North Carolina Chapter 55A (Nonprofit Corporation Act): What It Means for HOA Boards

Quick Answer

Chapter 55A of the North Carolina General Statutes is the Nonprofit Corporation Act. An HOA that is incorporated as a nonprofit corporation is governed by it alongside Chapter 47F or 47C. Chapter 55A supplies the standards of conduct for directors and officers, the rules on director conflicts of interest and removal, and members' rights to inspect corporate records. The 47F and 47C statutes point to Chapter 55A for director and officer standards.

The one thing a board most needs to know: the duty of care and good faith that applies to every director comes from G.S. 55A-8-30, and S.L. 2026-52 changed parts of Chapter 55A that now affect HOA boards and committees.

At a Glance

What the Law Says

Why Chapter 55A matters to HOAs

G.S. 47F-3-103(a) says officers "shall act according to the standards for officers of a nonprofit corporation set forth in G.S. 55A-8-42, and members shall act according to the standards for directors of a nonprofit corporation set forth in G.S. 55A-8-30." The condominium section, G.S. 47C-3-103(a), says the same and adds a fiduciary-relationship sentence.

Director standards (G.S. 55A-8-30)

A director must act "in good faith," "with the care an ordinarily prudent person in a like position would exercise under similar circumstances," and "in a manner the director reasonably believes to be in the best interests of the corporation." A director may rely on information, reports and statements prepared or presented by officers or employees the director reasonably believes reliable and competent, by legal counsel, public accountants or other professionals on matters within their competence, or by a board committee the director reasonably believes merits confidence. Reliance is not allowed if the director has "actual knowledge" that makes it unwarranted. A director who performs the duties in compliance with the section "is not liable for any action taken as a director, or any failure to take any action."

Officer standards (G.S. 55A-8-42)

An officer with discretionary authority follows the same three-part test (good faith, ordinary prudence, best interests), with similar reliance rights on officers, employees, counsel and accountants.

Conflicts of interest (G.S. 55A-8-31)

A transaction in which a director has a direct or indirect interest "is not voidable by the corporation solely because of the director's interest" if one of these is true: the material facts and the director's interest were disclosed or known to the board (or a committee) and it approved the transaction; they were disclosed or known to the voting members and they approved; or the transaction "was fair to the corporation." Board approval needs "the affirmative vote of a majority of the directors on the board of directors (or on the committee) who have no direct or indirect interest," and "a transaction shall not be authorized, approved, or ratified under this section by a single director." The articles, bylaws or a board resolution may add requirements.

Number of directors (G.S. 55A-8-03)

As currently codified, "a board of directors shall consist of three or more natural persons" except as provided for private foundations, with the number set under the articles or bylaws. The citation to S.L. 2026-52, s. 4(b) appears in the section's history; the act's own effective date and who it applies to are covered on the S.L. 2026-52 page below.

Removal of directors (G.S. 55A-8-08)

Members may remove directors they elected "with or without cause unless the articles of incorporation provide that directors may be removed only for cause." Removal can happen only at a meeting called for that purpose with notice stating that purpose, and the votes cast to remove must be enough to have elected the director. The board can remove directors it elected by a majority of directors in office. The bylaws may allow removal for missing a set number of meetings. For HOAs, G.S. 47F-3-103(b) separately provides for removal by a majority vote of those present at a meeting with a quorum.

Records (G.S. 55A-16-01 and 55A-16-02)

A corporation must keep permanent minutes of member and board meetings and of committee actions taken in place of the board, maintain accounting records, and maintain a member list. At its principal office it must keep the articles, bylaws, certain resolutions, three years of member-meeting minutes and member communications, and a list of current directors and officers. A member may inspect and copy those principal-office records on five business days' written notice. For accounting records, excerpts of required records and the membership list, the member must also act "in good faith and for a proper purpose," describe the purpose and records "with reasonable particularity," and show the records are "directly connected with this purpose."

What This Means in Practice

Boards

Our reading: the three-part standard is a process test. Documenting that the board reviewed management reports, took advice from counsel or accountants, and recorded conflict disclosures supports the reliance and good-faith provisions. The statute does not promise protection from every claim, and it does not describe insurance or indemnification, which sit in other sections we did not read.

When a board member's company bids on association work, section 8-31 requires disclosure and approval by the disinterested directors, or members' approval, or a showing of fairness. The statute does not require competitive bidding.

Owners

An owner who wants accounting records under Chapter 55A must give written notice at least five business days ahead and state a proper purpose. G.S. 47F-3-118 has its own record rules; see that page for how the two fit together.

Open questions

Whether the 47F removal rule or the Chapter 55A removal procedure governs when they differ is something to confirm with counsel. We also did not read the Chapter 55A sections on member meetings, voting, dissolution, indemnification or the new annual report article beyond what is described on the S.L. 2026-52 page.

Timeline

Related North Carolina Law

• S.L. 2026-52 (H.B. 517): annual reports, directors and committees
• G.S. 47F-3-103: board, budget ratification and removal
• G.S. 47F-3-118: records and unpaid-assessment statements
• Chapter 47F: Planned Community Act overview
• Chapter 47C: Condominium Act overview
• North Carolina HOA laws complete guide

Board Checklist

• Confirm with the Secretary of State records whether the association is a nonprofit corporation.
• Give each director a copy of the articles and bylaws and the G.S. 55A-8-30 standard.
• Record the reports and advice the board relied on when it decides major items.
• Collect conflict disclosures and have disinterested directors vote on any related-party deal.
• Keep minutes, accounting records, the member list and the principal-office records the statute lists.
• Handle owner records requests after checking both 55A-16-02 and 47F-3-118.
• Check that the board has at least three natural-person directors.

Frequently Asked Questions

Is an HOA a nonprofit corporation in North Carolina?

Many are, but not all. An association incorporated under Chapter 55A is subject to it. Confirm your entity type with the Secretary of State records.

What standard applies to HOA directors?

Good faith, the care an ordinarily prudent person in a like position would use, and a reasonable belief that the action serves the corporation's best interests (G.S. 55A-8-30).

Can a director rely on the manager's report?

Under section 8-30(b), a director may rely on reports from officers or employees reasonably believed reliable and competent, unless the director has actual knowledge that makes reliance unwarranted.

Can a director vote on a contract with their own company?

Section 8-31 deals with the validity of such transactions and requires approval by a majority of the disinterested directors, a member vote, or fairness. A single director cannot approve it alone.

Can members inspect HOA records under Chapter 55A?

Yes. Some records are available on five business days' written notice; accounting records and the membership list also require a good-faith, proper purpose.

How many directors must the board have?

Section 55A-8-03(a) as codified says three or more natural persons. See the S.L. 2026-52 page for who the 2026 change applies to.

Where This Comes From

This page is based on the text of G.S. 55A-8-03, 55A-8-08, 55A-8-30, 55A-8-31, 55A-8-42, 55A-16-01 and 55A-16-02 on ncleg.gov, and the cross-references in G.S. 47F-3-103 and 47C-3-103. We did not read the rest of Chapter 55A.

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.