capital letters, and no smaller than the largest

print used elsewhere in the document:

"THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY, AND IF THE LIEN IS NOT

PAID, THE HOMEOWNERS ASSOCIATION MAY PROCEED WITH FORECLOSURE AGAINST YOUR

PROPERTY IN LIKE MANNER AS A MORTGAGE UNDER NORTH CAROLINA LAW."

The person signing the claim of lien on behalf of the association shall attach to and file with the

claim of lien a certificate of service attesting to the attempt of service on the record owner, which

service shall be attempted in accordance with G.S. 1A-1, Rule 4(j), for service of a copy of a

summons and a complaint. If the actual service is not achieved, the person signing the claim of lien

on behalf of the association shall be deemed to have met the requirements of this subsection if

service has been attempted pursuant to both of the following: (i) G.S. 1A-1, Rule 4(j)(1)c, d, or e

and (ii) by mailing a copy of the lien by regular, first-class mail, postage prepaid to the physical

address of the unit and the unit owner's address of record with the association, and, if different, to

the address for the unit owner shown on the county tax records and the county real property

records for the unit. In the event that the owner of record is not a natural person, and actual

service is not achieved, the person signing the claim of lien on behalf of the association shall be

deemed to have met the requirements of this subsection if service has been attempted once

pursuant to the applicable provisions of G.S. 1A-1, Rule 4(j)(3) through G.S. 1A-1, Rule 4(j)(9).

N.C. Gen. Stat. § 47C-3-116

Notwithstanding anything to the contrary in this Chapter, the association is not required to mail a

claim of lien to an address which is known to be a vacant unit or to a unit for which there is no

United States postal address. A lien for unpaid assessments is extinguished unless proceedings to

enforce the lien are instituted within three years after the filing of the claim of lien in the office of

the clerk of superior court.

(d) A claim of lien filed under this section is prior to all liens and encumbrances on a unit except

(i) liens and encumbrances, specifically including, but not limited to, a mortgage or deed of

trust on the unit, recorded before the filing of the claim of lien in the office of the clerk of

superior court and (ii) liens for real estate taxes and other governmental assessments and

charges against the unit. This subsection does not affect the priority of mechanics' or

materialmen's liens.

(e) The association shall be entitled to recover the reasonable attorneys' fees and costs it incurs in

connection with the collection of any sums due. A unit owner may not be required to pay

attorneys' fees and court costs until the unit owner is notified in writing of the association's

intent to seek payment of attorneys' fees, costs, and expenses. The notice must be sent by

first-class mail to the physical address of the unit and the unit owner's address of record with

the association and, if different, to the address for the unit owner shown on the county tax

records for the unit. The association must make reasonable and diligent efforts to ensure that

its records contain the unit owner's current mailing address. Notwithstanding anything to the

contrary in this Chapter, there shall be no requirement that notice under this subsection be

mailed to an address which is known to be a vacant unit or a unit for which there is no United

States postal address. The notice shall set out the outstanding balance due as of the date of

the notice and state that the unit owner has 15 days from the mailing of the notice by first-

class mail to pay the outstanding balance without the attorneys' fees and court costs. If the

unit owner pays the outstanding balance within this period, then the unit owner shall have no

obligation to pay attorneys' fees, costs, or expenses. The notice shall also inform the unit

owner of the opportunity to contact a representative of the association to discuss a payment

schedule for the outstanding balance as provided in subsection (i) of this section and shall

provide the name and telephone number of the representative.

(f) Except as provided in subsection (h) of this section, the association, acting through the

executive board, may foreclose a claim of lien in like manner 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,

if the assessment remains unpaid for 90 days or more. The association shall not foreclose the

claim of lien unless the executive board votes to commence the proceeding against the specific

unit. The following provisions and procedures shall be applicable to and complied with in every

nonjudicial power of sale foreclosure of a claim of lien, and these provisions and procedures

shall control to the extent they are inconsistent or in conflict with the provisions of Article 2A of

Chapter 45 of the General Statutes:

(1) The association shall be deemed to have a power of sale for purposes of enforcement of its

claim of lien.

(2) The terms "mortgagee" and "holder" as used in Article 2A of Chapter 45 of the General

Statutes shall mean the association, except as provided otherwise in this Chapter.

(3) The term "security instrument" as used in Article 2A of Chapter 45 of the General Statutes

shall mean the claim of lien.

(4) The term "trustee" as used in Article 2A of Chapter 45 of the General Statutes shall mean

the person or entity appointed by the association under subdivision (6) of this subsection.

(5) After the association has filed a claim of lien and prior to the commencement of a

nonjudicial foreclosure, the association shall give to the unit owner notice of the

N.C. Gen. Stat. § 47C-3-116

association's intention to commence a nonjudicial foreclosure to enforce its claim of lien.

The notice shall contain the information required in G.S. 45-21.16(c)(5a).

(6) The association shall appoint a trustee to conduct the nonjudicial foreclosure proceeding

and sale. The appointment of the trustee shall be included in the claim of lien or in a

separate instrument filed with the office of the clerk of court in the county in which the unit

is located as an exhibit to the notice of hearing. The association, at its option, may from

time to time remove a trustee previously appointed and appoint a successor trustee by

filing a Substitution of Trustee with the clerk of court in the foreclosure proceeding. Counsel

for the association may be appointed by the association to serve as the trustee and may

serve in that capacity as long as the unit owner does not contest the obligation to pay the

amount of any sums due the association, or the validity, enforcement, or foreclosure of the

claim of lien as provided in subdivision (12) of this subsection. Any trustee appointed

pursuant to this subsection shall have the same fiduciary duties and obligations as a

trustee in the foreclosure of a deed of trust.

(7) If a valid debt, default, and notice to those entitled to receive notice under G.S. 45-

21.16(b) are found to exist, then the clerk of court shall authorize the sale of the property

described in the claim of lien by the trustee.

(8) If, prior to the expiration of the upset bid period provided in G.S. 45-21.27, the unit owner

satisfies the debt secured by the claim of lien and pays all expenses and costs incurred in

filing and enforcing the association assessment lien, including, but not limited to,

advertising costs, attorneys' fees, and the trustee's commission, then the trustee shall

dismiss the foreclosure action and the association shall cancel the claim of lien of record in

accordance with the provisions of G.S. 45-36.3. The unit owner shall have all rights granted

under Article 4 of Chapter 45 of the General Statutes to ensure the association's

satisfaction of the claim of lien.

(9) Any person, other than the trustee, may bid at the foreclosure sale. Unless prohibited in

the declaration or bylaws, the association may bid on the unit at a foreclosure sale directly

or through an agent. If the association or its agent is the high bidder at the sale, the

trustee shall allow the association to pay the costs and expenses of the sale and apply a

credit against the sums due by the unit owner to the association in lieu of paying the bid

price in full.

(10) Upon the expiration of the upset bid period provided in G.S. 45-21.27, the trustee shall

have full power and authority to execute a deed for the unit to the high bidder.

(11) The trustee shall be entitled to a commission for services rendered which shall include

fees, costs, and expenses reasonably incurred by the trustee in connection with the

foreclosure whether or not a sale is held. Except as provided in subdivision (12) of this

subsection, the trustee's commission shall be paid without regard to any limitations on

compensation otherwise provided by law, including, without limitation, the provisions of

G.S. 45-21.15.

(12) If the unit owner does not contest the obligation to pay or the amount of any sums due

the association or the validity, enforcement, or foreclosure of the claim of lien at any time

after the expiration of the 15-day period following notice as required in subsection (b) of

this section, then attorneys' fees and the trustee's commission collectively charged to the

unit owner shall not exceed one thousand two hundred dollars ($ 1,200), not including

costs or expenses incurred. The obligation to pay and the amount of any sums due the

association and the validity, enforcement, or foreclosure of the claim of lien remain

uncontested as long as the unit owner does not dispute, contest, or raise any objection,

defense, offset, or counterclaim as to the amount or validity of any portion of the sums

N.C. Gen. Stat. § 47C-3-116

claimed due by the association or the validity, enforcement, or foreclosure of the claim of

lien. Any judgment, decree, or order in any action brought under this section shall include

costs and reasonable attorneys' fees for the prevailing party.

(13) Unit owners shall be deemed to have the rights and remedies available to mortgagors

under G.S. 45-21.34.

(g) The provisions of subsection (f) of this section do not prohibit or prevent an association from

pursuing judicial foreclosure of a claim of lien, from taking other actions to recover the sums

due the association, or from accepting a deed in lieu of foreclosure. Any judgment, decree, or

order in any judicial foreclosure or civil action relating to the collection of assessments shall

include an award of costs and reasonable attorneys' fees for the prevailing party, which shall

not be subject to the limitation provided in subdivision (f)(12) of this section.

(h) A claim of lien securing a debt consisting solely of fines imposed by the association, interest on

unpaid fines, or attorneys' fees incurred by the association solely associated with fines imposed

by the association may only be enforced by judicial foreclosure, as provided in Article 29A of

Chapter 1 of the General Statutes. In addition, an association shall not levy, charge, or attempt

to collect a service, collection, consulting, or administration fee from any unit owner unless the

fee is expressly allowed in the declaration, and any claim of lien securing a debt consisting

solely of these fees may only be enforced by judicial foreclosure, as provided in Article 29A of

Chapter 1 of the General Statutes.

(i) The association, acting through its executive board and in the board's sole discretion, may

agree to allow payment of an outstanding balance in installments. Neither the association nor

the unit owner is obligated to offer or accept any proposed installment schedule. Reasonable

administrative fees and costs for accepting and processing installments may be added to the

outstanding balance and included in an installment payment schedule. Reasonable attorneys'

fees may be added to the outstanding balance and included in an installment schedule after the

unit owner has been given notice, as required in subsection (e) of this section. Attorneys' fees

incurred in connection with any request that the association agrees to accept payment of all or

any part of sums due in installments shall not be included or considered in the calculation of

fees chargeable under subdivision (f)(12) of this section.

(j) Where the holder of a first mortgage or first deed of trust of record or other purchaser of a unit

obtains title to the unit as a result of foreclosure of a first mortgage or first deed of trust, the

purchaser and its heirs, successors, and assigns shall not be liable for the assessments against

the unit which became due prior to the acquisition of title to the unit by the purchaser. The

unpaid assessments shall be deemed to be common expenses collectible from all the unit

owners, including the purchaser, its heirs, successors, and assigns. For purposes of this

subsection, the term "acquisition of title" means and refers to the recording of a deed

conveying title or the time at which the rights of the parties are fixed following the foreclosure

of a mortgage or deed of trust, whichever occurs first.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2005-422, s. 16; 2006-226, s. 14(a); 2009-515, s. 2; 2011-

362, s. 2; 2013-202, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-116.1




§ 47C-3-116.1. Validation of certain nonjudicial foreclosure proceedings and sales

All nonjudicial foreclosure proceedings commenced by an association before October 1, 2013, and all

sales and transfers of real property as part of those proceedings pursuant to the provisions of this

Chapter, Chapter 47A of the General Statutes, or provisions contained in the declaration of the

condominium, are declared to be valid unless an action to set aside the foreclosure is commenced on

or before October 1, 2013, or within one year after the date of the sale, whichever occurs last.

History

2013-202, s. 2.



reserved

N.C. Gen. Stat. § 47C-3-117




§ 47C-3-117. Other liens affecting the condominium

(a) A judgment for money against the association is not a lien on the common elements, but if

docketed is a lien in favor of the judgment lienholder against all of the units in the

condominium at the time the judgment was entered. No other property of a unit owner is

subject to the claims of creditors of the association.

(b) Notwithstanding the provisions of subsection (a), if the association has granted a security

interest in the common elements to a creditor of the association pursuant to G.S. 47C-3-112,

the holder of that security interest must exercise its right against the common elements before

its judgment lien on any unit may be enforced.

(c) Whether perfected before or after the creation of the condominium, if a lien other than a deed

of trust or mortgage, including a judgment lien or lien attributable to work performed or

materials supplied before creation of the condominium, becomes effective against two or more

units, the unit owner of an affected unit may pay the lienholder the amount of the lien

attributable to his unit, and the lienholder, upon receipt of payment, promptly shall deliver a

release of the lien covering that unit. The amount of the payment must be proportionate to the

ratio which that unit owner's common expense liability bears to the common expense liabilities

of all unit owners whose units are subject to the lien. After payment, the association may not

assess or have a lien against that unit owner's unit for any portion of the common expenses

incurred in connection with that lien.

(d) A judgment against the association shall be indexed in the name of the condominium and the

association and, if so indexed, is notice of the lien against the units.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-118




§ 47C-3-118. Association records

(a) The association shall keep financial records sufficiently detailed to enable the association to

comply with this chapter. All financial and other records, including records of meetings of the

association and executive board, shall be made reasonably available for examination by any

unit owner and the unit owner's authorized agents as required by the bylaws and by Chapter

55A of the General Statutes if the association is a nonprofit corporation. If the bylaws do not

specify particular records to be maintained, the association shall keep accurate records of all

cash receipts and expenditures and all assets and liabilities. In addition to any specific

information that is required by the bylaws to be assembled and reported to the unit owners at

specified times, the association shall make an annual income and expense statement and

balance sheet available to all unit owners at no charge and within 75 days after the close of the

fiscal year to which the information relates. Notwithstanding the bylaws, a more extensive

compilation, review, or audit of the association's books and records for the current or

immediately preceding fiscal year may be required by a vote of the majority of the executive

board or by the affirmative vote of a majority of the unit owners present and voting in person

or by proxy at any annual meeting or any special meeting duly called for that purpose.

