HB 814 (Edition 1)

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

H 1

HOUSE BILL 814

Short Title: Planned Community Act Changes.		(Public)
Sponsors:	Representatives Jordan and Blust (Primary Sponsors). For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to:	Judiciary III

April 13, 2017

A BILL TO BE ENTITLED

AN ACT to amend the planned community act and the condominium act for the purpose of creating consistency and enhancing consumer protections.

The General Assembly of North Carolina enacts:

PART I. AMENDMENTS TO PLANNED COMMUNITY ACT

SECTION 1.1. Article 2 of Chapter 47F of the General Statutes is amended by adding the following new sections to read:

"§ 47F‑2‑105. Contents of the declaration.

The declaration for a planned community shall contain all of the following:

(1) The name of the common interest community and association and a statement that the common interest community is a planned community.

(2) The name of every county in which any portion of the common interest community is situated.

(3) A legal description of the real estate included in the common interest community.

(4) A statement of the maximum number of lots that the declarant reserves the right to create.

(5) A description of the boundaries of each lot created by the declaration, including the lot's identifying number.

(6) A description of any limited common elements along with a list of real property that is or must become a common element.

(7) A description of any development rights and other special declarant rights reserved by the declarant, together with a legal description of the real property to which each of those rights applies and a time limit within which each of those rights must be exercised.

(8) 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 all of the following:

a. A statement fixing the boundaries of the affected parcels and the order in which the affected parcels will be subjected to the exercise of each development right or an affirmative statement that no assurances are made by the declarant with respect to the exercise of development rights.

b. If a development right is exercised in any portion of the real estate subject to that development right, a statement as to whether the development right will be reserved and applied to the remaining portions of the subject real estate.

(9) All conditions or limitations under which the rights described in subdivision (7) of this subsection may be exercised or will lapse.

(10) The allocation to each lot of the allocated common interest expense and votes as provided for under G.S. 47F-2-106.

(11) The recording information for all easements and licenses (i) appurtenant to or included in the common interest community or (ii) to which any portion of the common interest community may become subject by virtue of a reservation in the declaration.

(12) Any authorization that entitles the association to establish and enforce construction and design criteria and aesthetic standards.

(13) A provision allowing for members to adopt (i) rules for the establishment and enforcement of construction and design criteria and aesthetic standards and (ii) procedures for enforcement of those criteria and standards, including approval of applications establishment of a reasonable time for review of applications, and the consequences of the association's failure to timely respond.

(14) Any other matters the declarant deems appropriate and that are consistent with the provisions of this Chapter.

"§ 47F‑2‑106. Allocation of common expense liabilities and votes.

(a) The declaration shall allocate the common expense liabilities of the association and a portion of the total association votes to each lot and shall state the formulas used to establish those allocations.

(b) A declarant shall not use class voting for the purpose of evading any limitation imposed on declarants by this Chapter. Lots owned by a declarant shall not constitute a class by virtue of their ownership by the declarant.

(c) With the exception of minor variations from rounding, the sum of the common expense liabilities allocated to all lots subject to the declaration shall equal one, if stated fractionally, or, if stated as a percentage, one hundred percent (100%)."

SECTION 1.2. G.S. 47F‑2‑117 reads as rewritten:

"§ 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), and notwithstanding the content of the declaration or any intention of the declarant, 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~~ specifies, but not exceeding eighty percent (80%), 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. To the extent the procedures and requirements for amending the declaration conflict with the provisions of this section, this section shall control.

…."

SECTION 1.3. G.S. 47F‑3‑101 reads as rewritten:

"§ 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.~~corporation or as an unincorporated nonprofit association."

SECTION 1.4. G.S. 47F‑3‑102 reads as rewritten:

"§ 47F‑3‑102. Powers of owners' association.

Unless the articles of incorporation or the declaration expressly provides to the contrary, the association ~~may:~~may do all of the following:

(1) Adopt and amend bylaws and rules and ~~regulations;~~regulations.

(2) Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from lot ~~owners;~~owners.

(3) Hire and discharge managing agents and other employees, agents, and independent ~~contractors;~~contractors.

(4) Institute, defend, or intervene in litigation or administrative proceedings on matters affecting the planned ~~community;~~community.

(5) Make contracts and incur ~~liabilities;~~liabilities.

