North Carolina S.L. 2022-12 (S.B. 278): Condo Completion Certificates, Marketable Title

Quick Answer

North Carolina Session Law 2022-12 (Senate Bill 278) made three changes that matter to condominium and planned community associations. It bars recording a new condominium declaration (or an amendment adding units) until the buildings' structural components and mechanical systems are substantially complete, shown by a recorded architect or engineer certificate. It lists which Condominium Act sections reach condos created on or before October 1, 1986. And it adds an exception to the Marketable Title Act for covenants in condominiums, cooperatives and covered planned communities. The governor approved it on June 29, 2022.

At a Glance

What the Law Says

Section 2: completion certificate before a declaration is recorded

Section 2(b) rewrites G.S. 47C-2-101(b). Under the new language, a declaration or an amendment 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 building design plans." The completion must be "evidenced by a recorded certificate of completion executed by the architect or engineer." The architect must be licensed under Chapter 83A and the engineer registered under Chapter 89C.

Two carve-outs appear in the act:

• The requirement does not apply to any unit or portion of a unit whose boundaries consist solely of surface space, airspace, subterranean space or a combination of those, as described in G.S. 47C-2-105(a)(5).
• Nothing in the subsection requires the structural components and mechanical systems to be depicted on the plats or plans described in G.S. 47C-2-109(b)(6).

Section 2(c) says this section is effective when the act became law and "applies to declarations executed and recorded on or after that date."

Section 2(a): units without stated upper or lower limits

The act adds two sentences to G.S. 47C-2-105(a)(5). A unit that is not specifically described by an upper limiting boundary "with reference to established datum" is deemed to include the land and air above it that would be attributed to a noncondominium parcel under common or statutory law. The same rule applies below, for a unit without a lower limiting elevation boundary.

Section 3: older condominiums

Section 3(a) rewrites G.S. 47C-1-102(a). The Condominium Act applies to condominiums created in North Carolina after October 1, 1986. The rewritten subsection lists sections that also apply to condominiums created on or before that date, "notwithstanding any conflicting provisions in the articles of incorporation, the declaration, or the bylaws and notwithstanding any references in those documents to Chapter 47A." The list in the act includes:

• G.S. 47C-1-105, 1-106 and 1-107 (separate titles and taxation, local ordinances and building codes, eminent domain)
• G.S. 47C-2-103, 2-104 and 2-121 (construction of declaration and bylaws, description of units, merger or consolidation)
• G.S. 47C-3-102(a)(1) through (6) and (11) through (16) (association powers)
• G.S. 47C-3-103 (executive board members and officers)
• G.S. 47C-3-107.1 (procedures for fines and suspension of privileges)
• G.S. 47C-3-108 (meetings)
• G.S. 47C-3-111 and 3-112 (tort and contract liability, conveyance or encumbrance of common elements)
• G.S. 47C-3-116 (lien for assessments)
• G.S. 47C-3-118 (association records)
• G.S. 47C-3-121 (American and State flags and political signs)
• G.S. 47C-4-117 (effect of violation, attorney's fees)
• G.S. 47C-1-103 (definitions), to the extent needed to construe those sections

The act's text also says those sections apply only to events and circumstances after October 1, 1986. Because the rewritten subsection is shown in the session law with changes marked only by italics, confirm the exact current wording of G.S. 47C-1-102(a) on the legislature's statute page before relying on a detail.

Section 3(b) adds a sentence to G.S. 47A-2 (the older Unit Ownership Act): a condominium formed by a declaration under that chapter is still subject to the Chapter 47C sections that apply to condominiums formed on or before October 1, 1986, and those sections "are not in conflict with" Chapter 47A.

Section 4: Marketable Title Act exception

Section 4(a) adds subdivision (14) to G.S. 47B-3, the list of rights that marketable record title does not "affect or extinguish." It covers "provisions contained in any declaration of covenants that are applicable to" any of the following:

• A condominium created under Chapter 47A or 47C.
• A cooperative, as defined in G.S. 47F-1-103(8).
• A planned community, "whenever created," to which any provision of Chapter 47F applies, other than one in which all lots are restricted exclusively to nonresidential purposes.