(b) The association, upon written request, shall furnish a unit owner or the unit owner's

authorized agents a statement setting forth the amount of unpaid assessments and other

charges against a unit. The statement shall be furnished within 10 business days after receipt

of the request and is binding on the association, the executive board, and every unit owner.

(c) In addition to the limitations of Article 8 of Chapter 55A of the General Statutes, no financial

payments, including payments made in the form of goods and services, may be made to any

officer or member of the association's executive board or to a business, business associate, or

relative of an officer or member of the executive board, except as expressly provided for in the

bylaws or in payments for services or expenses paid on behalf of the association which are

approved in advance by the executive board.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 2005-422, s. 17.



reserved

N.C. Gen. Stat. § 47C-3-119




§ 47C-3-119. Association as trustee

With respect to a third person dealing with the association in the association's capacity as a trustee

under G.S. 47C-2-118 following termination or G.S. 47C-3-113 for insurance proceeds, the existence

of trust powers and their proper exercise by the association may be assumed without inquiry. A third

person is not bound to inquire whether the association has power to act as trustee or is properly

exercising trust powers and a third person, without actual knowledge that the association is exceeding

or improperly exercising its powers, is fully protected in dealing with the association as if it possessed

and properly exercised the powers it purports to exercise. A third person is not bound to assure the

proper application of trust assets paid or delivered to the association in its capacity as such trustee.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-3-120




N.C. Gen. Stat. § 47C-3-120




reserved

N.C. Gen. Stat. § 47C-3-121




§ 47C-3-121. American and State flags and political sign displays

Notwithstanding any provision in any declaration of covenants, no restriction on the use of land

shall be construed to:

(1) Regulate or prohibit the display of the flag of the United States or North Carolina, of a size

no greater than four feet by six feet, which is displayed in accordance with or in a manner

consistent with the patriotic customs set forth in 4 U.S.C. §§ 5-10, as amended, governing

the display and use of the flag of the United States unless:

a. For restrictions registered prior to October 1, 2005, the restriction specifically uses the

following terms:

1. Flag of the United States of America;

2. American flag;

3. United States flag; or

4. North Carolina flag.

b. For restrictions registered on or after October 1, 2005, the restriction shall be written on

the first page of the instrument or conveyance in print that is in boldface type, capital

letters, and no smaller than the largest print used elsewhere in the instrument or

conveyance. The restriction shall be construed to regulate or prohibit the display of the

United States or North Carolina flag only if the restriction specifically states: "THIS

DOCUMENT REGULATES OR PROHIBITS THE DISPLAY OF THE FLAG OF THE UNITED

STATES OF AMERICA OR STATE OF NORTH CAROLINA".

This subdivision shall apply to owners of property who display the flag of the United States

or North Carolina on property owned exclusively by them and does not apply to common

areas, easements, rights-of-way, or other areas owned by others.

(2) Regulate or prohibit the indoor or outdoor display of a political sign by an association

member on that member's property owned exclusively by the member, unless:


term "political signs".




conveyance. The restriction shall be construed to regulate or prohibit the display of

political signs only if the restriction specifically states: "THIS DOCUMENT REGULATES

OR PROHIBITS THE DISPLAY OF POLITICAL SIGNS".

Even when display of a political sign is permitted under this subdivision, an association (i) may

prohibit the display of political signs earlier than 45 days before the day of the election and later

than seven days after an election day, and (ii) may regulate the size and number of political signs

that may be placed on a member's property if the association's regulation is no more restrictive

than any applicable city, town, or county ordinance that regulates the size and number of political

N.C. Gen. Stat. § 47C-3-121

signs on residential property. If the local government in which the property is located does not

regulate the size and number of political signs on residential property, the association shall permit

at least one political sign with the maximum dimensions of 24 inches by 24 inches on a member's

property. For the purposes of this subdivision, "political sign" means a sign that attempts to

influence the outcome of an election, including supporting or opposing an issue on the election

ballot. This subdivision shall apply to owners of property who display political signs on property

owned exclusively by them and does not apply to common areas, easements, rights-of-way, or

other areas owned by others.

History

2005-422, s. 18; 2006-226, s. 14(b).



reserved

N.C. Gen. Stat. § 47C-3-122




§ 47C-3-122. Irrigation of landscaping

Notwithstanding any provision in any declaration of covenants, no requirement to irrigate

landscaping shall be construed to:

(1) Require the irrigation of landscaping, during any period in which the U.S. Drought Monitor,

as defined in G.S. 143-350, or the Secretary of Environment and Natural Resources has

designated an area in which the association is located as an area of severe, extreme, or

exceptional drought and the Governor, a State agency, or unit of local government has

imposed water conservation measures applicable to the area unless:

a. For covenants registered prior to October 1, 2008, the covenant specifically requires the

irrigation of landscaping notwithstanding water conservation measures imposed by the

Governor, a State agency, or unit of local government. The association may not fine or

otherwise penalize an owner of land for violation of an irrigation requirement during a

period of drought as designated under this subdivision, unless the covenant specifically

authorizes fines or other penalties.

b. For covenants registered on or after October 1, 2008, the covenant must specifically

state that any requirement to irrigate landscaping is suspended to the extent the

requirement would otherwise be prohibited during any period in which the Governor, a

State agency, or unit of local government has imposed water conservation measures.

The association may not fine or otherwise penalize an owner of land for violation of an

irrigation requirement during a drought designated under this subdivision, unless the

covenant authorizes the fines or other penalties. This authorization must be written on

the first page of the covenant in print that is in boldface type, capital letters, and no

smaller than the largest print used elsewhere in the declarations of covenants.

(2) For purposes of this section, the term "landscaping" includes lawns, trees, shrubbery, and

other ornamental or decorative plants.

History

2008-143, s. 19(a).



reserved

N.C. Gen. Stat. § 47C-4-101



CONDOMINIUM ACT > ARTICLE 4. PROTECTION OF PURCHASERS

§ 47C-4-101. Applicability; waiver

(a) This Article applies to all units subject to this chapter, except as provided in subsection (b) or

as modified or waived by agreement of purchasers of units in a condominium in which all units

are restricted to nonresidential use.

(b) Neither a public offering statement nor a resale certificate need be prepared or delivered in

the case of a disposition which is:

(1) Gratuitous;

(2) Pursuant to court order;

(3) By a government or governmental agency;

(4) By foreclosure or deed in lieu of foreclosure;

(5) To a person in the business of selling real estate who intends to offer those units to

purchasers; or

(6) Subject to cancellation at any time for any reason by the purchasers without penalty.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-102




§ 47C-4-102. Liability for public offering statement requirements

(a) Except as provided in subsection (b), a declarant must, prior to the offering of any interest in

a unit to the public, prepare a public offering statement conforming to the requirements of G.S.

47C-4-103, 47C-4-104, 47C-4-105, and 47C-4-106.

(b) A declarant may transfer responsibility for preparation of all or a part of the public offering

statement to a successor declarant or to a person in the business of selling real estate who

intends to offer units in the condominium for his own account. In the event of any such

transfer, the transferor must provide the transferee with any information necessary to enable

the transferee to fulfill the requirements of subsection (a).

(c) Any declarant or other person in the business of selling real estate who offers a unit for his

own account to a purchaser shall deliver a public offering statement in the manner prescribed

in G.S. 47C-4-108(a). The person who prepared all or a part of or delivered the public offering

statement is subject to G.S. 47C-4-117 for any false or misleading statement set forth therein

or for any omission of material fact therefrom with respect to that portion of the public offering

statement which he prepared. If a declarant did not prepare any part of or deliver a public

offering statement, he is not liable for any false or misleading statement set forth therein or for

any omission of material fact therefrom unless he had actual knowledge of the statement or

omission. A declarant, who has transferred responsibility for preparation of all or a part of the

public offering statement under subsection (b), shall be liable when a false or misleading

statement in the public offering statement prepared by another results from the declarant's

failure to provide the information required in subsection (b).

(d) If a unit is a part of a condominium and is part of any other real estate regime in connection

with the sale of which the delivery of a public offering statement is required under the laws of

this State, a single public offering statement conforming to the requirements of G.S. 47C-4-

103, 47C-4-104, 47C-4-105, and 47C-4-106 as those requirements relate to all real estate

regimes in which the unit is located, and to any other requirements imposed under the laws of

this State, may be prepared and delivered in lieu of providing two or more public offering

statements.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-103




§ 47C-4-103. Public offering statement; general provisions

(a) A public offering statement must contain or fully and accurately disclose:

(1) The name and principal address of the declarant and of the condominium;

(2) A general description of the condominium, including to the extent possible, the types,

number, and declarant's schedule of commencement and completion of construction of

buildings and amenities which declarant anticipates including as part of the condominium;

(3) The number of units in the condominium;

(4) Copies of the recorded or proposed declaration (other than the plats and plans) and any

other recorded covenants, conditions, restrictions and reservations affecting the

condominium; the bylaws, and any rules or regulations of the association; copies of any

contracts and leases to be signed by purchasers at closing, and copies of or a brief

narrative description of any contracts or leases that will or may be subject to cancellation

by the association under G.S. 47C-3-105;

(5) Any current balance sheet and a projected budget for the association, either within or as

an exhibit to the public offering statement, for one year after the date of the first

conveyance to a purchaser, and thereafter the current budget of the association, a

statement of who prepared the budget, and a statement of the budget's assumptions

concerning occupancy and inflation factors. The budget must include, without limitation:

a. A statement of the amount, or a statement that there is no amount, included in the

budget as a reserve for repairs and replacement;

b. A statement of any other reserves;

c. The projected common expense assessment by category of expenditures for the

association; and

d. The projected monthly common expense assessment for each type of unit;

(6) Any services that the declarant provides or expenses that he pays which are not reflected

in the budget and that he expects may become at any subsequent time a common expense

of the association and the projected common expense assessment attributable to each of

those services or expenses for the association and for each type of unit;

(7) Any initial or special fee due from the purchaser at closing, together with a description of

the purpose and method of calculating the fee;

(8) A description of any known or recorded liens, encumbrances or defects affecting the title to

the condominium;

(9) The terms and limitations of any warranties provided by the declarant;

(10) A statement that the purchaser must receive a public offering statement before signing a

contract for purchase and that no conveyance can occur until seven calendar days following

the signing of a contract for purchase; and that the purchaser has the absolute right to

cancel the contract during the seven calendar days period;

N.C. Gen. Stat. § 47C-4-103

(11) A statement of any known or recorded unsatisfied judgments or pending suits against the

association, and the status of any pending suits material to the condominium of which a

declarant has actual knowledge;

(12) A statement that any deposit made in connection with the purchase of a unit will be held

in an escrow account pursuant to G.S. 47C-4-108, together with the name and address of

the escrow agent;

(13) Any restraints on alienation of any portion of the condominium;

(14) A description of the insurance coverage provided for the benefit of unit owners;

(15) Any current or known future fees or charges to be paid by unit owners for the use of the

common elements and other facilities related to the condominium;

(16) The extent to which financial arrangements have been provided for completion of all

improvements labeled "MUST BE BUILT" pursuant to G.S. 47C-4-119;

(17) A brief narrative description of any existing zoning and other land use requirements

governing the condominium; and

(18) A statement that any common element may be alienated or conveyed in accordance with

G.S. 47C-3-112.

(b) A declarant promptly shall amend the public offering statement to report any material change

in the information required by this section and provide a copy of any such material changes to

any purchaser who has executed a contract. If any material change is made in a proposed

declaration after a contract for purchase of a unit has been signed but before conveyance, the

purchaser may rescind the contract within seven days after receipt of the notice of the change.