(6) Regulate the use, maintenance, repair, replacement, and modification of common ~~elements;~~elements.

(7) Cause additional improvements to be made as a part of the common ~~elements;~~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;~~G.S. 47F‑3‑112.

(9) Grant easements, leases, licenses, and concessions through or over the common ~~elements;~~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;~~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;~~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;~~association.

(13) Impose reasonable charges in connection with the preparation and recordation of documents, including, without limitation, amendments to the ~~declaration~~ declaration, certificates required by G.S. 47F‑4‑103, or statements of unpaid ~~assessments;~~assessments.

(14) Provide for the indemnification of and maintain liability insurance for its officers, executive board, directors, employees, and ~~agents;~~agents.

(15) Assign its right to future income, including the right to receive common expense ~~assessments;~~assessments.

(16) Exercise all other powers that may be exercised in this State by legal entities of the same type as the ~~association; and~~association.

(17) Exercise any other powers necessary and proper for the governance and operation of the association."

SECTION 1.5. G.S. 47F‑3‑103 reads as rewritten:

"§ 47F‑3‑103. Executive board members and officers.

…

(d) ~~The~~ Subject to subsection (d1) of this section, 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. 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 lots (including lots which may be created pursuant to special declarant rights) to lot owners other than a declarant, (ii) two years after all declarants have ceased to offer lots for sale in the ordinary course of business, or (iii) two years after any development right to add new lots 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, the declarant 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.

(d1) Not later than 60 days after conveyance of twenty‑five percent (25%) of the lots, including lots which may be created pursuant to special declarant rights, to lot 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 lot owners other than a declarant. Not later than 60 days after conveyance of fifty percent (50%) of the lots, including lots which may be created pursuant to special declarant rights, to lot owners other than a declarant, not less than thirty‑three percent (33%) of the members of the executive board shall be elected by lot owners other than the declarant.

…

(g) 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, shall be made to any 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."

SECTION 1.6. G.S. 47F‑3‑105 reads as rewritten:

"§ 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~~ (i) any management contract, employment contract, or lease of recreational or parking areas or facilities, (ii) any other contract or leases between the association and a declarant or an affiliate of a declarant, or (iii) any contract or lease 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. 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 lot owners takes office. Failure of the contract to contain such a provision shall not affect the rights of the association under this section."

SECTION 1.7. G.S. 47F‑3‑108 reads as rewritten:

"§ 47F‑3‑108. Meetings.

(a) ~~A meeting of the association shall be held at least once each year.~~An association shall hold a meeting of lot owners at a time, date, and place stated in or fixed in accordance with the bylaws. 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. If the association does not notify the lot owners of a special meeting within 30 days after the requisite number or percentage of lot owners request a special meeting pursuant to this subsection, then the requesting lot owners may directly notify all of the lot owners. 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. Only matters described in a meeting notice may be considered at a special meeting.

…."

SECTION 1.8. G.S. 47F‑3‑111 reads as rewritten:

"§ 47F‑3‑111. Tort and contract liability.

…

(b1) If an action is brought against the association for a claim which occurred during any period of declarant control, and if the association gives the declarant that controlled the association when the claim occurred reasonable notice of and an opportunity to defend against the action, the declarant in control when the claim occurred shall be liable to the association for all of the following:

(1) All tort losses incurred by the association that are not covered by an insurance policy held by the association.

(2) 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 claims occurring during the period of declarant control.

(c) In any situation where the declarant is liable to the association under this section, the declarant shall also be 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 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."

SECTION 1.9. G.S. 47F‑3‑114 reads as rewritten:

"§ 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,~~expenses 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."

SECTION 1.10. G.S. 47F‑3‑116 reads as rewritten:

"§ 47F‑3‑116. Lien for sums due the association; enforcement.

…

(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.~~more, provided that the claim of lien is against a lot that is not the primary residence of the owner. 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.~~

…

(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. A claim of lien against a lot that is the primary residence of the owner may only be foreclosed by judicial foreclosure as provided in Part 1 of Article 29A of Chapter 1 of the General Statutes.

…."

SECTION 1.11. G.S. 47F‑3‑118 reads as rewritten:

"§ 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. retain all of the following:

(1) Detailed records of receipts and expenditures affecting the operation and administration of the association and other appropriate accounting records.

