Quick Answer
G.S. 47F-3-115 governs how a planned community association assesses common expenses. Assessments must be made at least annually once started, are allocated by the declaration, and past-due amounts bear interest at the association's chosen rate up to 18 percent a year. The section also covers limited common element costs, owner-caused expenses and assessments to pay a judgment.
At a Glance
| Item | Detail |
|---|---|
| Law/citation | G.S. 47F-3-115, "Assessments for common expenses" |
| History | S.L. 1998-199, s. 1 (no later amendment listed) |
| Applies to | HOAs created on or after January 1, 1999, and, under G.S. 47F-1-102(c), pre-1999 communities unless their articles or declaration expressly say otherwise (only for events on or after January 1, 1999) |
| Key sections | (a) timing, (b) allocation and interest, (c) special allocations, (d) judgments, (e) owner-caused expenses, (f) reallocation |
| Remedy or penalty | None stated here; collection is under G.S. 47F-3-116 |
What the Law Says
- (a) Timing. "Except as otherwise provided in the declaration," until the association makes a common expense assessment, the declarant pays all common expenses. After any assessment, assessments "shall be made at least annually."
- (b) Allocation and interest. Except for assessments under (c), (d) and (e), all common expenses are assessed against all lots "in accordance with the allocations set forth in the declaration." Past-due assessments or installments bear interest "at the rate established by the association not exceeding eighteen percent (18%) per year." For communities created before January 1, 1999, interest may be charged only if the declaration provides for it, and if it sets no rate, the rate may not exceed 18 percent a year.
- (c) Special allocations. To the extent the declaration requires: limited common element costs go to the lots assigned that element (equally or as the declaration provides); expenses benefiting fewer than all lots are assessed only to the benefited lots; insurance costs are assessed in proportion to risk and utilities in proportion to usage.
- (d) Judgments. Assessments to pay a judgment against the association may be made only against lots in the community when the judgment was entered, in proportion to their common expense liabilities.
- (e) Owner-caused expenses. If a common expense is caused by the negligence or misconduct of an owner or occupant, the association may assess it exclusively against that owner's lot.
- (f) Reallocation. If liabilities are reallocated, unpaid assessments not yet due are recalculated.
What This Means in Practice
For boards
Two points drive most disputes. First, allocation comes from the declaration, so confirm the formula before adopting a budget. Second, interest is the association's choice up to a cap, so adopt the rate by resolution and apply it consistently. Our reading: a rate above 18 percent a year exceeds the statutory limit for communities this section covers.
For owners
Owners can ask which declaration section supports a charge. A cost assigned to a limited common element or a subset of lots must follow the declaration. This section does not set late fees, which are addressed in G.S. 47F-3-102 and the lien statute.
What the law does not say
- It does not set the assessment amount, a spending cap or a reserve requirement.
- It does not define "limited common element" costs beyond referring to the declaration. See G.S. 47F-1-103 for definitions.
- We did not read the parallel condominium section.
Timeline
| Date | Event |
|---|---|
| January 1, 1999 | Planned Community Act effective (S.L. 1998-199); the section reaches older communities only as to later events |
Related North Carolina Law
- G.S. 47F-3-116: assessment liens and foreclosure
- G.S. 47F-3-103: budget ratification
- G.S. 47F-3-118: records and statements
- Willow Bend v. Robinson (2008)
- North Carolina HOA laws complete guide
Board Checklist
- Confirm the allocation formula in the declaration before approving a budget.
- Assess at least annually once assessments begin.
- Adopt the interest rate by board resolution, at or below 18 percent a year.
- For pre-1999 communities, confirm the declaration authorizes interest.
- Identify any limited common element or benefited-lots costs and assess them to the right lots.
- Keep records showing when an owner-caused expense was assessed and why.
- Have counsel review any assessment to pay a judgment.
Frequently Asked Questions
What is the maximum interest on late assessments in a North Carolina HOA?
The association sets the rate, not exceeding 18 percent per year, for communities this section covers.
Do older communities get interest charges?
For communities created before January 1, 1999, only if the declaration provides for interest.
How often must the HOA assess?
At least annually after the association makes its first assessment.
Can the HOA bill one owner for damage that owner caused?
Yes. Subsection (e) allows assessing the expense exclusively against that owner's lot if caused by negligence or misconduct of the owner or occupant.
Who pays an assessment to cover a judgment against the association?
Only lots in the community when the judgment was entered, in proportion to their common expense liabilities.
Does this statute authorize late fees?
Not in this section. It addresses interest. Late charges are covered elsewhere in the Act.
Where We Stand
Our position: we support this law. Tying allocation to the declaration and capping interest gives boards predictable rules and protects owners from runaway charges. Tip: adopt a written collection policy that states the interest rate and when it starts, and apply it the same way to every lot. This is Association Property Managers' operating view as a management company, separate from the legal summary above, and it is not legal advice.
Where This Comes From
This page is based on the text of G.S. 47F-3-115 and G.S. 47F-1-102 in Chapter 47F on ncleg.gov. We did not read court decisions on this section or the condominium counterpart.
How APM Helps
Association Property Managers provides remote HOA and condo management for associations in North Carolina, starting at a flat $99/month per community with no per-door fees or long-term contracts. See remote management in North Carolina, browse every North Carolina state-law guide, or request a free proposal, delivered within three business days. Laws and licensing rules differ by state, and we confirm the requirements for North Carolina when we build your proposal.
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.
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