History

1985 (Reg. Sess., 1986), c. 877, s. 1; 1997-456, s. 27.



reserved

N.C. Gen. Stat. § 47C-4-104




§ 47C-4-104. Same; condominiums subject to developmental rights

If the declaration provides that a condominium is subject to any development rights reserved by

the declarant, the public offering statement shall disclose, in addition to the information required by

G.S. 47C-4-103:

(1) The maximum number of units, and the maximum number of units per acre, that may be

created;

(2) How many or what percentage of the units which may be created will be restricted

exclusively to residential use, or a statement that no representations are made regarding

use restrictions;

(3) If any of the units that may be built within real estate subject to development rights are

not to be restricted exclusively to residential use, a statement, with respect to each portion

of that real estate, of the maximum percentage of the real estate areas and the maximum

percentage of the floor areas of all units that may be created therein that are not restricted

exclusively to residential use;

(4) A brief narrative description of any development rights and of any conditions relating to or

limitations upon the exercise of development rights;

(5) The maximum extent to which each unit's allocated interests may be changed by the

exercise of any development right;

(6) The extent to which any buildings or other improvements that may be erected pursuant to

any development right in any part of the condominium will be compatible with existing

buildings and improvements in the condominium in terms of architectural style, quality of

construction, and size, or a statement that no assurances are made in those regards;

(7) General descriptions of all other improvements that may be made and limited common

elements that may be created within any part of the condominium pursuant to any

development right, or a statement that no assurances are made in that regard;

(8) Any limitations as to the locations of any building or other improvement that may be made

within any part of the condominium pursuant to any development right, or a statement that

no assurances are made in that regard;

(9) A statement that any limited common elements created pursuant to any development right

will be of the same general types and sizes as the limited common elements within other

parts of the condominium, or a statement of the types and sizes planned, or a statement

that no assurances are made in that regard;

(10) A statement that the proportion of limited common elements to units created pursuant to

any development right will be approximately equal to the proportion existing within other

parts of the condominium, or a statement of any other assurances in that regard, or a

statement that no assurances are made in that regard;

(11) A statement that all restrictions in the declaration affecting use, occupancy, and

alienation of units will apply to any units created pursuant to any development right, or

N.C. Gen. Stat. § 47C-4-104

a statement of any differentiations that may be made as to those units, or a statement

that no assurances are made in that regard; and

(12) A statement of the extent to which any assurances made pursuant to this section apply or

do not apply in the event that any development right is not exercised by the declarant.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-105




§ 47C-4-105. Same; time share

(a) If the declaration provides that ownership or occupancy of any units are or may be owned in

time shares, the public offering statement shall disclose, in addition to the information required

by G.S. 47C-4-103:

(1) The number and identity of units in which time shares may be created;

(2) The total number of time shares that may be created;

(3) The minimum duration of any time shares which may be created; and

(4) The extent to which the creation of time shares will or may affect the enforceability of the

association's lien for assessments provided in G.S. 47C-3-116.

(b) The provisions of subsection (a) apply to all purchasers of units in the condominium. In

addition, the purchaser of time shares shall receive the information required by G.S. 93A-44.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-106




§ 47C-4-106. Conversion buildings

Condominiums containing conversion buildings shall be subject to the provisions of Article 2 of

Chapter 47A.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-107




§ 47C-4-107. Same; condominium securities

(a) If an interest in a condominium is registered with the Securities and Exchange Commission of

the United States, a declarant satisfies the requirements relating to the preparation of a public

offering statement of this chapter if he delivers to the purchaser a copy of the public offering

statement filed with the Securities and Exchange Commission to the extent such statement

provides the information required by G.S. 47C-4-103, 47C-4-104, 47C-4-105 and 47C-4-106.

(b) The North Carolina Securities Act, Chapter 78A, shall apply to condominiums deemed to be

investment contracts or to other securities offered with or incident to a condominium. In the

event of such applicability of the North Carolina Securities Act, any real estate broker or

salesman registered under Article 1 of Chapter 93A shall not be subject to the provisions of

G.S. 78A-36. The exemption provided by the preceding sentence shall not apply to any person

who is required to register with the Securities Exchange Commission as a broker or dealer

under the Securities and Exchange Act of 1934.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-108




§ 47C-4-108. Purchaser's right to cancel

(a) A person required to deliver a public offering statement pursuant to G.S. 47C-4-102(c) shall

provide a purchaser of a unit or the spouse of such purchaser with a copy of the public offering

statement and all amendments thereto before a contract to purchase the unit is executed. No

conveyance pursuant to the contract to purchase may occur until seven calendar days following

the execution of the contract and a purchaser has the absolute right to cancel the contract at

any time during this seven calendar day period. Cancellation is without penalty, and all

payments made by the purchaser before cancellation shall be refunded promptly.

(b) If a purchaser elects to cancel a contract pursuant to subsection (a), he may do so by hand-

delivering notice thereof to the offeror or by mailing notice thereof by prepaid United States

mail to the offeror or to his agent for service of process.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-109




§ 47C-4-109. Resales of units

Except in the case of a sale where delivery of a public offering statement is required, or unless

exempt under G.S. 47C-4-101(b), a unit owner shall furnish to a prospective purchaser before

conveyance a statement setting forth the monthly common expense assessment and any other fees

payable by unit owners.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-110




§ 47C-4-110. Escrow of deposits

(a) Any deposit made in connection with the purchase or reservation of a unit from a person

required to deliver a public offering statement pursuant to G.S. 47C-4-102(c) shall be

immediately deposited in a trust or escrow account in an insured bank or savings and loan

association in North Carolina and shall remain in such account for such period of time as a

purchaser is entitled to cancel pursuant to G.S. 47C-4-108 or cancellation by the purchaser

thereunder whichever occurs first. Payments held in such trust or escrow accounts shall be

deemed to belong to the purchaser and not the seller.

(b) Except as provided in G.S. 47C-4-108, nothing in subsection (a) is intended to preclude the

parties to a contract from providing for the use of progress payments by the declarant during

construction.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-111




§ 47C-4-111. Release of liens or encumbrances

(a) In the case of a sale of a unit where delivery of a public offering statement is required

pursuant to G.S. 47C-4-102(c), a seller shall, at or before conveying a unit, record or furnish to

the purchaser, releases of all liens or encumbrances affecting that unit and its common element

interest which the purchaser does not expressly agree to take subject to or assume, or shall

provide a surety bond or substitute collateral for or insurance against the lien or encumbrance

as provided for liens or encumbrances on real estate in G.S. 44A-16(5) and (6) or insurance

against the lien or encumbrance acceptable to the purchaser. This subsection does not apply to

any real estate which a declarant has the right to withdraw.

(b) Before conveying real estate to the association the declarant shall have that real estate

released from: (1) all liens or encumbrances the foreclosure of which would deprive unit

owners of any right of access to or easement of support of their units, and (2) all other liens or

encumbrances on that real estate unless the public offering statement describes certain real

estate which may be conveyed subject to liens or encumbrances in specified amounts.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-112




N.C. Gen. Stat. § 47C-4-112




reserved

N.C. Gen. Stat. § 47C-4-113




§ 47C-4-113. Express warranties of quality

The law relating to express warranties is applicable to the sale of a condominium unit and

supplements the provisions of this chapter; provided, however, that the existence of express

warranties shall not constitute a disclaimer of implied warranties.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-114




§ 47C-4-114. Implied warranties of quality

The law relating to implied warranties, including but not limited to, implied warranties that the

premises are free from defective materials, constructed in a workmanlike manner, constructed

according to sound engineering and construction standards and that the premises may be used for a

particular purpose, is applicable to the sale of a condominium unit and supplements the provisions of

this chapter.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-115




§ 47C-4-115. Exclusion of modification of implied warranties of quality

(a) Except as limited by subsection (b) with respect to a purchaser of a unit that may be used for

residential use, implied warranties of quality:

(1) May be excluded or modified by agreement of the parties; and

(2) Are excluded by expression of disclaimer, such as "as is," "with all faults," or other

language which in common understanding calls the buyer's attention to the exclusion of

warranties.

(b) With respect to a purchaser of a unit that may be occupied for residential use, no general

disclaimer of implied warranties of quality is effective, but a declarant and any person in the

business of selling real estate for his own account may disclaim liability in an instrument signed

by the purchaser for a specified defect or specified failure to comply with applicable law, if the

defect or failure entered into and became a part of the basis of the bargain.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-116




§ 47C-4-116. Statute of limitations for warranties

(a) A judicial proceeding for breach of any obligation arising under G.S. 47C-4-113 or 47C-4-114

must be commenced within the applicable period of limitations set out in Chapter 1 of the North

Carolina General Statutes.

(b) If a warranty of quality explicitly extends to future performance or duration of any

improvement or component of the condominium, the cause of action accrues at the time the

breach is discovered or at the end of the period for which the warranty explicitly extends,

whichever is earlier.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-117




§ 47C-4-117. Effect of violations on rights of action; attorney's fees

If a declarant or any other person subject to this chapter fails to comply with any provision hereof or

any provision of the declaration or bylaws, any person or class of person adversely affected by that

failure has a claim for appropriate relief. The court may award reasonable attorney's fees to the

prevailing party.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-118




§ 47C-4-118. Labeling of promotional material

If any improvement contemplated in a condominium is labeled "NEED NOT BE BUILT" on a plat or

plan, or is to be located within a portion of the condominium with respect to which the declarant has

reserved a development right, no promotional material may be displayed or delivered to prospective

purchasers which describes or portrays that improvement unless the description or portrayal of the

improvement in the promotional material is conspicuously labeled or identified as "NEED NOT BE

BUILT".

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-119




§ 47C-4-119. Declarant's obligation to complete

(a) The declarant shall complete all improvements labeled "MUST BE BUILT" on plats or plans

prepared pursuant to G.S. 47C-2-109.

(b) The declarant is subject to liability for the prompt repair and restoration, to a condition

compatible with the remainder of the condominium, of any portion of the condominium affected

by the exercise of rights reserved pursuant to or created by G.S. 47C-2-110, 47C-2-111, 47C-

2-112, 47C-2-113, 47C-2-115, and 47C-2-116.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved

N.C. Gen. Stat. § 47C-4-120




§ 47C-4-120. Substantial completion of units

In the case of a sale of a unit where delivery of a public offering statement is required, a contract of

sale may be executed, but no interest in that unit may be conveyed until the declaration is recorded

and the unit is substantially completed, as evidenced by a recorded certificate of substantial

completion executed by an architect licensed under the provisions of Chapter 83 [83A] of the General

Statutes or an engineer registered under the provisions of Chapter 89C of the General Statutes, or by

issuance of a certificate of occupancy authorized by law.

History

1985 (Reg. Sess., 1986), c. 877, s. 1.



reserved.

N.C. Gen. Stat. § 47F-1-101


General Statutes of North Carolina > CHAPTER 47F. NORTH CAROLINA

PLANNED COMMUNITY ACT > ARTICLE 1. GENERAL PROVISIONS

§ 47F-1-101. Short title

This Chapter shall be known and may be cited as the North Carolina Planned Community Act.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-1-104




§ 47F-1-104. Variation

(a) Except as specifically provided in specific sections of this Chapter, the provisions of this

Chapter may not be varied by the declaration or bylaws. To the extent not inconsistent with the

provisions of this Chapter, the declaration, bylaws, and articles of incorporation form the basis

for the legal authority for the planned community to act as provided in the declaration, bylaws,

and articles of incorporation, and the declaration, bylaws, and articles of incorporation are

enforceable by their terms.

(b) The provisions of this Chapter may not be varied by agreement; however, after breach of a

provision of this Chapter, rights created hereunder may be knowingly waived in writing.

(c) Notwithstanding any of the provisions of this Chapter, a declarant may not act under a power

of attorney or proxy or use any other device to evade the limitations or prohibitions of this

Chapter, the declaration, or the bylaws.

History

1998-199, s. 1; 2013-34, s. 3.



reserved

N.C. Gen. Stat. § 47F-1-103




§ 47F-1-103. Definitions

In the declaration and bylaws, unless specifically provided otherwise or the context otherwise

requires, and in this Chapter:

(1) "Affiliate of declarant" means any person who succeeds to any special declarant rights and

who controls, is controlled by, or is under common control with a declarant. A person

"controls" a declarant if the person is any of the following:

a. A general partner, officer, director, or employer of the declarant.

b. Directly or indirectly or acting in concert with one or more other persons, or through

one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies

representing more than twenty percent (20%) of the voting interest in the declarant.

c. Controls in any manner the election of a majority of the directors of the declarant.

d. Has contributed more than twenty percent (20%) of the capital of the declarant.

A person "is controlled by" a declarant if the declarant (i) is a general partner, officer,

director, or employer of the person; (ii) directly or indirectly or acting in concert with one

or more other persons, or through one or more subsidiaries, owns, controls, holds with

power to vote, or holds proxies representing more than twenty percent (20%) of the voting

interest in the person; (iii) controls in any manner the election of a majority of the directors

of the person; or (iv) has contributed more than twenty percent (20%) of the capital of the

person. Control does not exist if the powers described in this subdivision are held solely as

security for an obligation and are not exercised.

(2) "Allocated interests" means the common expense liability and votes in the association

allocated to each lot.

(3) "Association" or "owners' association" means the association organized as allowed under

North Carolina law, including G.S. 47F-3-101.

(4) "Common elements" means any real estate within a planned community owned or leased

by the association, other than a lot.

(5) "Common expenses" means expenditures made by or financial liabilities of the association,

together with any allocations to reserves.

(6) "Common expense liability" means the liability for common expenses allocated to each lot

as permitted by this Chapter, the declaration or otherwise by law.

(7) "Condominium" means real estate, as defined and created under Chapter 47C [of the

General Statutes].

(8) "Cooperative" means real estate owned by a corporation, trust, trustee, partnership, or

unincorporated association, where the governing instruments of that organization provide

that each of the organization's members, partners, stockholders, or beneficiaries is entitled

to exclusive occupancy of a designated portion of that real estate.

(9) "Declarant" means any person or group of persons acting in concert who (i) as part of a

common promotional plan, offers to dispose of the person's or group's interest in a lot not

previously disposed of, or (ii) reserves or succeeds to any special declarant right.

N.C. Gen. Stat. § 47F-1-103

(10) "Declaration" means any instruments, however denominated, that create a planned

community and any amendments to those instruments.

