§ 93A-62. Delinquent Assessments; Developer Guarantee +19North Carolina · Real Estate · English

Delinquent assessments may bear interest at the highest legal rate or a lesser rate set by the managing entity, plus a reasonable administrative late fee. Collection costs, including reasonable collection agency and attorney's fees, are paid by the owner and secured by a lien in favor of the managing entity.

• ✓Delinquent assessments may bear interest up to the highest rate permitted by law
• ✓Collection costs and attorney's fees are the owner's responsibility and secured by a lien

The managing entity may deny use, deny reservations, or cancel confirmed reservations for delinquent owners after written notice sent no less than 30 days after the assessment due date. Notice must state the total delinquency with per diem and that use is barred until paid. Denial of use must be enforced uniformly against all owners including developers.

• ✓Written delinquency notice must be sent no less than 30 days after the due date
• ✓Denial of use bars the owner, guests, lessees, and exchange users (with exchange notice conditions)
• ✓Denial of use must be enforced uniformly against all owners, including developers

After a further 30-day notice of intent to rent, the managing entity may rent the delinquent owner's timeshare. Rental efforts may not begin earlier than 10 days after notice. Net proceeds are applied to the account; the owner remains liable for any residual delinquency, and the managing entity need not obtain the highest rate but must use reasonable efforts.

• ✓A further notice of intent to rent must be given no less than 30 days after the due date
• ✓Rental efforts cannot begin earlier than 10 days after the notice of intent to rent
• ✓Owner remains liable for any residual delinquency after applying net rental proceeds

For timeshare estates in NC, the managing entity has a lien for any assessment from its due date and for damage caused by the owner/guest/lessee. Liens may be judicially foreclosed or foreclosed via trustee under 93A-62.1. The claim of lien must contain a required boldface capitalized statement, relates back to the declaration recording (except first mortgages), and expires when satisfied or 5 years after filing unless enforced.

• ✓A lien exists on a timeshare estate for assessments from the due date
• ✓The lien relates back to recording of the declaration except as to first mortgages of record
• ✓The lien expires when satisfied or 5 years after filing unless an enforcement action is commenced
• ✓The claim of lien must contain the required boldface capitalized foreclosure warning

Except in trustee foreclosure, a successor in interest is jointly and severally liable for the predecessor's unpaid assessments up to transfer, but a first mortgagee acquiring by foreclosure/deed in lieu is exempt from prior assessments. A developer may be excused from paying its share during a guarantee period if it guarantees owner assessments won't increase and covers any excess of expenses over revenues.

• ✓Successors are jointly/severally liable for predecessor's unpaid assessments except in trustee foreclosure
• ✓First mortgagees acquiring by foreclosure are exempt from prior unpaid assessments
• ✓A developer guarantee excuses developer assessments only if it caps owner assessments and covers deficits

Every nonresident applicant must file an irrevocable consent that suits may be commenced against them in NC courts by serving process on the Executive Director of the Commission. Process served on the Executive Director is deemed valid as if served personally, and must be served in duplicate with one copy forwarded by registered mail to the licensee.

• ✓Nonresident applicants must file irrevocable consent to service of process via the Executive Director
• ✓Service on the Executive Director is binding as if made personally on the applicant
• ✓Process must be served in duplicate, one copy forwarded to the nonresident by registered mail

This section provides a simple, inexpensive alternative to judicial foreclosure for assessment liens. A compliant claim of lien must be filed with the clerk of superior court in the county where the timeshare is located. At least 15 days before filing, a statement of amount due must be mailed to the owner (and registered agent if a corporation/LLC).

• ✓Claim of lien is filed with the clerk of superior court where the timeshare is located
• ✓A statement of amount due must be mailed at least 15 days prior to filing the claim of lien
• ✓A sworn notary certificate confirming notice must be attached to the claim of lien

At least 30 days before docketing judgment, notice of the assessment lien foreclosure must be sent to the owner and junior lienholders, including an objection form. If the owner returns the signed objection within 30 days, the lien may only be foreclosed judicially. Owners who do not object are not subject to a deficiency judgment even if sale proceeds are insufficient.

• ✓Foreclosure notice must be sent at least 30 days before docketing judgment
• ✓A signed objection within 30 days forces judicial foreclosure only
• ✓Non-objecting owners are not subject to a deficiency judgment

Docketing the certificate creates a valid judgment bearing 8% annual interest. Foreclosure may not begin sooner than six months after the debt became due. Sale occurs between 30 days and one year after judgment indexing, conducted by an appointed neutral trustee with the same fiduciary duties as a deed of trust trustee, who acts as auctioneer.

• ✓The docketed judgment bears interest at 8% annually
• ✓Foreclosure cannot begin sooner than six months after the debt became due
• ✓Sale occurs between 30 days and one year after the judgment is indexed
• ✓The trustee is a neutral third party with deed-of-trust fiduciary duties

At least 30 days before sale, the trustee must send notice with required contents (owner/junior holders, legal description, default, amounts, sale date/location, cure and redemption rights). Highest bidder pays cash/certified funds; a certificate of sale terminates all redemption rights. A certificate of compliance must be filed within 10 days; the trustee's deed (with no title warranties) is issued and recorded at least 10 days after sale.