(2) Minutes of all meetings of its lot owners and executive board, including executive sessions, a record of all actions taken by the lot owners or executive board without a meeting, and a record of all actions taken by a committee in place of the executive board on behalf of the association.

(3) The names of lot owners in a form that permits preparation of a list of the names of all lot owners and the addresses at which the association communicates with them, in alphabetical order showing the number of votes each owner is entitled to cast.

(4) The association's original or amended organizational documents, bylaws and all amendments to them, and all rules currently in effect.

(5) All financial statements and tax returns of the association for the past three years.

(6) A list of the names and addresses of its current executive board members and officers.

(7) The most recent annual income and expense statement and balance sheet as required by subsection (a1) of this section.

(8) Financial and other records sufficiently detailed to enable the association to comply with other requirements of law.

(9) Copies of current contracts to which it is a party.

(10) Records of executive board or committee actions to approve or deny any request for design or architectural approval from lot owners.

(11) Ballots, proxies, and other records related to voting by lot owners for one year after the election, action, or vote to which they relate.

(a1) 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.

…

(d) Subject to subsections (e) and (f) of this section, all records retained by an association must be available for examination and copying by a lot owner or the owner's authorized agent as follows:

(1) During reasonable business hours or at a mutually convenient time and location.

(2) Upon 15 days' notice in a request reasonably identifying the specific records of the association requested.

(e) Records retained by an association may be withheld from inspection and copying to the extent that they concern one of the following matters:

(1) Personnel, salary, and medical records relating to specific individuals.

(2) Contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated.

(3) Existing or potential litigation or mediation, arbitration, or administrative proceedings.

(4) Existing or potential matters involving federal, State, or local administrative or other formal proceedings before a governmental tribunal for enforcement of the declaration, bylaws, or rules and regulations.

(5) Communications with the association's attorney which are otherwise protected by the attorney-client privilege or the attorney work product doctrine.

(6) Information the disclosure of which would violate law other than this act.

(7) Records of an executive session of the executive board.

(8) Individual lot files other than those of the requesting owner.

(f) An association may charge a reasonable fee for providing copies of any records under this section and for supervising the lot owner's inspection.

(g) A right to copy records under this section includes the right to receive copies by photocopying or other means, including copies through an electronic transmission if available upon request by the lot owner.

(h) An association is not obligated to compile or synthesize information.

(i) Information provided pursuant to this section shall not be used for commercial purposes."

SECTION 1.12. Article 3 of Chapter 47F of the General Statutes is amended by adding a new section to read:

"§ 47F‑3‑120.1. Alternative dispute resolution allowed.

Parties to a dispute arising under this Chapter or an association's declaration, bylaws, or rules and regulations may agree to resolve the dispute by any form of binding or nonbinding alternative dispute resolution, except that a declarant may agree with the association to do so only after the period of declarant control has expired. Parties electing to use alternative dispute resolution pursuant to this section shall use only mediators certified by the Dispute Resolution Commission. An agreement to submit to any form of binding alternative dispute resolution must be in a record authenticated by the parties."

SECTION 1.13. Chapter 47F of the General Statutes is amended by adding a new Article to read:

"Article 4.

"Protection of Purchasers.

"§ 47F‑4‑101. Applicability of Article; waiver.

(a) This Article applies to the disposition of all lots that are part of a planned community subject to this Chapter, except as provided in subsection (b) of this section or as modified or waived by agreement of purchasers of lots in a planned community in which all lots are restricted to nonresidential use.

(b) No disclosure certificate, as provided for in G.S. 47F‑4‑103, need be prepared or delivered in the case of a disposition which is classified as one or more of the following:

(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 dealer.

(6) Subject to cancellation at any time and for any reason by the purchaser without penalty.

(7) Property restricted to nonresidential purposes.

"§ 47F‑4‑102. Purchaser's right to cancel.

(a) A person required to deliver a disclosure certificate pursuant to G.S. 47F‑4‑103 shall provide a purchaser with a copy of the certificate before conveyance of the lot, and not later than the date of any contract of sale. Unless a purchaser is given the disclosure certificate more than five days before execution of a contract for the purchase of the lot, the purchase contract is voidable by the purchaser until the certificate has been provided and for five days thereafter or until conveyance, whichever occurs first.

