June 22, 2013 – SB 228 versus the Wainwright Decision
North Carolina has recently passed Senate Bill 228 (SB228) and it has been signed by Governor McCrory on April 24, 2013. This senate bill challenges parts of Judge Wainwright’s decision in the Declaratory Judgment and offers brighter horizons for all of NC seasoned HOA’s. We expect some of our general powers to be restored that were previously overlooked by definition in NC Nonprofit Corporation law. Hurrah for our community!!!
The focus of the Declaratory Judgment action was on the power to acquire real property however North Carolina General Statues 47F-3-102(8) which, never applied to pre-1999 communities, also did not allow the acquisition of personal property as well. This is where the POA appealed, because to not allow the POA to acquire personal property, meant that we could not acquire desks, chairs, PC’s, etc. Our DOR’s do not speak to personal property; therefore, as a corporation, we should have been allowed to come under NC Statue 55A-3-02(a)(4) General Powers of the NC Nonprofit Corporation Act, which permits every corporation to purchase, receive, lease or otherwise acquire, and own, hold, improve, use and otherwise deal with, real or personal property, or any legal or equitable interest in property wherever located.
In the Declaratory Judgment, Judge Wainwright effectively told us that since we hadn’t adopted the NC Planned Community Act, we could not acquire or encumber real property or make any improvements that weren’t specifically authorized by our 1971 Declaration of Restrictions. (emphasis added). Judge Wainwright chose to ignore our rights under NC Statute 55A and now SB228 offers an avenue to return those rights.
SB228 reminds Judge Wainwright, and others, that HOA’s are not frozen in time. SB228 ensures the rights and responsibilities of HOAs and considers ALL applicable documents, which, in the past, were viewed narrowly or ignored by the judiciary when ruling on cases. Changes incorporated by SB228 to the 47F and 47C NC statutes explicitly expand the documents that MUST be considered by the court when defining an HOA’s responsibility and authority.
SB228 has been passed by the legislature, with no resistance, and has been signed by the Governor. As a statute, it will require interpretation within the judicial system and be applied in such a manner that it establishes precedent and is upheld as law.
For the NC General Assembly – Senate Bill 228 statute, see http://openstates.org/nc/bills/2013/SB228/documents/NCD00021255/