(11) "Development rights" means any right or combination of rights reserved by a declarant in

the declaration (i) to add real estate to a planned community; (ii) to create lots, common

elements, or limited common elements within a planned community; (iii) to subdivide or

combine lots or convert lots into common elements; or (iv) to withdraw real estate from a

planned community.

(12) Reserved.

(13) "Executive board" means the body, regardless of name, designated in the declaration to

act on behalf of the association.

(14), (15) Reserved.

(16) "Leasehold planned community" means a planned community in which all or a portion of

the real estate is subject to a lease, the expiration or termination of which will terminate

the planned community or reduce its size.

(17) "Lessee" means the party entitled to present possession of a leased lot whether lessee,

sublessee, or assignee.

(18) "Limited common element" means a portion of the common elements allocated by the

declaration or by operation of law for the exclusive use of one or more but fewer than all of

the lots.

(19) "Lot" means a physical portion of the planned community designated for separate

ownership or occupancy by a lot owner.

(20) "Lot owner" means a declarant or other person who owns a lot, or a lessee of a lot in a

leasehold planned community whose lease expires simultaneously with any lease the

expiration or termination of which will remove the lot from the planned community, but

does not include a person having an interest in a lot solely as security for an obligation.

(21) "Master association" means an organization described in G.S. 47F-2-120, whether or not

it is also an association described in G.S. 47F-3-101.

(22) "Person" means a natural person, corporation, business trust, estate, trust, partnership,

association, joint venture, government, governmental subdivision or agency, or other legal

or commercial entity.

(23) "Planned community" means real estate with respect to which any person, by virtue of

that person's ownership of a lot, is expressly obligated by a declaration to pay real property

taxes, insurance premiums, or other expenses to maintain, improve, or benefit other lots or

other real estate described in the declaration. For purposes of this act, neither a

cooperative nor a condominium is a planned community, but real estate comprising a

condominium or cooperative may be part of a planned community. "Ownership of a lot"

does not include holding a leasehold interest of less that [than] 20 years in a lot, including

renewal options.

(24) "Purchaser" means any person, other than a declarant or a person in the business of

selling real estate for the purchaser's own account, who by means of a voluntary transfer

acquires a legal or equitable interest in a lot, other than (i) a leasehold interest (including

renewal options) of less than 20 years, or (ii) as security for an obligation.

(25) "Real estate" means any leasehold or other estate or interest in, over, or under land,

including structures, fixtures, and other improvements and interests which by custom,

N.C. Gen. Stat. § 47F-1-103

usage, or law pass with a conveyance of land though not described in the contract of sale

or instrument of conveyance. "Real estate" includes parcels with or without upper or lower

boundaries, and spaces that may be filled with air or water.

(26) "Reasonable attorneys' fees" means attorneys' fees reasonably incurred without regard to

any limitations on attorneys' fees which otherwise may be allowed by law.

(27) Reserved.

(28) "Special declarant rights" means rights reserved for the benefit of a declarant including,

without limitation, any right (i) to complete improvements indicated on plats and plans filed

with the declaration; (ii) to exercise any development right; (iii) to maintain sales offices,

management offices, signs advertising the planned community, and models; (iv) to use

easements through the common elements for the purpose of making improvements within

the planned community or within real estate which may be added to the planned

community; (v) to make the planned community part of a larger planned community or

group of planned communities; (vi) to make the planned community subject to a master

association; or (vii) to appoint or remove any officer or executive board member of the

association or any master association during any period of declarant control.

(29) Reserved.

History

1998-199, s. 1; 2014-57, s. 2.



reserved

N.C. Gen. Stat. § 47F-1-105




§ 47F-1-105. Taxation

Extraterritorial common property taxed pursuant to G.S. 105-277.8 shall be assessed, pro rata,

among the lot owners based on the number of lots in the association.

History

2012-157, s. 3.



reserved

N.C. Gen. Stat. § 47F-1-106




§ 47F-1-106. Applicability of local ordinances, regulations, and building codes

A zoning, subdivision, or building code or other real estate use law, ordinance, or regulation may not

prohibit a planned community or impose any requirement upon a planned community which it would

not impose upon a substantially similar development under a different form of ownership or

administration. Otherwise, no provision of this Chapter invalidates or modifies any provision of any

zoning, subdivision, or building code or any other real estate use law, ordinance, or regulation. No

local ordinance or regulation may require the recordation of a declaration prior to the date required by

this Chapter.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-1-107




§ 47F-1-107. Eminent domain

(a) If a lot is acquired by eminent domain, or if part of a lot is acquired by eminent domain

leaving the lot owner with a remnant which may not practically or lawfully be used for any

purpose permitted by the declaration, the award shall compensate the lot owner for his lot and

its interest in the common element. Upon acquisition, unless the decree otherwise provides, the

lot's allocated interests are automatically reallocated to the remaining lots in proportion to the

respective allocated interests of those lots before the taking, exclusive of the lot taken.

(b) Except as provided in subsection (a) of this section, if part of a lot is acquired by eminent

domain, the award shall compensate the lot owner for the reduction in value of the lot. Upon

acquisition, unless the decree otherwise provides, (i) that lot's allocated interests are reduced

in proportion to the reduction in the size of the lot, or on any other basis specified in the

declaration, and (ii) the portion of the allocated interests divested from the partially acquired

lot are automatically reallocated to that lot and the remaining lots in proportion to the

respective allocated interests of those lots before the taking, with the partially acquired lot

participating in the reallocation on the basis of its reduced allocated interests.

(c) If there is any reallocation under subsection (a) or (b) of this section, the association shall

promptly prepare, execute, and record an amendment to the declaration reflecting the

reallocations. Any remnant of a lot remaining after part of a lot is taken under this subsection is

thereafter a common element.

(d) If part of the common elements is acquired by eminent domain, the portion of the award

attributable to the common elements taken shall be paid to the association. Unless the

declaration provides otherwise, any portion of the award attributable to the acquisition of a

limited common element shall 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.

(e) The court decree shall be recorded in every county in which any portion of the planned

community is located.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-1-108




§ 47F-1-108. Supplemental general principles of law applicable

The principles of law and equity as well as other North Carolina statutes (including the provisions of

the North Carolina Nonprofit Corporation Act) supplement the provisions of this Chapter, except to the

extent inconsistent with this Chapter. When these principles or statutes are inconsistent or conflict

with this Chapter, the provisions of this Chapter will control.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-1-109




N.C. Gen. Stat. § 47F-1-109




reserved

N.C. Gen. Stat. § 47F-1-102




§ 47F-1-102. Applicability

(a) This Chapter applies to all planned communities created within this State on or after January

1, 1999, except as otherwise provided in this section.

(b) This Chapter does not apply to a planned community created within this State on or after

January 1, 1999:

(1) Which contains no more than 20 lots (including all lots which may be added or created by

the exercise of development rights) unless the declaration provides or is amended to

provide that this Chapter does apply to that planned community; or

(2) In which all lots are restricted exclusively to nonresidential purposes, unless the declaration

provides or is amended to provide that this Chapter does apply to that planned community.

(c) Notwithstanding the provisions of subsection (a) of this section, G.S. 47F-1-104 (Variation),

G.S. 47F-2-103 (Construction and validity of declaration and bylaws), G.S. 47F-2-117

(Amendment of declaration), G.S. 47F-3-102(1) through (6) and (11) through (17)(Powers of

owners' association), G.S. 47F-3-103(f)(Executive board members and officers), G.S. 47F-3-

107(a), (b), and (c)(Upkeep of planned community; responsibility and assessments for

damages), G.S. 47F-3-107.1 (Procedures for fines and suspension of planned community

privileges or services), G.S. 47F-3-108 (Meetings), G.S. 47F-3-115 (Assessments for common

expenses), G.S. 47F-3-116 (Lien for assessments), G.S. 47F-3-118 (Association records), and

G.S. 47F-3-121 (American and State flags and political sign displays), and G.S. 47F-3-104

(Transfer of Special Declarant Rights) apply to all planned communities created in this State

before January 1, 1999, unless the articles of incorporation or the declaration expressly

provides to the contrary, and G.S. 47F-3-120 (Declaration limits on attorneys' fees) applies to

all planned communities created in this State before January 1, 1999. These sections apply

only with respect to events and circumstances occurring on or after January 1, 1999, and do

not invalidate existing provisions of the declaration, bylaws, or plats and plans of those planned

communities. G.S. 47F-1-103 (Definitions) also applies to all planned communities created in

this State before January 1, 1999, to the extent necessary in construing any of the preceding

sections.

(d) Notwithstanding the provisions of subsections (a) and (c) of this section, any planned

community created prior to January 1, 1999, may elect to make the provisions of this Chapter

applicable to it by amending its declaration to provide that this Chapter shall apply to that

planned community. The amendment may be made by affirmative vote or written agreement

signed by lot owners of lots to which at least sixty-seven percent (67%) of the votes in the

association are allocated or any smaller majority the declaration specifies. To the extent the

procedures and requirements for amendment in the declaration conflict with the provisions of

this subsection, this subsection shall control with respect to any amendment to provide that

this Chapter applies to that planned community.

(e) This Chapter does not apply to planned communities or lots located outside this State.

N.C. Gen. Stat. § 47F-1-102

History

1998-199, s. 1; 2002-112, s. 2; 2004-109, s. 3; 2005-214, s. 1; 2005-422, s. 9; 2006-226, s. 15(a);

2013-34, s. 6; 2014-57, s. 1.



reserved

N.C. Gen. Stat. § 47F-2-101



PLANNED COMMUNITY ACT > ARTICLE 2. CREATION, ALTERATION, AND TERMINATION OF

PLANNED COMMUNITIES

§ 47F-2-101. Creation of the planned community

A declaration creating a planned community shall be executed in the same manner as a deed and

shall be recorded in every county in which any portion of the planned community is located.

History

1998-199, s. 1; 2012-18, s. 1.7.



reserved

N.C. Gen. Stat. § 47F-2-102




PLANNED COMMUNITIES

N.C. Gen. Stat. § 47F-2-102




reserved

N.C. Gen. Stat. § 47F-2-103




PLANNED COMMUNITIES

§ 47F-2-103. Construction and validity of declaration and bylaws

(a) To the extent not inconsistent with the provisions of this Chapter, the declaration, bylaws, and

articles of incorporation form the basis for the legal authority for the planned community to act

as provided in the declaration, bylaws, and articles of incorporation, and the declaration,

bylaws, and articles of incorporation are enforceable by their terms. All provisions of the

declaration and bylaws are severable.

(b) The rule against perpetuities may not be applied to defeat any provision of the declaration,

bylaws, rules, or regulations adopted pursuant to G.S. 47F-3-102(1).

(c) In the event of a conflict between the provisions of the declaration and the bylaws, the

declaration prevails except to the extent the declaration is inconsistent with this Chapter.

(d) Title to a lot and common elements is not rendered unmarketable or otherwise affected by

reason of an insubstantial failure of the declaration to comply with this Chapter. Whether a

substantial failure to comply with this Chapter impairs marketability shall be determined by the

law of this State relating to marketability.

History

1998-199, s. 1; 2013-34, s. 4.



reserved

N.C. Gen. Stat. § 47F-2-104




PLANNED COMMUNITIES

§§ 47F-2-104 through 47F-2-116




reserved

N.C. Gen. Stat. § 47F-2-117




PLANNED COMMUNITIES

§ 47F-2-117. Amendment of declaration

(a) Except in cases of amendments that may be executed by a declarant under the terms of the

declaration or by certain lot owners under G.S. 47F-2-118(b), the declaration may be amended

only by affirmative vote or written agreement signed by lot owners of lots to which at least

sixty-seven percent (67%) of the votes in the association are allocated, or any larger majority

the declaration specifies or by the declarant if necessary for the exercise of any development

right. The declaration may specify a smaller number only if all of the lots are restricted

exclusively to nonresidential use.

(b) No action to challenge the validity of an amendment adopted pursuant to this section may be

brought more than one year after the amendment is recorded.

(c) Every amendment to the declaration shall be recorded in every county in which any portion of

the planned community is located and is effective only upon recordation.

(d) Any amendment passed pursuant to the provisions of this section or the procedures provided

for in the declaration are presumed valid and enforceable.

(e) Amendments to the declaration required by this Chapter to be recorded by the association

shall be prepared, executed, recorded, and certified in accordance with G.S. 47-41.

History

1998-199, s. 1; 2012-18, s. 1.8; 2013-34, s. 5.



reserved

N.C. Gen. Stat. § 47F-2-118




PLANNED COMMUNITIES

§ 47F-2-118. Termination of planned community

(a) Except in the case of taking of all the lots by eminent domain (G.S. 47F-1-107), a planned

community may be terminated only by agreement of lot owners of lots to which at least eighty

percent (80%) of the votes in the association are allocated, or any larger percentage the

declaration specifies. The declaration may specify a smaller percentage only if all of the lots in

the planned community are restricted exclusively to nonresidential uses.

(b) An agreement to terminate shall be evidenced by the execution of a termination agreement,

or ratifications thereof, in the same manner as a deed, by the requisite number of lot owners.

The termination agreement shall specify a date after which the agreement will be void unless it

is recorded before that date. A termination agreement and all ratifications thereof shall be

recorded in every county in which a portion of the planned community is situated and is

effective only upon recordation.