(b) A purchaser who elects to cancel a contract pursuant to subsection (a) of this section may do so by hand-delivering notice to the seller or by mailing notice by prepaid United States mail to the seller or to the seller's agent. A purchaser may cancel without penalty, and all payments made by the purchaser before cancellation shall be refunded promptly.

"§ 47F‑4‑103. Disclosure to be made to purchasers.

(a) Unless exempt under G.S. 47F‑4‑101(b), a seller of lot that is part of a planned community shall furnish to a purchaser before the earlier of conveyance or transfer of the right to possession of the lot, a copy of the declaration, other than any plats and plans, the bylaws, the rules or regulations of the association, and a certificate containing all of the following:

(1) A statement disclosing the effect on the proposed disposition of any right of first refusal or other restraint on the free alienability of the lot held by the association.

(2) A statement setting forth the amount of the periodic common expense assessment and any unpaid common expense or special assessment currently due and payable from the owner who is selling the lot.

(3) A statement of any other fees payable by the owner who is selling the lot.

(4) A statement of any capital expenditures approved by the association for the current and succeeding fiscal years.

(5) A statement of the amount of any reserves for capital expenditures and of any portions of those reserves designated by the association for any specified projects.

(6) The most recent regularly prepared balance sheet and income and expense statement, if any, of the association.

(7) The current operating budget of the association.

(8) A statement of any unsatisfied judgments against the association and the status of any pending suits in which the association is a defendant.

(9) A statement describing any insurance coverage provided for the benefit of lot owners.

(10) A statement as to whether the executive board has given or received written notice that any existing uses, occupancies, alterations, or improvements in or to the lot or to the limited common elements assigned thereto violate any provision of the declaration.

(11) A statement as to whether the executive board has received written notice from a governmental agency of any violation of environmental, health, or building codes with respect to the lot, the limited common elements assigned thereto, or any other portion of the planned community which has not been cured.

(12) A statement of the remaining term of any leasehold estate affecting the planned community and the provisions governing any extension or renewal thereof.

(13) A statement of any restrictions in the declaration affecting the amount that may be received by a lot owner upon sale, condemnation, casualty loss to the lot or the planned community, or termination of the planned community.

(14) In a cooperative, an accountant's statement, if any was prepared, as to the deductibility for federal income tax purposes by the lot owner of real estate taxes and interest paid by the association.

(15) A statement describing any pending sale or encumbrance of common elements.

(16) A statement disclosing the effect on the lot to be conveyed of any restrictions on the owner's right to use or occupy the lot or to lease the lot to another person.

(b) The association, within 10 days after a request by a lot owner, shall furnish a certificate containing the information and copies of all documents necessary to enable the lot owner to comply with this section. A lot owner providing a certificate pursuant to subsection (a) of this section is not liable to the purchaser for any erroneous information provided by the association and included in the certificate.

(c) A purchaser is not liable for any unpaid assessment or fee greater than the amount set forth in the certificate prepared by the association. A lot owner is not liable to a purchaser for the failure or delay of the association to provide the certificate in a timely manner."

SECTION 1.14. This Part is effective when it becomes law and applies to all (i) planned communities created in this State on or after that date, which contain more than 20 residential lots and (ii) planned communities created in this State before that date, which contain more than 20 residential lots, except that the act applies only with respect to events and circumstances occurring on or after the effective date of this act, and this act does not invalidate existing provisions of the declaration, bylaws, or plats or plans of those planned communities. The declaration, bylaws, or plats and plans of any planned community in this State created before the effective date of this act may be amended to achieve any result permitted by this act, regardless of what applicable law provided before that date.

part ii. amendments to the condominium act

SECTION 2.1. G.S. 47C‑3‑103 reads as rewritten:

"§ 47C‑3‑103. Executive board members and officers.

…

(h) 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, shall be made to any officer or member of the 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."

SECTION 2.2. G.S. 47C‑3‑108 reads as rewritten:

"§ 47C‑3‑108. Meetings.

(a) ~~A meeting of the association shall be held at least once each year.~~An association shall hold a meeting of unit owners annually at a time, date, and place stated in or fixed in accordance with the bylaws. 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. If the association does not notify the unit owners of a special meeting within 30 days after the requisite number or percentage of unit owners request a special meeting pursuant to this subsection, then the requesting unit owners may directly notify all of the unit owners. 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. Only matters described in a meeting notice may be considered at a special meeting.

