North Carolina G.S. 47F-3-118: HOA Records, Annual Statements and Payoff Statements

Quick Answer

G.S. 47F-3-118 sets three records rules for North Carolina planned community associations: keep detailed financial records and make records "reasonably available" to owners as the bylaws and Chapter 55A require; give owners an annual income and expense statement and balance sheet free within 75 days after the fiscal year closes; and furnish a statement of unpaid assessments within 10 business days of a written request, for a fee of no more than $200 (plus up to $100 if the request comes within 48 hours of closing). Condominiums have a parallel section, § 47C-3-118.

The one thing a board most needs to know: the statement of unpaid assessments is "binding on the association, the executive board, and every lot owner," so it should be accurate before it goes out.

At a Glance

What the Law Says

Records and annual statements, (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 list records to be kept, the association "shall keep accurate records of all cash receipts and expenditures and all assets and liabilities."
• 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."

Statement of unpaid assessments, (b)

• The association, "upon written request, shall furnish to a lot owner or the lot owner's authorized agents a statement setting forth the amount of unpaid assessments and other charges against a lot."
• It must be furnished "within 10 business days after receipt of the request" and "is binding on the association, the executive board, and every lot owner."
• The association, its managers or its agents "may charge a reasonable fee," "not to exceed two hundred dollars ($200.00) per statement or request," plus "an additional expedite fee in an amount not exceeding one hundred dollars ($100.00) if the request for a statement is made within 48 hours of closing."
• Section 47F-3-102(13a) separately lists these charges among association powers and says they "may be collected by the association, its managers, or its agents."

Payments to insiders, (c)

"In addition to the limitations of Article 8 of Chapter 55A," no financial payments, "including payments made in the form of goods and services," may be made to an officer or board member, or to a business, business associate or relative of one, "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."

Condominiums, § 47C-3-118

Subsections (a) and (b) track the planned-community text: annual statements free within 75 days, the same audit-or-review vote, a 10-business-day statement of unpaid assessments, and the same $200 and $100 limits. One difference in (a): records are examinable as required by the bylaws "and by Chapter 55A of the General Statutes if the association is a nonprofit corporation," which matters because a condominium association need not be incorporated (§ 47C-3-101). Subsection (c) begins with the same payment restriction on officers and board members; the text we retrieved cut off partway through the sentence, so confirm the exception wording in the current statute.

What This Means in Practice

Deadline math

Our reading: the 75 days run from "the close of the fiscal year," so for a December 31 year end, day 75 falls on March 16 in a non-leap year (March 15 in a leap year). The 10 business days for a payoff statement run from "receipt of the request," not from the date the request was sent. The statute does not define "business day." Confirm with counsel how weekends and holidays are counted under your management agreement.

For boards

• Set a fiscal-year calendar that produces the income and expense statement and balance sheet before day 75.
• Log the date every unpaid-assessment request is received. The 10-business-day clock starts on receipt.
• Do not charge more than $200 per statement or request, or more than $100 expedite, and treat the expedite fee as applicable only when the request is made within 48 hours of closing.
• Have a second person review each statement. It is "binding" on the association, board and owners.
• Check your bylaws for a list of records to be kept. If the bylaws are silent, the statute's default (cash receipts, expenditures, assets and liabilities) applies.
• Review payments to board members, their relatives and their businesses against § 47F-3-118(c) and your bylaws.

For owners

• Make requests for payoff statements in writing and keep the date.
• You may ask for the annual income and expense statement and balance sheet at no charge.
• Examination of other records depends on the bylaws and Chapter 55A.

What the law does not say

• It does not state how quickly an association must respond to an owner's request to examine records, or what it may charge for copies. It points to "the bylaws and Chapter 55A." We did not read Chapter 55A for this page.
• It does not list which records are covered beyond "financial and other records, including records of meetings."
• It states no penalty for missing the 10-business-day or 75-day deadlines.
• Our reading: nothing in the section limits who may request a statement beyond "a lot owner or the lot owner's authorized agents." Who counts as an authorized agent (for example a closing attorney) is a question for counsel.

Timeline

Related North Carolina Law

• § 47F-3-116: assessment liens and foreclosure
• Chapter 47F overview
• Chapter 47C overview
• North Carolina HOA laws: complete guide

Board Checklist

• Calendar the 75-day deadline after each fiscal year end.
• Track receipt dates for payoff statement requests and the 10-business-day deadline.
• Confirm that statement fees stay at or under $200, and the expedite fee at or under $100.
• Reconcile each statement to the ledger before sending, since it binds the association.
• Check bylaws for the list of records to be kept and for owner inspection procedures.
• Review any payment to a director, officer, relative or related business for a bylaw provision or advance board approval.

Frequently Asked Questions

How fast must a North Carolina HOA provide a payoff or unpaid assessment statement?

Within 10 business days after receiving a written request (§ 47F-3-118(b)).

How much can an HOA charge for the statement?

A reasonable fee not to exceed $200 per statement or request, plus an expedite fee of up to $100 if the request is made within 48 hours of closing.

Is the statement binding?

Yes. The statute says it "is binding on the association, the executive board, and every lot owner."

Do owners get financial statements?

An annual income and expense statement and balance sheet must be available to all owners at no charge within 75 days after the fiscal year closes.

Can owners demand an audit?

A more extensive compilation, review or audit may be required by a majority vote of the board or by a majority of lot owners present and voting at an annual or duly called special meeting, "notwithstanding the bylaws."

Can an HOA pay a board member's company?

Only as the bylaws expressly provide or for services or expenses paid on behalf of the association that the board approved in advance, and subject to Article 8 of Chapter 55A.

Where This Comes From

We read the text of §§ 47F-3-118 and 47F-3-102 on the North Carolina General Assembly site, and §§ 47C-3-118 and 47C-3-102 on the Chapter 47C page (the latter text cut off partway through § 47C-3-118(c)). We did not read Chapter 55A. The official chapter page is ncleg.gov, Chapter 47F.

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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.