(c) A termination agreement may provide for sale of the common elements, but may not require

that the lots be sold following termination, unless the declaration as originally recorded

provided otherwise or unless all the lot owners consent to the sale. If, pursuant to the

agreement, any real estate in the planned community is to be sold following termination, the

termination agreement shall set forth the minimum terms of the sale.

(d) The association, on behalf of the lot owners, may contract for the sale of real estate in the

planned community, but the contract is not binding until approved pursuant to subsections (a)

and (b) of this section. Until the sale has been concluded and the proceeds thereof distributed,

the association continues in existence with all powers it had before termination. Proceeds of the

sale shall be distributed to lot owners and lienholders as their interests may appear, as

provided in the termination agreement.

(e) If the real estate constituting the planned community is not to be sold following termination,

title to the common elements vests in the lot owners upon termination as tenants in common in

proportion to their respective interests as provided in the termination agreement.

(f) Following termination of the planned community, the proceeds of any sale of real estate,

together with the assets of the association, are held by the association as trustee for lot owners

and holders of liens on the lots as their interests may appear. All other creditors of the

association are to be treated as if they had perfected liens on the common elements

immediately before termination.

(g) If the termination agreement does not provide for the distribution of sales proceeds pursuant

to subsection (d) of this section or the vesting of title pursuant to subsection (e) of this section,

sales proceeds shall be distributed and title shall vest in accordance with each lot owner's

allocated share of common expense liability.

(h) Except as provided in subsection (i) of this section, foreclosure or enforcement of a lien or

encumbrance against the common elements does not of itself terminate the planned

community, and foreclosure or enforcement of a lien or encumbrance against a portion of the

common elements other than withdrawable real estate does not withdraw that portion from the

planned community. Foreclosure or enforcement of a lien or encumbrance against

N.C. Gen. Stat. § 47F-2-118

withdrawable real estate does not of itself withdraw that real estate from the planned

community, but the person taking title thereto has the right to require from the association,

upon request, an amendment excluding the real estate from the planned community.

(i) If a lien or encumbrance against a portion of the real estate comprising the planned community

has priority over the declaration and the lien or encumbrance has not been partially released,

the parties foreclosing the lien or encumbrance may, upon foreclosure, record an instrument

excluding the real estate subject to that lien or encumbrance from the planned community.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-2-119




PLANNED COMMUNITIES

N.C. Gen. Stat. § 47F-2-119




reserved

N.C. Gen. Stat. § 47F-2-121




PLANNED COMMUNITIES

§ 47F-2-121. Merger or consolidation of planned communities

(a) Any two or more planned communities, by agreement of the lot owners as provided in

subsection (b) of this section, may be merged or consolidated into a single planned community.

In the event of a merger or consolidation, unless the agreement otherwise provides, the

resultant planned community is, for all purposes, the legal successor of all of the preexisting

planned communities, and the operations and activities of all associations of the preexisting

planned communities shall be merged or consolidated into a single association which shall hold

all powers, rights, obligations, assets, and liabilities of all preexisting associations.

(b) An agreement of two or more planned communities to merge or consolidate pursuant to

subsection (a) of this section shall be evidenced by an agreement prepared, executed,

recorded, and certified by the president of the association of each of the preexisting planned

communities following approval by owners of lots to which are allocated the percentage of

votes in each planned community required to terminate that planned community. Any such

agreement shall be recorded in every county in which a portion of the planned community is

located and is not effective until recorded.

(c) Every merger or consolidation agreement shall provide for the reallocation of the allocated

interests in the new association among the lots of the resultant planned community either (i)

by stating the reallocations or the formulas upon which they are based or (ii) by stating the

percentage of overall common expense liabilities and votes in the new association which are

allocated to all of the lots comprising each of the preexisting planned communities, and

providing that the portion of the percentages allocated to each lot formerly comprising a part of

the preexisting planned community shall be equal to the percentages of common expense

liabilities and votes in the association allocated to that lot by the declaration of the preexisting

planned community.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-2-120




PLANNED COMMUNITIES

§ 47F-2-120. Master associations

If the declaration for a planned community provides that any of the powers described in G.S. 47F-3-

102 are to be exercised by or may be delegated to a profit or nonprofit corporation which exercises

those or other powers on behalf of one or more other planned communities or for the benefit of the

lot owners of one or more other planned communities, all provisions of this act applicable to lot

owners' associations apply to any such corporation.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-101



PLANNED COMMUNITY ACT > ARTICLE 3. MANAGEMENT OF PLANNED COMMUNITY

§ 47F-3-101. Organization of owners' association

A lot owners' association shall be incorporated no later than the date the first lot in the planned

community is conveyed. The membership of the association at all times shall consist exclusively of all

the lot owners or, following termination of the planned community, of all persons entitled to

distributions of proceeds under G.S. 47F-2-118. Every association created after the effective date of

this Chapter shall be organized as a nonprofit corporation.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-102




§ 47F-3-102. Powers of owners' association

Unless the articles of incorporation or the declaration expressly provides to the contrary, the

association may:

(1) Adopt and amend bylaws and rules and regulations;

(2) Adopt and amend budgets for revenues, expenditures, and reserves and collect

assessments for common expenses from lot owners;

(3) Hire and discharge managing agents and other employees, agents, and independent

contractors;

(4) Institute, defend, or intervene in litigation or administrative proceedings on matters

affecting the planned community;

(5) Make contracts and incur liabilities;

(6) Regulate the use, maintenance, repair, replacement, and modification of common

elements;

(7) Cause additional improvements to be made as a part of the common elements;

(8) Acquire, hold, encumber, and convey in its own name any right, title, or interest to real or

personal property, provided that common elements may be conveyed or subjected to a

security interest only pursuant to G.S. 47F-3-112;

(9) Grant easements, leases, licenses, and concessions through or over the common elements;

(10) Impose and receive any payments, fees, or charges for the use, rental, or operation of

the common elements other than the limited common elements and for services provided

to lot owners;

(11) Impose reasonable charges for late payment of assessments, not to exceed the greater of

twenty dollars ($ 20.00) per month or ten percent (10%) of any assessment installment

unpaid and, after notice and an opportunity to be heard, suspend privileges or services

provided by the association (except rights of access to lots) during any period that

assessments or other amounts due and owing to the association remain unpaid for a period

of 30 days or longer;

(12) After notice and an opportunity to be heard, impose reasonable fines or suspend

privileges or services provided by the association (except rights of access to lots) for

reasonable periods for violations of the declaration, bylaws, and rules and regulations of

the association;

(13) Impose reasonable charges in connection with the preparation and recordation of

documents, including, without limitation, amendments to the declaration or statements of

unpaid assessments;

(14) Provide for the indemnification of and maintain liability insurance for its officers, executive

board, directors, employees, and agents;

N.C. Gen. Stat. § 47F-3-102

(15) Assign its right to future income, including the right to receive common expense

assessments;

(16) Exercise all other powers that may be exercised in this State by legal entities of the same

type as the association; and

(17) Exercise any other powers necessary and proper for the governance and operation of the

association.

History

1998-199, s. 1; 2004-109, s. 4; 2005-422, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-103




§ 47F-3-103. Executive board members and officers

(a) Except as provided in the declaration, in the bylaws, in subsection (b) of this section, or in

other provisions of this Chapter, the executive board may act in all instances on behalf of the

association. In the performance of their duties, officers and members of the executive board

shall discharge their duties in good faith. Officers shall act according to the standards for

officers of a nonprofit corporation set forth in G.S. 55A-8-42, and members shall act according

to the standards for directors of a nonprofit corporation set forth in G.S. 55A-8-30.

(b) The executive board may not act unilaterally on behalf of the association to amend the

declaration (G.S. 47F-2-117), to terminate the planned community (G.S. 47F-2-118), or to

elect members of the executive board or determine the qualifications, powers and duties, or

terms of office of executive board members (G.S. 47F-3-103(e)), but the executive board may

unilaterally fill vacancies in its membership for the unexpired portion of any term.

Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners, by a

majority vote of all persons present and entitled to vote at any meeting of the lot 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.

(c) Within 30 days after adoption of any proposed budget for the planned community, the

executive board shall provide to all the lot owners a summary of the budget and a notice of the

meeting to consider ratification of the budget, including a statement that the budget may be

ratified without a quorum. The executive board shall set a date for a meeting of the lot owners

to consider ratification of the budget, such meeting to be held not less than 10 nor more than

60 days after mailing of the summary and notice. There shall be no requirement that a quorum

be present at the meeting. The budget is ratified unless at that meeting a majority of all the lot

owners in the association or any larger vote specified in the declaration rejects the budget. In

the event the proposed budget is rejected, the periodic budget last ratified by the lot owners

shall be continued until such time as the lot owners ratify a subsequent budget proposed by the

executive board.

(d) The declaration may provide for a period of declarant control of the association, during which

period a declarant, or persons designated by the declarant, may appoint and remove the

officers and members of the executive board.

(e) Not later than the termination of any period of declarant control, the lot owners shall elect an

executive board of at least three members, at least a majority of whom shall be lot owners.

The executive board shall elect the officers. The executive board members and officers shall

take office upon election.

(f) The association shall publish the names and addresses of all officers and board members of the

association within 30 days of their election.

N.C. Gen. Stat. § 47F-3-103

History

1998-199, s. 1; 2005-422, ss. 2, 3.



reserved

N.C. Gen. Stat. § 47F-3-104




§ 47F-3-104. Transfer of special declarant rights

(a) No special declarant right (G.S. 47F-1-103(28)) defined under this Chapter may be transferred

except by an instrument evidencing the transfer recorded in every county in which any portion

of the planned community is located. Except for the transfer of declarant rights pursuant to

subsection (c) of this section, the instrument is not effective unless executed by the transferee.

(b) Upon transfer of any special declarant right, the liability of a transferor declarant is as follows:

(1) A transferor is not relieved of any obligation or liability arising before the transfer and

remains liable for warranty obligations imposed upon the transferor by this Chapter. Lack

of privity does not deprive any lot owner of standing to maintain an action to enforce any

obligation of the transferor.

(2) If a successor to any special declarant right is an affiliate of a declarant (G.S. 47F-1-

103(1)), the transferor is jointly and severally liable with the successor for any obligations

or liabilities of the successor relating to the planned community.

(3) If a transferor retains any special declarant rights but transfers other special declarant

rights to a successor who is not an affiliate of the declarant, the transferor is liable for any

obligations or liabilities imposed on a declarant by this Chapter or by the declaration

relating to the retained special declarant rights and arising after the transfer.

(4) A transferor has no liability for any act or omission or any breach of a contractual or

warranty obligation arising from the exercise of a special declarant right by a successor

declarant who is not an affiliate of the transferor.

(c) Unless otherwise provided in a mortgage instrument, deed of trust, or other agreement

creating a security interest, in case of foreclosure of a security interest, sale by a trustee under

an agreement creating a security interest, tax sale, judicial sale, or sale under Bankruptcy Code

or receivership proceedings of any lots owned by a declarant, or real estate in a planned

community subject to development rights, or real estate subject to development rights for a

planned community, a person acquiring title to all the property being foreclosed or sold, but

only upon the person's request in an instrument recorded in every county in which any portion

of the planned community is located, succeeds to all special declarant rights (G.S. 47F-1-

103(28)) related to that property held by that declarant and requested by the person acquiring

title. The judgment or instrument conveying title shall provide for transfer of only the special

declarant rights requested. The mortgage, deed of trust, tax lien, or other conveyance to be

foreclosed under this subsection shall not be required to contain specific reference to an

assignment of special declarant rights but shall be deemed to include the special declarant

rights as part of the right, title, and interest encumbered by the mortgage, deed of trust, tax

lien, or other conveyance.

(d) Upon foreclosure of a security interest, sale by a trustee under an agreement creating a

security interest, tax sale, judicial sale, or sale under Bankruptcy Code or receivership

proceedings of all interests in a planned community owned by a declarant, the declarant

N.C. Gen. Stat. § 47F-3-104

ceases to have any special declarant rights and the period of declarant control (G.S. 47F-3-

103(d)) terminates unless either of the following applies:

(1) The judgment or instrument conveying title provides for transfer of all special declarant

rights held by that declarant to a successor declarant.

(2) The declarant transferred special declarant rights related to the appointment of executive

board members to another person pursuant to this section prior to the foreclosure or sale.

(e) The liabilities and obligations of a person who succeeds to special declarant rights are as

follows:

(1) A successor to any special declarant right who is an affiliate of a declarant is subject to all

obligations and liabilities imposed on the transferor by this Chapter or by the declaration.

(2) Unless otherwise specified in the declaration as to the holder of a mortgage instrument,

deed of trust, or other agreement creating a security interest, in case of foreclosure of a

security interest, sale by a trustee under an agreement creating a security interest, tax

sale, judicial sale, or sale under Bankruptcy Code or receivership proceedings, a successor

to any special declarant right who is not an affiliate of a declarant, other than a successor

described in subdivision (3) or (4) of this subsection, is subject to the obligations and

liabilities expressly imposed by this Chapter or the declaration:

a. On a declarant which relate to the successor's exercise or nonexercise of special

declarant rights; or

b. On his or her transferor, other than:

1. Misrepresentations by the transferor or any previous declarant;

2. Warranty obligations on improvements made by the transferor or any previous

declarant or made before the planned community was created;

3. Obligations and liabilities arising out of contractual agreements between the

transferor or any previous declarant and third parties other than the declaration;

4. Breach of any fiduciary obligation by the transferor or any previous declarant or his

or her appointees to the executive board; or

5. Any liability or obligation imposed on the transferor or any previous declarant as a

result of the transferor's acts or omissions after the transfer.

(3) A successor to only a right reserved in the declaration to maintain sales offices,

management offices, signs advertising the planned community, and models, if the

successor is not an affiliate of the declarant, may not exercise any other special declarant

right and is not subject to any liability or obligation as a declarant.

(4) A successor to all special declarant rights held by a transferor who is not an affiliate of the

declarant who succeeded to those rights pursuant to a deed or other instrument of

conveyance in lieu of foreclosure or a judgment or instrument conveying title under

subsection (c) of this section may declare in a recorded instrument the intention to hold

those rights solely for transfer to another person. Thereafter, until transferring all special

declarant rights to any person acquiring title to any lot or real estate subject to

development rights owned by the successor, or until recording an instrument permitting

exercise of all those rights, that successor may not exercise any of those rights other than

any right held by his or her transferor to control the executive board in accordance with

G.S. 47F-3-103(d) for the duration of any period of declarant control, and any attempted

exercise of those rights is void. So long as a successor declarant does not have the right

N.C. Gen. Stat. § 47F-3-104

to exercise special declarant rights under this subsection, the successor declarant is not

subject to any liability or obligation as a declarant other than liability for his or her acts

and omissions under G.S. 47F-3-103(d).

(f) Nothing in this section subjects any successor to a special declarant right to any claims against

or other obligations of a transferor declarant other than claims and obligations expressly arising

under this Chapter or the declaration.

(g) For purposes of this section, "assignment of declarant rights" shall include any assignment by

the declarant of special declarant rights to a person, including, without limitation, an

assignment pursuant to this section.

History

1998-199, s. 1; 2014-57, s. 3.



reserved

N.C. Gen. Stat. § 47F-3-105




§ 47F-3-105. Termination of contracts and leases of declarant

If entered into before the executive board elected by the lot owners pursuant to G.S. 47F-3-103(e)

takes office, any contract or lease affecting or related to the planned community that is not bona fide

or was unconscionable to the lot owners at the time entered into under the circumstances then

prevailing, may be terminated without penalty by the association at any time after the executive

board elected by the lot owners pursuant to G.S. 47F-3-103(e) takes office upon not less than 90

days' notice to the other party.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-106




§ 47F-3-106. Bylaws

(a) The bylaws of the association shall provide for:

(1) The number of members of the executive board and the titles of the officers of the

association;

(2) Election by the executive board of officers of the association;

(3) The qualifications, powers and duties, terms of office, and manner of electing and removing

executive board members and officers and filling vacancies;

(4) Which, if any, of its powers the executive board or officers may delegate to other persons

or to a managing agent;

(5) Which of its officers may prepare, execute, certify, and record amendments to the

declaration on behalf of the association; and

(6) The method of amending the bylaws.

(b) The bylaws may provide for any other matters the association deems necessary and

appropriate.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-107




§ 47F-3-107. Upkeep of planned community; responsibility and assessments for damages

(a) Except as otherwise provided in the declaration, G.S. 47F-3-113(h) or subsection (b) of this

section, the association is responsible for causing the common elements to be maintained,

repaired, and replaced when necessary and to assess the lot owners as necessary to recover

the costs of such maintenance, repair, or replacement except that the costs of maintenance,

repair, or replacement of a limited common element shall be assessed as provided in G.S. 47F-

3-115(c)(1). Except as otherwise provided in the declaration, each lot owner is responsible for

the maintenance and repair of his lot and any improvements thereon. Each lot owner shall

afford to the association and when necessary to another lot owner access through the lot

owner's lot or the limited common element allocated to the lot owner's lot reasonably

necessary for any such maintenance, repair, or replacement activity.

(b) If a lot owner is legally responsible for damage inflicted on any common element or limited

common element, the association may direct such lot owner to repair such damage, or the

association may itself cause the repairs to be made and recover damages from the responsible

lot owner.

(c) If damage is inflicted on any lot by an agent of the association in the scope of the agent's

activities as such agent, the association is liable to repair such damage or to reimburse the lot

owner for the cost of repairing such damages. The association shall also be liable for any losses

to the lot owner.

(d) When the claim under subsection (b) or (c) of this section is less than or equal to the

jurisdictional amount established for small claims by G.S. 7A-210, any aggrieved party may

request that a hearing be held before an adjudicatory panel appointed by the executive board

to determine if a lot owner is responsible for damages to any common element or the

association is responsible for damages to any lot. If the executive board fails to appoint an

adjudicatory panel to hear such matters, hearings under this section shall be held before the

executive board. Such panel shall accord to the party charged with causing damages notice of

the charge, opportunity to be heard and to present evidence, and notice of the decision. This

panel may assess liability for each damage incident against each lot owner charged or against

the association not in excess of the jurisdictional amount established for small claims by G.S.

7A-210. When the claim under subsection (b) or (c) of this section exceeds the jurisdictional

amount established for small claims by G.S. 7A-210, liability of any lot owner charged or the

association shall be determined as otherwise provided by law. Liabilities of lot owners

determined by adjudicatory hearing or as otherwise provided by law shall be assessments

secured by lien under G.S. 47F-3-116. Liabilities of the association determined by adjudicatory

hearing or as otherwise provided by law may be offset by the lot owner against sums owing to

the association and if so offset, shall reduce the amount of any lien of the association against

the lot at issue.

(e) The association shall not be liable for maintenance, repair, and all other expenses in

connection with any real estate which has not been incorporated into the planned community.

N.C. Gen. Stat. § 47F-3-107

History

1998-199, s. 1; 2013-34, s. 2.



reserved

N.C. Gen. Stat. § 47F-3-107.1




§ 47F-3-107.1. Procedures for fines and suspension of planned community privileges or

services

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 shall be held before the executive board or an

adjudicatory panel appointed by the executive board to determine if any lot owner should be fined or

if planned community privileges or services should be suspended pursuant to the powers granted to

the association in G.S. 47F-3-102(11) and (12). Any adjudicatory panel appointed by the executive

board shall be composed of members of the association who are not officers of the association or

members of the executive board. The lot owner charged shall be given notice of the charge,

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 one hundred dollars ($ 100.00) may be imposed for the

violation and without further hearing, for each day more than five days after the decision that the

violation occurs. Such fines shall be shall be assessments secured by liens under G.S. 47F-3-116. If it

is decided that a suspension of planned community privileges or services should be imposed, the

suspension may be continued without further hearing until the violation or delinquency is cured. 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. The

executive board may affirm, vacate, or modify the prior decision of the adjudicatory body.

History

1997-456, s. 27; 1998-199, s. 1; 2005-422, s. 4.



reserved

N.C. Gen. Stat. § 47F-3-108




§ 47F-3-108. Meetings

(a) A meeting of the association shall be held at least once each year. Special meetings of the

association may be called by the president, a majority of the executive board, or by lot owners

having ten percent (10%), or any lower percentage specified in the bylaws, of the votes in the

association. Not less than 10 nor more than 60 days in advance of any meeting, the secretary

or other officer specified in the bylaws shall cause notice to be hand-delivered or sent prepaid

by United States mail to the mailing address of each lot or to any other mailing address

designated in writing by the lot owner, or sent by electronic means, including by electronic mail

over the Internet, to an electronic mailing address designated in writing by the lot owner. The

notice of any meeting shall state the time and place of the meeting and the items on the

agenda, including the general nature of any proposed amendment to the declaration or bylaws,

any budget changes, and any proposal to remove a director or officer.

(b) Meetings of the executive board shall be held as provided in the bylaws. At regular intervals,

the executive board meeting shall provide lot owners an opportunity to attend a portion of an

executive board meeting and to speak to the executive board about their issues or concerns.

The executive board may place reasonable restrictions on the number of persons who speak on

each side of an issue and may place reasonable time restrictions on persons who speak.

(c) Except as otherwise provided in the bylaws, meetings of the association and the executive

board shall be conducted in accordance with the most recent edition of Robert's Rules of Order

Newly Revised.

History

1998-199, s. 1; 2004-109, s. 6; 2005-422, s. 5.



reserved

N.C. Gen. Stat. § 47F-3-109




§ 47F-3-109. Quorums

(a) Unless the bylaws provide otherwise, a quorum is present throughout any meeting of the

association if persons entitled to cast ten percent (10%) of the votes which may be cast for

election of the executive board are present in person or by proxy at the beginning of the

meeting.

(b) Unless the bylaws specify a larger percentage, a quorum is deemed present throughout any

meeting of the executive board if persons entitled to cast fifty percent (50%) of the votes on

that board are present at the beginning of the meeting.

(c) In the event business cannot be conducted at any meeting because a quorum is not present,

that meeting may be adjourned to a later date by the affirmative vote of a majority of those

present in person or by proxy. Notwithstanding any provision to the contrary in the declaration

or the bylaws, the quorum requirement at the next meeting shall be one-half of the quorum

requirement applicable to the meeting adjourned for lack of a quorum. This provision shall

continue to reduce the quorum by fifty percent (50%) from that required at the previous

meeting, as previously reduced, until such time as a quorum is present and business can be

conducted.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-110




§ 47F-3-110. Voting; proxies

(a) If only one of the multiple owners of a lot is present at a meeting of the association, the owner

who is present is entitled to cast all the votes allocated to that lot. If more than one of the

multiple owners are present, the votes allocated to that lot may be cast only in accordance with

the agreement of a majority in interest of the multiple owners, unless the declaration or bylaws

expressly provide otherwise. Majority agreement is conclusively presumed if any one of the

multiple owners casts the votes allocated to that lot without protest being made promptly to

the person presiding over the meeting by any of the other owners of the lot.

(b) Votes allocated to a lot may be cast pursuant to a proxy duly executed by a lot owner. If a lot

is owned by more than one person, each owner of the lot may vote or register protest to the

casting of votes by the other owners of the lot through a duly executed proxy. A lot owner may

not revoke a proxy given pursuant to this section except by actual notice of revocation to the

person presiding over a meeting of the association. A proxy is void if it is not dated. A proxy

terminates 11 months after its date, unless it specifies a shorter term.

(c) If the declaration requires that votes on specified matters affecting the planned community be

cast by lessees rather than lot owners of leased lots, (i) the provisions of subsections (a) and

(b) of this section apply to lessees as if they were lot owners; (ii) lot owners who have leased

their lots to other persons may not cast votes on those specified matters; and (iii) lessees are

entitled to notice of meetings, access to records, and other rights respecting those matters as if

they were lot owners. Lot owners shall also be given notice, in the manner provided in G.S.

47F-3-108, of all meetings at which lessees may be entitled to vote.

(d) No votes allocated to a lot owned by the association may be cast.

(e) The declaration may provide that on specified issues only a defined subgroup of lot owners

may vote provided:

(1) The issue being voted is of special interest solely to the members of the subgroup; and

(2) All except de minimis cost that will be incurred based on the vote taken will be assessed

solely against those lot owners entitled to vote.

(f) For purposes of subdivision (e)(1) above, an issue to be voted on is not a special interest solely

to a subgroup if it substantially affects the overall appearance of the planned community or

substantially affects living conditions of lot owners not included in the voting subgroup.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-111




§ 47F-3-111. Tort and contract liability

(a) Neither the association nor any lot owner except the declarant is liable for that declarant's

torts in connection with any part of the planned community which that declarant has the

responsibility to maintain.

(b) An action alleging a wrong done by the association shall be brought against the association

and not against a lot owner.

(c) Any statute of limitation affecting the association's right of action under this section is tolled

until the period of declarant control terminates. A lot owner is not precluded from bringing an

action contemplated by this section because the person is a lot owner or a member of the

association.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-112




§ 47F-3-112. Conveyance or encumbrance of common elements

(a) Portions of the common elements may be conveyed or subjected to a security interest by the

association if persons entitled to cast at least eighty percent (80%) of the votes in the

association, or any larger percentage the declaration specifies, agree in writing to that action;

provided that all the owners of lots to which any limited common element is allocated shall

agree in order to convey that limited common element or subject it to a security interest. The

declaration may specify a smaller percentage only if all the lots are restricted exclusively to

nonresidential uses. Distribution of proceeds of the sale of a limited common element shall be

as provided by agreement between the lot owners to which it is allocated and the association.

Proceeds of the sale or financing of a common element (other than a limited common element)

shall be an asset of the association.

(b) The association, on behalf of the lot owners, may contract to convey common elements or

subject them to a security interest, but the contract is not enforceable against the association

until approved pursuant to subsection (a) of this section. Thereafter, the association has all

powers necessary and appropriate to effect the conveyance or encumbrance, free and clear of

any interest of any lot owner or the association in or to the common element conveyed or

encumbered, including the power to execute deeds or other instruments.