~~(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. Unless the declaration or bylaws otherwise provide, meetings of the association and the executive board may be conducted by telephonic, video, or other conferencing process if both of the following conditions are met:

(1) The meeting notice states the conferencing process to be used and provides information explaining how unit owners may participate in the conference directly or by meeting at a central location or conference connection.

(2) The process provides all unit owners the opportunity to hear or perceive the discussion and to comment as provided in subsection (d) of this section.

(d) Unit owners shall be given a reasonable opportunity at any meeting, including meetings of the executive board, to comment regarding any matter affecting the condominium or the association.

(e) Meetings of the executive board and committees of the association authorized to act for the association shall be open to the unit owners except during executive sessions. The executive board and those committees may hold an executive session only during a regular or special meeting of the board or a committee. No final vote or action may be taken during an executive session. An executive session may be held only for any of the following purposes:

(1) To consult with the association's attorney concerning legal matters.

(2) To discuss existing or potential litigation or mediation, arbitration, or administrative proceedings.

(3) To discuss labor or personnel matters.

(4) To discuss contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage.

(5) To prevent public knowledge of the matter to be discussed if the executive board or committee determines that public knowledge would violate the privacy of any person.

(f) For purposes of this section, a gathering of board members at which the board members do not conduct association business is not a meeting of the executive board. The executive board and its members may not use incidental or social gatherings of board members or any other method to evade the open meeting requirements of this section.

(g) During the period of declarant control, the executive board shall meet at least four times a year. At least one of those meetings shall be held at the condominium or at a place convenient to the condominium. After termination of the period of declarant control, all executive board meetings shall be at the condominium or at a place convenient to the condominium unless the unit owners amend the bylaws to vary the location or procedures of those meetings.

(h) Unless the meeting is included in a schedule given to the unit owners or the meeting is called to deal with an emergency, the secretary or other officer specified in the bylaws shall give notice of each executive board meeting to each board member and to the unit owners. The notice shall be given not less than 10 days nor more than 60 days before the meeting and shall state the time, date, place, and agenda of the meeting.

(i) If any materials are distributed to the executive board before the meeting, the executive board at the same time shall make copies of those materials reasonably available to unit owners, except that the board need not make available copies of unapproved minutes or materials that are to be considered in executive session.

(j) Instead of meeting, the executive board may act by unanimous consent as documented in a record authenticated by all its members. The secretary promptly shall give notice to all unit owners of any action taken by unanimous consent. After termination of the period of declarant control, the executive board may act by unanimous consent only to undertake ministerial actions or to implement actions previously taken at a meeting of the executive board.

(k) Even if an action by the executive board is not in compliance with this section, it is valid unless set aside by a court. A challenge to the validity of an action of the executive board for failure to comply with this section may not be brought more than 60 days after the minutes of the executive board of the meeting at which the action was taken are approved or the record of that action is distributed to unit owners, whichever is later."

SECTION 2.3. G.S. 47C‑3‑118 reads as rewritten:

"§ 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.retain all of the following:

(1) Detailed records of receipts and expenditures affecting the operation and administration of the association and other appropriate accounting records.

(2) Minutes of all meetings of its unit owners and executive board, including executive sessions, a record of all actions taken by the unit owners or executive board without a meeting, and a record of all actions taken by a committee in place of the executive board on behalf of the association.

(3) The names of unit owners in a form that permits preparation of a list of the names of all unit owners and the addresses at which the association communicates with them in alphabetical order showing the number of votes each owner is entitled to cast.

(4) Its original or amended organizational documents, bylaws and all amendments to them, and all rules currently in effect.

(5) All financial statements and tax returns of the association for the past three years.

(6) A list of the names and addresses of its current executive board members and officers.

(7) Its most recent annual income and expense statement and balance sheet as required by subsection (a1) of this section.

(8) Financial and other records sufficiently detailed to enable the association to comply with other requirements of law.

(9) Copies of current contracts to which it is a party.

(10) Records of executive board or committee actions to approve or deny any requests for design or architectural approval from unit owners.

(11) Ballots, proxies, and other records related to voting by unit owners for one year after the election, action, or vote to which they relate.

(a1) 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.

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~~(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.

(d) Subject to subsections (e) and (f) of this section, all records retained by an association must be available for examination and copying by a unit owner or the owner's authorized agent as follows: