North Carolina G.S. 7A-38.3F: Prelitigation Mediation of HOA and Condo Disputes

Quick Answer

G.S. 7A-38.3F creates a voluntary prelitigation mediation process for disputes between North Carolina condominium or HOA members and their associations. Either side may start it, either side may decline, the cost is split equally, and filing deadlines are paused while it runs. Every association must tell its members in writing each year that they may initiate mediation.

The one thing a board most needs to know: the yearly notice is a duty. The statute says the notice goes on the association's website, or, if there is no website, "at the same time and in the same manner" that officer and board names are published.

At a Glance

What the Law Says

Voluntary, with an assessment exclusion (subsection (b))

Before filing a civil action, parties to a dispute under the Condominium Act, the Planned Community Act, or an association's declaration, bylaws or rules "are encouraged to initiate mediation." The exclusion: "disputes related solely to a member's failure to timely pay an association assessment or any fines or fees associated with the levying or collection of an association assessment are not covered."

A "dispute" is "any matter relating to real estate under the jurisdiction of an association about which the member and association cannot agree" (subsection (a)(2)).

Starting mediation (subsection (c))

• Either side may contact the North Carolina Dispute Resolution Commission or the Mediation Network of North Carolina for a mediator or community mediation center.
• The mediator contacts the other party. If the parties agree to mediate, "they shall request in writing that the mediator schedule the mediation."
• The mediator sets the date, time and location, "not later than 25 days after the mediator receives the written request from the parties."

Procedure (subsections (d) through (g))

• The mediator decides who attends and may require a board or large group to designate representatives. All parties are expected to attend, and the mediator may allow phone or electronic attendance for a compelling reason.
• If an agreement needs full board approval or a member vote, the mediator "may recess the mediation meeting" so the board or members can review and vote.
• Either party may decline. A party who declines after initiation but before a meeting must tell the mediator and the other party in writing, and "no costs shall be assessed to any party if either party declines mediation prior to the occurrence of an initial mediation meeting."
• Costs, including mediator fees, "shall be shared equally by the parties unless otherwise agreed," due at the end of each meeting. Each side pays its own attorney.
• At the end the mediator issues a certification stating the conclusion date and whether an agreement was reached. If both parties participated and a suit is later filed on the mediated dispute, either may file the certificate with the clerk, and "the parties shall not be required to mediate again under any provision of law."

Confidentiality and tolling (subsections (h) and (i))

Statements and conduct during mediation are not discoverable and are inadmissible in a later civil action on the dispute, with listed exceptions (enforcing or rescinding a settlement, State Bar or Dispute Resolution Commission discipline, and laws on juvenile or elder abuse). Evidence otherwise discoverable is not shielded merely because it was discussed in mediation.

Time limits "relating to the filing of a civil action, including any applicable statutes of limitations or statutes of repose" are tolled "upon the initiation of mediation under this section until 30 days after the date on which the mediation is concluded as set forth in the mediator's certification." Initiation means "the date upon which both parties have signed the written request to schedule the mediation."

Annual notice (subsection (j))

"Each association shall, in writing, notify the members of the association each year that they may initiate mediation under this section to try to resolve a dispute with the association." The notice is published on the association's website. If there is no website, the association publishes it "at the same time and in the same manner as the names and addresses of all officers and board members of the association are published" under G.S. 47C-3-103 and G.S. 47F-3-103.

What This Means in Practice

For boards

Our reading: the statute does not require the association to say yes to a request. It does give both sides a low-pressure way to try. Because costs are split equally, a board should decide in advance who may authorize participation and how a recess for board approval will work.

The statute does not state a form or wording for the annual notice, or a date by which it must go out. Our reading: a standing notice on the website, refreshed each year, is the simplest approach. Confirm with counsel for associations without a website.

For owners

An owner can start by contacting a mediator source listed in subsection (c), but the process only moves forward if both sides sign the written request. Mediation does not cover assessment collection disputes, and it is not a replacement for any deadline in the declaration unless the tolling rule applies. Our reading: tolling begins only when both parties have signed, so a one-sided request does not pause the clock. Confirm deadlines with counsel.

What the section does not say

It does not require mediation before suit and it does not say that a court must dismiss a case filed without it. Senate Bill 378 (2025) proposed to require a party to initiate mediation before filing suit, but it did not become law (see the S.B. 378 page below).

Timeline

Related North Carolina Law

• S.B. 378 (2025): HOA Revisions bill that stalled
• H.B. 542 (2023): HOA Revisions bill that failed
• H.B. 444 (2025): HOA reform bill pending
• G.S. 47F-3-107.1: fines, suspension and hearing requirement
• G.S. 47F-3-103: board, budget ratification and removal
• Chapter 47F: Planned Community Act overview

Board Checklist

• Post the annual mediation notice on the association website, or publish it with the officer list if there is no website.
• Calendar a yearly review so the notice stays current.
• Decide who may agree to mediation and how a board vote would happen during a recess.
• Budget for the association's half of the mediator's fee.
• Remember that assessment collection disputes are outside the statute.
• Save the mediator's certification if mediation concludes.

Frequently Asked Questions

Is mediation required before suing a North Carolina HOA?

No. Under G.S. 7A-38.3F(b) parties are "encouraged" to initiate it, and either side may decline.

Does it cover unpaid assessments?

No. Disputes related solely to a failure to pay assessments, or fines or fees tied to collecting them, are not covered.

Who pays for mediation?

The parties share the costs equally unless they agree otherwise, and each pays its own attorney.

Does mediation pause the deadline to sue?

Time limits are tolled from the date both parties sign the written request until 30 days after the mediator's certification of conclusion.

Are mediation statements confidential?

They are not discoverable and are inadmissible in a later civil action on the dispute, subject to the exceptions in subsection (h).

What must the association tell members each year?

In writing, that they may initiate mediation under the section to try to resolve a dispute with the association.

Where This Comes From

This page is based on the full text of G.S. 7A-38.3F on ncleg.gov. We did not read S.L. 2013-127 or S.L. 2025-25 or any rules of the Dispute Resolution Commission.

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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.