Legislators ‘distraught’ with their own HOAs, seek reforms to protect homeowners

The North Carolina House Commerce Committee and Senate Judiciary Committee advanced companion bills on Tuesday that target homeowners’ associations (HOA). The bills aim to provide additional protections for homeowners by enhancing transparency, limiting fines, and curbing abusive foreclosure practices.

Fueled by legislators’ own frustrations with HOAs, the bills aim to curb abusive practices among the state’s 14,000 HOAs.

“I’ve been told by the opposition that of the 14,000 homeowners associations in North Carolina, 95% people are happy with [them],” said bill sponsor state Rep. Frank Iler, R-Brunswick. “Well, 5% of 14,000 is 700, so I hope we can take action for the bad actors, you know, brought back to be good actors.”

Legislators approved HB 444 in the House Commerce Committee and SB 378 in the Senate Judiciary Committee. The companion bills mirror legislation from previous years. The legislation would cap daily fines at $100 with a $2,500 maximum, ban retroactive rule changes, and require mediation before most lawsuits.

State Sen. Benton Sawrey, R-Johnston, called it a property-rights protection bill and “the most sweeping legislation that we seen in some time with respect to HOAs in this chamber.”

It mandates budget transparency, restricts foreclosures until unpaid dues reach six months or $2,500, and directs the North Carolina Department of Justice (NCDOJ) to track homeowner complaints against HOAs. The bill also bans management companies from profiting from fine collections, ensuring there is no profit motive in enforcement.

“This bill makes targeted reforms to how homeowner associations operate in North Carolina,” said state Rep. Ya Liu, D-Wake. “These changes promote fairness, transparency, and accountability for both homeowners and associations.”

State Rep. John Blust, R-Guildford, expressed frustration with his own HOA, adding that he’s looked into options to altogether abolish HOAs.

“I’ve been so distraught with my homeowner association,” said Blust. “I’ve actually looked at, can we do something to where you can get rid of them? And the problem I’m told is constitutionally, these are restrictions in deeds. These are things in the deeds. And unless you’ve got 100% of the homeowners to agree, you really can’t do anything to get rid of them.”

Additionally, the bill directs the NCDOJ to track homeowner complaints against HOAs, clarifying, “We are just asking them to compile a report and report back to the legislature.”

The bill’s sponsors noted the potential need for future appropriations to actually get HOAs to take action. Both bills are now scheduled to go to their respective rules committees.

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