(The Center Square) – Increased regulations on homeowners’ associations in North Carolina are in a proposal approved Tuesday morning by a committee in the House of Representatives.

Homeowners Association Reform Bill, known also as House Bill 444, advances to the Judiciary 1 Committee and if approved there to the Rules Committee. Full floor vote would be next. Crossover day is Thursday.

“This bill makes targeted reforms to how homeowners’ associations operate in North Carolina,” bill sponsor Rep. Ya Liu, D-Wake, told the Commerce and Economic Development Committee. “The changes promote fairness, transparency, and accountability for both homeowners and the associations.”

The bill would limit homeowner association management contracts to one year, with no automatic renewals allowed and prohibits those companies from accepting fees for collecting fines. This ensures that there is no “profit motive” in enforcement of fines, Liu said. Fines would be capped at $100 a day with a $2,500 maximum per violation.

The associations would not be allowed to foreclose on a homeowner until the dues are at least six months behind on dues or owe $2,500 or more. It also gives homeowners access to association records, financial documents and management contracts.

The legislation would also require associations to share budgets with all homeowners, and a majority of the homeowners would have to approve the budget before it takes effect. It requires mandatory mediation in most cases before a homeowners association files a lawsuit against a homeowner. The bill also requires the North Carolina Department of Justice to track homeowner complaints again HOAs.

The changes would only affect homeowners who joined after the legislation became law.

“Current owners remain under the rules that were in place when they bought their property,” Liu said.

The Commerce and Economic Development Committee also approved State Infrastructure Bank Board, known also as House Bill 909. This would create a state revolving loan fund for infrastructure such as roads and bridges.

“Over the past year, we have seen natural disasters like Hurricane Helene that have demonstrated how vulnerable our infrastructure is, not only our road infrastructure but a full spectrum of infrastructure systems,” House minority leader Rep. Robert Reives, D-Chatham, told the committee.

The loan fund would be administered by an independent board within the department of the state treasurer.

“What this will allow the state to do is establish a flexible self-replenishing mechanism for big infrastructure projects across the state that will not be continuously reliant on appropriations from the legislature,” Reives said. “It will also allow the state to attract private capital as a force multiplier, a resource which is not currently part of the state’s infrastructure strategy.”

The legislation now advances to the House Rules Committee and if approved there, to the full House for a vote.