For a planned community created before January 1, 1999, the exemption does not apply "unless it is governed by an owners' association in existence as of July 1, 2022." Section 4(b) makes this section effective July 1, 2022.

What This Means in Practice

For boards of older planned communities

The Marketable Title Act exception is conditioned, for pre-1999 communities, on having an owners' association in existence on July 1, 2022. Our reading: a pre-1999 community with no association on that date does not get the exception from the act's text alone. Whether and how old covenants in such a community are affected by the Marketable Title Act is a question for counsel and a title review. This page does not describe how the Marketable Title Act operates, because we did not read Chapter 47B beyond the section amended here.

For condominium developers and boards of new projects

The completion requirement controls when a declaration (or a declaration amendment adding units) can be recorded. It is tied to recording, so it matters at creation and at each phase that adds buildings. The act does not say what happens to a declaration recorded without the certificate, and it states no penalty. That is an open question for counsel.

For boards of pre-1987 condominiums

The act confirms that a defined list of Chapter 47C sections applies to condominiums created on or before October 1, 1986, including condominiums formed under the old Chapter 47A. Practically, the fines hearing procedure, the lien statute, the records statute and the flag statute are on that list. Our reading: your governing documents still matter, but for the listed sections the act says conflicting document terms do not control.

What the act does not do

• It does not amend Chapter 47F (the Planned Community Act) itself. Its only planned community provision is the Marketable Title Act exception in G.S. 47B-3(14).
• It sets no penalty or remedy for recording a declaration without a certificate.
• Section 1 (spousal reimbursement on entireties property) is unrelated to associations.

Timeline

Related North Carolina Law

• Chapter 47C: North Carolina Condominium Act overview
• Chapter 47F: North Carolina Planned Community Act overview
• G.S. 47F-3-107.1: fines and suspension hearing
• G.S. 47F-3-116: assessment liens and foreclosure
• S.L. 2026-59: flag display
• North Carolina HOA laws complete guide

Board Checklist

• Find your community's creation date and whether it is a condominium, a planned community or both, and note whether it was created before or after October 1, 1986 (condos) or January 1, 1999 (planned communities).
• For a pre-1999 planned community, confirm with counsel that an owners' association existed on July 1, 2022, since the Marketable Title Act exception depends on it.
• For a pre-1987 condominium, list which Chapter 47C sections in G.S. 47C-1-102(a) apply and compare them with your documents.
• If a phased condominium is adding buildings, confirm with the developer's counsel that the architect or engineer certificate of completion is recorded before the amendment adding units.
• Keep a copy of the recorded declaration, amendments and any certificates in the association records.
• Ask counsel before relying on any reading of how old covenants interact with the Marketable Title Act.

Frequently Asked Questions

When did S.L. 2022-12 take effect?

The Governor approved it on June 29, 2022. Most sections took effect when it became law. Section 4, the Marketable Title Act exception, took effect July 1, 2022.

Does the completion certificate apply to existing condominiums?

Section 2(c) says it applies to declarations executed and recorded on or after the date the act became law. Our reading: a declaration recorded before June 29, 2022 is not covered, but an amendment adding units recorded after that date is within the statute's wording.

Who signs the certificate?

The statute calls for a recorded certificate of completion executed by an architect licensed under Chapter 83A or an engineer registered under Chapter 89C.

Does the act apply to homeowners associations in planned communities?

Only through Section 4. That section adds an exception to the Marketable Title Act for declarations of covenants in planned communities to which any part of Chapter 47F applies, with a special condition for those created before 1999.

Which sections of the Condominium Act apply to a pre-1987 condo?

The act lists them in G.S. 47C-1-102(a), including the fines procedure (47C-3-107.1), assessment liens (47C-3-116), records (47C-3-118) and flags (47C-3-121). See the list above and confirm the current text.

Is there a penalty if a declaration is recorded without the certificate?

The act states none. What a court would do with such a declaration is not addressed, and counsel should be consulted.

Where This Comes From

This page is based on the enrolled text of Session Law 2022-12 (Senate Bill 278) as published by the North Carolina General Assembly at ncleg.gov. We did not re-read the current published text of Chapters 47A, 47B or 47C, so confirm the codified wording before relying on it.

How APM Helps

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed North Carolina attorney before acting.