(c) Any purported conveyance, encumbrance, or other voluntary transfer of common elements,

unless made pursuant to this section is void.

(d) No conveyance or encumbrance of common elements pursuant to this section may deprive

any lot of its rights of access and support.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-113




§ 47F-3-113. Insurance

(a) Commencing not later than the time of the first conveyance of a lot to a person other than a

declarant, the association shall maintain, to the extent reasonably available:

(1) Property insurance on the common elements insuring against all risks of direct physical

loss commonly insured against including fire and extended coverage perils. The total

amount of insurance after application of any deductibles shall be not less than eighty

percent (80%) of the replacement cost of the insured property at the time the insurance is

purchased and at each renewal date, exclusive of land, excavations, foundations, and other

items normally excluded from property policies; and

(2) Liability insurance in reasonable amounts, covering all occurrences commonly insured

against for death, bodily injury, and property damage arising out of or in connection with

the use, ownership, or maintenance of the common elements.

(b) If the insurance described in subsection (a) of this section is not reasonably available, the

association promptly shall cause notice of that fact to be hand-delivered or sent prepaid by

United States mail to all lot owners. The declaration may require the association to carry any

other insurance, and the association in any event may carry any other insurance it deems

appropriate to protect the association or the lot owners.

(c) Insurance policies carried pursuant to subsection (a) of this section shall provide that:

(1) Each lot owner is an insured person under the policy to the extent of the lot owner's

insurable interest;

(2) The insurer waives its right to subrogation under the policy against any lot owner or

member of the lot owner's household;

(3) No act or omission by any lot owner, unless acting within the scope of the owner's

authority on behalf of the association, will preclude recovery under the policy; and

(4) If, at the time of a loss under the policy, there is other insurance in the name of a lot

owner covering the same risk covered by the policy, the association's policy provides

primary insurance.

(d) Any loss covered by the property policy under subdivision (a)(1) of this section shall be

adjusted with the association, but the insurance proceeds for that loss are payable to any

insurance trustee designated for that purpose, or otherwise to the association, and not to any

mortgagee or beneficiary under a deed of trust. The insurance trustee or the association shall

hold any insurance proceeds in trust for lot owners and lienholders as their interests may

appear. Subject to the provisions of subsection (h) of this section, the proceeds shall be

disbursed first for the repair or restoration of the damaged property, and lot owners and

lienholders are not entitled to receive payment of any portion of the proceeds unless there is a

surplus of proceeds after the property has been completely repaired or restored, or the planned

community is terminated.

(e) An insurance policy issued to the association does not prevent a lot owner from obtaining

insurance for the lot owner's own benefit.

N.C. Gen. Stat. § 47F-3-113

(f) An insurer that has issued an insurance policy under this section shall issue certificates or

memoranda of insurance to the association and, upon written request, to any lot owner,

mortgagee, or beneficiary under a deed of trust. The insurer issuing the policy may not cancel

or refuse to renew it until 30 days after notice of the proposed cancellation or nonrenewal has

been mailed to the association, each lot owner, and each mortgagee or beneficiary under a

deed of trust to whom certificates or memoranda of insurance have been issued at their

respective last known addresses.

(g) Any portion of the planned community for which insurance is required under subdivision (a)(1)

of this section which is damaged or destroyed shall be repaired or replaced promptly by the

association unless (i) the planned community is terminated, (ii) repair or replacement would be

illegal under any State or local health or safety statute or ordinance, or (iii) the lot owners

decide not to rebuild by an eighty percent (80%) vote, including one hundred percent (100%)

approval of owners assigned to the limited common elements not to be rebuilt. The cost of

repair or replacement in excess of insurance proceeds and reserves is a common expense. If

any portion of the planned community is not repaired or replaced, (i) the insurance proceeds

attributable to the damaged common elements shall be used to restore the damaged area to a

condition compatible with the remainder of the planned community, (ii) the insurance proceeds

attributable to limited common elements which are not rebuilt shall be distributed to the

owners of the lots to which those limited common elements were allocated, or to lienholders, as

their interests may appear, and (iii) the remainder of the proceeds shall be distributed to all the

lot owners or lienholders, as their interests may appear, in proportion to the common expense

liabilities of all the lots. Notwithstanding the provisions of this subsection, G.S. 47F-2-118

(termination of the planned community) governs the distribution of insurance proceeds if the

planned community is terminated.

(h) The provisions of this section may be varied or waived in the case of a planned community all

of whose lots are restricted to nonresidential use.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-114




§ 47F-3-114. Surplus funds

Unless otherwise provided in the declaration, any surplus funds of the association remaining after

payment of or provision for common expenses, the funding of a reasonable operating expense

surplus, and any prepayment of reserves shall be paid to the lot owners in proportion to their

common expense liabilities or credited to them to reduce their future common expense assessments.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-115




§ 47F-3-115. Assessments for common expenses

(a) Except as otherwise provided in the declaration, until the association makes a common

expense assessment, the declarant shall pay all common expenses. After any assessment has

been made by the association, assessments thereafter shall be made at least annually.

(b) Except for assessments under subsections (c), (d), and (e) of this section, all common

expenses shall be assessed against all the lots in accordance with the allocations set forth in

the declaration. Any past-due common expense assessment or installment thereof bears

interest at the rate established by the association not exceeding eighteen percent (18%) per

year. For planned communities created prior to January 1, 1999, interest may be charged on

any past-due common expense assessment or installment only if the declaration provides for

interest charges, and where the declaration does not otherwise specify the interest rate, the

rate may not exceed eighteen percent (18%) per year.

(c) To the extent required by the declaration:

(1) Any common expense associated with the maintenance, repair, or replacement of a limited

common element shall be assessed against the lots to which that limited common element

is assigned, equally, or in any other proportion that the declaration provides;

(2) Any common expense or portion thereof benefiting fewer than all of the lots shall be

assessed exclusively against the lots benefitted; and

(3) The costs of insurance shall be assessed in proportion to risk and the costs of utilities shall

be assessed in proportion to usage.

(d) Assessments to pay a judgment against the association may be made only against the lots in

the planned community at the time the judgment was entered, in proportion to their common

expense liabilities.

(e) If any common expense is caused by the negligence or misconduct of any lot owner or

occupant, the association may assess that expense exclusively against that lot owner or

occupant's lot.

(f) If common expense liabilities are reallocated, common expense assessments and any

installment thereof not yet due shall be recalculated in accordance with the reallocated

common expense liabilities.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-116




§ 47F-3-116. Lien for sums due the association; enforcement

(a) Any assessment attributable to a lot which remains unpaid for a period of 30 days or longer

shall constitute a lien on that lot when a claim of lien is filed of record in the office of the clerk

of superior court of the county in which the lot is located in the manner provided in this section.

Once filed, a claim of lien secures all sums due the association through the date filed and any

sums due to the association thereafter. Unless the declaration provides otherwise, fees,

charges, late charges, and other charges imposed pursuant to G.S. 47F-3-102, 47F-3-107,

47F-3-107.1, and 47F-3-115 are subject to the claim of lien under this section as well as any

other sums due and payable to the association under the declaration, the provisions of this

Chapter, or as the result of an arbitration, mediation, or judicial decision.

(b) The association must make reasonable and diligent efforts to ensure that its records contain

the lot owner's current mailing address. No fewer than 15 days prior to filing the lien, the

association shall mail a statement of the assessment amount due by first-class mail to the

physical address of the lot and the lot owner's address of record with the association and, if

different, to the address for the lot owner shown on the county tax records for the lot. If the lot

owner is a corporation or limited liability company, the statement shall also be sent by first-

class mail to the mailing address of the registered agent for the corporation or limited liability

company. Notwithstanding anything to the contrary in this Chapter, the association is not

required to mail a statement to an address known to be a vacant lot on which no dwelling has

been constructed or to a lot for which there is no United States postal address.

(c) A claim of lien shall set forth the name and address of the association, the name of the record

owner of the lot at the time the claim of lien is filed, a description of the lot, and the amount of

the lien claimed. A claim of lien may also appoint a trustee to conduct a foreclosure, as

provided in subsection (f) of this section. The first page of the claim of lien shall contain the

following statement in print that is in boldface, capital letters, and no smaller than the largest

print used elsewhere in the document:

"THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY, AND IF THE LIEN IS NOT

PAID, THE HOMEOWNERS ASSOCIATION MAY PROCEED WITH FORECLOSURE AGAINST YOUR

PROPERTY IN LIKE MANNER AS A MORTGAGE UNDER NORTH CAROLINA LAW."

The person signing the claim of lien on behalf of the association shall attach to and file with the

claim of lien a certificate of service attesting to the attempt of service on the record owner, which

service shall be attempted in accordance with G.S. 1A-1, Rule 4(j), for service of a copy of a

summons and a complaint. If the actual service is not achieved, the person signing the claim of lien

on behalf of the association shall be deemed to have met the requirements of this subsection if

service has been attempted pursuant to both of the following: (i) G.S. 1A-1, Rule 4(j)(1)c, d, or e

and (ii) by mailing a copy of the lien by regular, first-class mail, postage prepaid to the physical

address of the lot and the lot owner's address of record with the association, and, if different, to

the address for the lot owner shown on the county tax records and the county real property records

for the lot. In the event that the owner of record is not a natural person, and actual service is not

achieved, the person signing the claim of lien on behalf of the association shall be deemed to have

met the requirements of this subsection if service has been attempted once pursuant to

N.C. Gen. Stat. § 47F-3-116

the applicable provisions of G.S. 1A-1, Rule 4(j)(3) through G.S. 1A-1, Rule 4(j)(9).

Notwithstanding anything to the contrary in this Chapter, the association is not required to mail a

claim of lien to an address which is known to be a vacant lot on which no dwelling has been

constructed or to a lot for which there is no United States postal address. A lien for unpaid

assessments is extinguished unless proceedings to enforce the lien are instituted within three years

after the filing of the claim of lien in the office of the clerk of superior court.

(d) A claim of lien filed under this section is prior to all liens and encumbrances on a lot except (i)

liens and encumbrances, specifically including, but not limited to, a mortgage or deed of trust

on the lot, recorded before the filing of the claim of lien in the office of the clerk of superior

court and (ii) liens for real estate taxes and other governmental assessments and charges

against the lot. This subsection does not affect the priority of mechanics' or materialmen's

liens.

(e) The association shall be entitled to recover the reasonable attorneys' fees and costs it incurs in

connection with the collection of any sums due. A lot owner may not be required to pay

attorneys' fees and court costs until the lot owner is notified in writing of the association's

intent to seek payment of attorneys' fees, costs, and expenses. The notice must be sent by

first-class mail to the physical address of the lot and the lot owner's address of record with the

association and, if different, to the address for the lot owner shown on the county tax records

for the lot. The association must make reasonable and diligent efforts to ensure that its records

contain the lot owner's current mailing address. Notwithstanding anything to the contrary in

this Chapter, there shall be no requirement that notice under this subsection be mailed to an

address which is known to be a vacant lot on which no dwelling has been constructed or a lot

for which there is no United States postal address. The notice shall set out the outstanding

balance due as of the date of the notice and state that the lot owner has 15 days from the

mailing of the notice by first-class mail to pay the outstanding balance without the attorneys'

fees and court costs. If the lot owner pays the outstanding balance within this period, then the

lot owner shall have no obligation to pay attorneys' fees, costs, or expenses. The notice shall

also inform the lot owner of the opportunity to contact a representative of the association to

discuss a payment schedule for the outstanding balance, as provided in subsection (i) of this

section, and shall provide the name and telephone number of the representative.

(f) Except as provided in subsection (h) of this section, the association, acting through the

executive board, may foreclose a claim of lien in like manner 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,

if the assessment remains unpaid for 90 days or more. The association shall not foreclose the

claim of lien unless the executive board votes to commence the proceeding against the specific

lot.

The following provisions and procedures shall be applicable to and complied with in every

nonjudicial power of sale foreclosure of a claim of lien, and these provisions and procedures shall

control to the extent they are inconsistent or in conflict with the provisions of Article 2A of Chapter

45 of the General Statutes:

(1) The association shall be deemed to have a power of sale for purposes of enforcement of its

claim of lien.

(2) The terms "mortgagee" and "holder" as used in Article 2A of Chapter 45 of the General

Statutes shall mean the association, except as provided otherwise in this Chapter.

(3) The term "security instrument" as used in Article 2A of Chapter 45 of the General Statutes

shall mean the claim of lien.

(4) The term "trustee" as used in Article 2A of Chapter 45 of the General Statutes shall mean

the person or entity appointed by the association under subdivision (6) of this subsection.

N.C. Gen. Stat. § 47F-3-116

(5) After the association has filed a claim of lien and prior to the commencement of a

nonjudicial foreclosure, the association shall give to the lot owner notice of the association's

intention to commence a nonjudicial foreclosure to enforce its claim of lien. The notice shall

contain the information required in G.S. 45-21.16(c)(5a).

(6) The association shall appoint a trustee to conduct the nonjudicial foreclosure proceeding

and sale. The appointment of the trustee shall be included in the claim of lien or in a

separate instrument filed with the clerk of court in the county in which the planned

community is located as an exhibit to the notice of hearing. The association, at its option,

may from time to time remove a trustee previously appointed and appoint a successor

trustee by filing a Substitution of Trustee with the clerk of court in the foreclosure

proceeding. Counsel for the association may be appointed by the association to serve as

the trustee and may serve in that capacity as long as the lot owner does not contest the

obligation to pay or the amount of any sums due the association, or the validity,

enforcement, or foreclosure of the claim of lien, as provided in subdivision (12) of this

subsection. Any trustee appointed pursuant to this subsection shall have the same fiduciary

duties and obligations as a trustee in the foreclosure of a deed of trust.

(7) If a valid debt, default, and notice to those entitled to receive notice under G.S. 45-

21.16(b) are found to exist, then the clerk of court shall authorize the sale of the property

described in the claim of lien by the trustee.

(8) If, prior to the expiration of the upset bid period provided in G.S. 45-21.27, the lot owner

satisfies the debt secured by the claim of lien and pays all expenses and costs incurred in

filing and enforcing the association assessment lien, including, but not limited to,

advertising costs, attorneys' fees, and the trustee's commission, then the trustee shall

dismiss the foreclosure action and the association shall cancel the claim of lien of record in

accordance with the provisions of G.S. 45-36.3. The lot owner shall have all rights granted

under Article 4 of Chapter 45 of the General Statutes to ensure the association's

satisfaction of the claim of lien.

(9) Any person, other than the trustee, may bid at the foreclosure sale. Unless prohibited in

the declaration or bylaws, the association may bid on the lot at a foreclosure sale directly

or through an agent. If the association or its agent is the high bidder at the sale, the

trustee shall allow the association to pay the costs and expenses of the sale and apply a

credit against the sums due by the lot owner to the association in lieu of paying the bid

price in full.

(10) Upon the expiration of the upset bid period provided in G.S. 45-21.27, the trustee shall

have full power and authority to execute a deed for the lot to the high bidder.

(11) The trustee shall be entitled to a commission for services rendered which shall include

fees, costs, and expenses reasonably incurred by the trustee in connection with the

foreclosure, whether or not a sale is held. Except as provided in subdivision (12) of this

subsection, the trustee's commission shall be paid without regard to any limitations on

compensation otherwise provided by law, including, without limitation, the provisions of

G.S. 45-21.15.

(12) If the lot owner does not contest the obligation to pay the amount of any sums due the

association or the validity, enforcement, or foreclosure of the claim of lien at any time after

the expiration of the 15-day period following notice as required in subsection (b) of this

section, then attorneys' fees and the trustee's commission collectively charged to the lot

owner shall not exceed one thousand two hundred dollars ($ 1,200), not including costs or

expenses incurred. The obligation to pay and the amount of any sums due the association

and the validity, enforcement, or foreclosure of the claim of lien remain

N.C. Gen. Stat. § 47F-3-116

uncontested as long as the lot owner does not dispute, contest, or raise any objection,

defense, offset, or counterclaim as to the amount or validity of any portion of the sums

claimed due by the association or the validity, enforcement, or foreclosure of the claim of

lien. Any judgment, decree, or order in any action brought under this section shall include

costs and reasonable attorneys' fees for the prevailing party.

(13) Lot owners shall be deemed to have the rights and remedies available to mortgagors

under G.S. 45-21.34.

(g) The provisions of subsection (f) of this section do not prohibit or prevent an association from

pursuing judicial foreclosure of a claim of lien, from taking other actions to recover the sums

due the association, or from accepting a deed in lieu of foreclosure. Any judgment, decree, or

order in any judicial foreclosure or civil action relating to the collection of assessments shall

include an award of costs and reasonable attorneys' fees for the prevailing party, which shall

not be subject to the limitation provided in subdivision (f)(12) of this section.

(h) A claim of lien securing a debt consisting solely of fines imposed by the association, interest on

unpaid fines, or attorneys' fees incurred by the association solely associated with fines imposed

by the association may only be enforced by judicial foreclosure, as provided in Article 29A of

Chapter 1 of the General Statutes. In addition, an association shall not levy, charge, or attempt

to collect a service, collection, consulting, or administration fee from any lot owner unless the

fee is expressly allowed in the declaration, and any claim of lien securing a debt consisting

solely of these fees may only be enforced by judicial foreclosure, as provided in Article 29A of

Chapter 1 of the General Statutes.

(i) The association, acting through its executive board and in the board's sole discretion, may

agree to allow payment of an outstanding balance in installments. Neither the association nor

the lot owner is obligated to offer or accept any proposed installment schedule. Reasonable

administrative fees and costs for accepting and processing installments may be added to the

outstanding balance and included in an installment payment schedule. Reasonable attorneys'

fees may be added to the outstanding balance and included in an installment schedule after the

lot owner has been given notice, as required in subsection (e) of this section. Attorneys' fees

incurred in connection with any request that the association agrees to accept payment of all or

any part of sums due in installments shall not be included or considered in the calculation of

fees chargeable under subdivision (f)(12) of this section.

(j) Where the holder of a first mortgage or first deed of trust of record or other purchaser of a lot

obtains title to the lot as a result of foreclosure of a first mortgage or first deed of trust, the

purchaser and its heirs, successors, and assigns shall not be liable for the assessments against

the lot which became due prior to the acquisition of title to the lot by the purchaser. The unpaid

assessments shall be deemed to be common expenses collectible from all the lot owners,

including the purchaser, its heirs, successors, and assigns. For purposes of this subsection, the

term "acquisition of title" means and refers to the recording of a deed conveying title or the

time at which the rights of the parties are fixed following the foreclosure of a mortgage or deed

of trust, whichever occurs first.

History

1998-199, s. 1; 2005-422, s. 6; 2009-515, s. 1; 2011-362, s. 1; 2013-202, s. 3.



reserved

N.C. Gen. Stat. § 47F-3-116.1




§ 47F-3-116.1. Validation of certain nonjudicial foreclosure proceedings and sales

All nonjudicial foreclosure proceedings commenced by an association before October 1, 2013, and all

sales and transfers of real property as part of those proceedings pursuant to the provisions of this

Chapter or provisions contained in the declaration of the planned community, are declared to be valid,

unless an action to set aside the foreclosure is commenced on or before October 1, 2013, or within

one year after the date of the sale, whichever occurs last.

History

2013-202, s. 4.



reserved

N.C. Gen. Stat. § 47F-3-117




N.C. Gen. Stat. § 47F-3-117




reserved

N.C. Gen. Stat. § 47F-3-118




§ 47F-3-118. Association records

(a) The association shall keep financial records sufficiently detailed to enable the association to

comply with this Chapter. All financial and other records, including records of meetings of the

association and executive board, shall be made reasonably available for examination by any lot

owner and the lot owner's authorized agents as required in the bylaws and Chapter 55A of the

General Statutes. If the bylaws do not specify particular records to be maintained, the

association shall keep accurate records of all cash receipts and expenditures and all assets and

liabilities. In addition to any specific information that is required by the bylaws to be assembled

and reported to the lot owners at specified times, the association shall make an annual income

and expense statement and balance sheet available to all lot owners at no charge and within 75

days after the close of the fiscal year to which the information relates. Notwithstanding the

bylaws, a more extensive compilation, review, or audit of the association's books and records

for the current or immediately preceding fiscal year may be required by a vote of the majority

of the executive board or by the affirmative vote of a majority of the lot owners present and

voting in person or by proxy at any annual meeting or any special meeting duly called for that

purpose.

(b) The association, upon written request, shall furnish to a lot owner or the lot owner's

authorized agents a statement setting forth the amount of unpaid assessments and other

charges against a lot. The statement shall be furnished within 10 business days after receipt of

the request and is binding on the association, the executive board, and every lot owner.

(c) In addition to the limitations of Article 8 of Chapter 55A of the General Statutes, no financial

payments, including payments made in the form of goods and services, may be made to any

officer or member of the association's executive board or to a business, business associate, or

relative of an officer or member of the executive board, except as expressly provided for in the

bylaws or in payments for services or expenses paid on behalf of the association which are

approved in advance by the executive board.

History

1998-199, s. 1; 2005-422, s. 7.



reserved

N.C. Gen. Stat. § 47F-3-119




§ 47F-3-119. Association as trustee

With respect to a third person dealing with the association in the association's capacity as a trustee

under G.S. 47F-2-118 following termination or G.S. 47F-3-113 for insurance proceeds, the existence

of trust powers and their proper exercise by the association may be assumed without inquiry. A third

person is not bound to inquire whether the association has power to act as trustee or is properly

exercising trust powers, and a third person, without actual knowledge that the association is

exceeding or improperly exercising its powers, is fully protected in dealing with the association as if it

possessed and properly exercised the powers it purports to exercise. A third person is not bound to

assure the proper application of trust assets paid or delivered to the association in its capacity as

trustee.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-120




§ 47F-3-120. Declaration limits on attorneys' fees

Except as provided in G.S. 47F-3-116, in an action to enforce provisions of the articles of

incorporation, the declaration, bylaws, or duly adopted rules or regulations, the court may award

reasonable attorneys' fees to the prevailing party if recovery of attorneys' fees is allowed in the

declaration.

History

1998-199, s. 1.



reserved

N.C. Gen. Stat. § 47F-3-121




§ 47F-3-121. American and State flags and political sign displays

Notwithstanding any provision in any declaration of covenants, no restriction on the use of land

shall be construed to:

(1) Regulate or prohibit the display of the flag of the United States or North Carolina, of a size

no greater than four feet by six feet, which is displayed in accordance with or in a manner

consistent with the patriotic customs set forth in 4 U.S.C. §§ 5-10, as amended, governing

the display and use of the flag of the United States unless:


following terms:

1. Flag of the United States of America;

2. American flag;

3. United States flag; or

4. North Carolina flag.




conveyance. The restriction shall be construed to regulate or prohibit the display of the

United States or North Carolina flag only if the restriction specifically states: "THIS

DOCUMENT REGULATES OR PROHIBITS THE DISPLAY OF THE FLAG OF THE UNITED

STATES OF AMERICA OR STATE OF NORTH CAROLINA".

This subdivision shall apply to owners of property who display the flag of the United States

or North Carolina on property owned exclusively by them and does not apply to common

areas, easements, rights-of-way, or other areas owned by others.

(2) Regulate or prohibit the indoor or outdoor display of a political sign by an association

member on property owned exclusively by the member, unless:


term "political signs".




conveyance. The restriction shall be construed to regulate or prohibit the display of

political signs only if the restriction specifically states: "THIS DOCUMENT REGULATES

OR PROHIBITS THE DISPLAY OF POLITICAL SIGNS".

Even when display of a political sign is permitted under this subdivision, an association (i) may

prohibit the display of political signs earlier than 45 days before the day of the election and later

than seven days after an election day, and (ii) may regulate the size and number of political signs

that may be placed on a member's property if the association's regulation is no more restrictive

N.C. Gen. Stat. § 47F-3-121

than any applicable city, town, or county ordinance that regulates the size and number of political

signs on residential property. If the local government in which the property is located does not

regulate the size and number of political signs on residential property, the association shall permit

at least one political sign with the maximum dimensions of 24 inches by 24 inches on a member's

property. For the purposes of this subdivision, "political sign" means a sign that attempts to

influence the outcome of an election, including supporting or opposing an issue on the election

ballot. This subdivision shall apply to owners of property who display political signs on property

owned exclusively by them and does not apply to common areas, easements, rights-of-way, or

other areas owned by others.

History

2005-422, s. 8; 2006-226, s. 15(b).



reserved

N.C. Gen. Stat. § 47F-3-122




§ 47F-3-122. Irrigation of landscaping

Notwithstanding any provision in any declaration of covenants, no requirement to irrigate

landscaping shall be construed to:

(1) Require the irrigation of landscaping, during any period in which the U.S. Drought Monitor,

as defined in G.S. 143-350, or the Secretary of Environment and Natural Resources has

designated an area in which the association is located as an area of severe, extreme, or

exceptional drought and the Governor, a State agency, or unit of local government has

imposed water conservation measures applicable to the area unless:

a. For declarations of covenants registered prior to October 1, 2008, the covenant

specifically requires the irrigation of landscaping notwithstanding water conservation

measures imposed by the Governor, a State agency, or unit of local government. The

association may not fine or otherwise penalize an owner of land for violation of an

irrigation requirement during a period of a drought as designated under this

subdivision, unless the covenant specifically authorizes fines or other penalties.

b. For covenants registered on or after October 1, 2008, the covenant must specifically

state that any requirement to irrigate landscaping is suspended to the extent the

requirement would otherwise be prohibited during any period in which the Governor, a

State agency, or unit of local government has imposed water conservation measures.

The association may not fine or otherwise penalize an owner of land for violation of an

irrigation requirement during a drought designated under this subdivision, unless the

covenant authorizes the fines or other penalties. This authorization must be written on

the first page of the covenant in print that is in boldface type, capital letters, and no

smaller than the largest print used elsewhere in the declarations of covenants.

(2) For purposes of this section, the term "landscaping" includes lawns, trees, shrubbery, and

other ornamental or decorative plants.

History

2008-143, s. 19(b).



reserved.

N.C. Gen. Stat. § 47A-1...N.C. Gen. Stat. § 47A-3 (6) "Declaration" means the instrument, duly...

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