• ✓Notice of sale must be sent at least 30 days before the sale
• ✓Issuance of a certificate of sale forecloses and terminates all redemption rights
• ✓Certificate of compliance must be filed within 10 calendar days after the sale
• ✓The trustee's deed contains no warranties of title

A sale under this section releases the owner from liability for all amounts secured by the lien with no right to a deficiency judgment. Proceeds are applied to sale expenses/trustee compensation, then the amount owed, then to junior interest holders (or the clerk), and any surplus to the former owner.

• ✓A trustee sale releases the owner from liability with no deficiency judgment
• ✓Proceeds pay sale expenses first, then amounts owed, then junior holders, then surplus to former owner

A claim of lien securing a debt consisting solely of fines, interest on fines, or associated attorneys' fees may be enforced only by judicial foreclosure. Likewise, liens for solely service, collection, consulting, or administration fees may only be enforced by judicial foreclosure.

• ✓Liens for fines-only debts must be enforced by judicial foreclosure
• ✓Liens for service/collection/consulting/administration fees only require judicial foreclosure

BPO and CMA have the same legal meaning: an estimate by a licensed broker of a property's probable selling or leasing price. A CMA is usually for clients; a BPO for third parties for non-mortgage purposes. A non-provisional broker with an active license may perform BPOs/CMAs for a fee for various parties. A provisional broker may NOT perform a BPO/CMA for a fee for anyone.

• ✓BPO and CMA have the same legal meaning
• ✓A non-provisional active broker may perform BPOs/CMAs for a fee
• ✓A provisional broker may NOT perform a BPO/CMA for a fee for anyone
• ✓May NOT prepare a BPO for a lienholder to value property for mortgage loan origination
• ✓A BPO/CMA may only estimate probable selling/leasing price, not 'value'

BPOs/CMAs for a fee must comply with Article 6 and Section A.2200 standards, be in writing, and address required matters. Price may be reported as a single figure or a range; if the range exceeds 10%, an explanation is required. Income analysis methodology is now required where appropriate. If a BPO estimates 'value,' it is legally an appraisal requiring a licensed appraiser.

• ✓BPOs/CMAs for a fee must be in writing and meet A.2200 standards
• ✓Price may be a single figure or range; ranges exceeding 10% require explanation
• ✓Income analysis methodology is required where appropriate for income-producing property
• ✓A BPO estimating 'value' is legally an appraisal requiring a licensed appraiser
• ✓A broker not qualified for the required methodology should decline the assignment

Any broker (provisional or non-provisional) may perform a BPO/CMA for any party when no fee is charged. Compensation for general brokerage services under a brokerage agreement is not a 'fee.' Even for no fee, the Commission expects competent performance without undisclosed conflicts of interest, following A.2202 for guidance.

• ✓Any broker may perform a BPO/CMA for no fee for any party
• ✓General brokerage service compensation is not a 'fee' under Article 6
• ✓Even for no fee, performance must be competent and free of undisclosed conflicts
• ✓Provisional brokers may perform a no-fee CMA/BPO

A real estate broker may include in the governing contract with a provisional broker (whose nonemployee status is recognized under IRC section 3508) an agreement for the provisional broker to reimburse the broker for workers' compensation coverage costs. This does not affect other workers' comp coverage requirements.

• ✓A broker may contract for provisional broker reimbursement of workers' compensation costs
• ✓This applies to provisional brokers with recognized nonemployee (independent contractor) status
• ✓The section does not exclude anyone otherwise subject to workers' compensation law

An escrow agent may deposit disputed monies (other than residential security deposits) with the clerk of court in the county where the property is located. The agent must certify that claimants were notified. The agent must wait 90 days after notification before depositing. If no special proceeding is filed within one year, the monies are deemed unclaimed and delivered to the State Treasurer.

• ✓Disputed monies (except residential security deposits) may be deposited with the clerk of court
• ✓The escrow agent must wait 90 days after notifying claimants before depositing
• ✓If no special proceeding is filed within one year, funds go to the State Treasurer as unclaimed
• ✓'Escrow agent' includes licensed brokers, attorneys, and title insurance companies/agents

The developer must describe any reservation system in the declaration and establish operating rules, using best efforts in good faith to further owners' interests as a whole. The operator may adjust the system for actual use patterns, forecast use, and reserve periods/units to deposit with exchange programs or rent to facilitate owner benefits.

• ✓Reservation systems must be described in the declaration with operating rules
• ✓The operator must act in the best interests of owners as a whole
• ✓The operator may reserve periods/units for exchange deposits or rentals to benefit owners

If the operator is not the owners' association, upon termination it must transfer all relevant reservation data within 90 days (or as agreed) to permit uninterrupted operation, excluding unrelated private information. Reasonable transfer costs are reimbursed as a common expense within 10 days. Agreements may provide the operator retains ownership of the system.

• ✓Terminated operator must transfer reservation data within 90 days
• ✓Reasonable transfer costs are reimbursed as a common expense within 10 days
• ✓An agreement may allow the operator to retain ownership of the reservation system

No action between a broker and client for recovery under a broker services agreement is valid unless the contract is reduced to writing and signed by the party to be charged or a lawfully authorized person.

• ✓Broker service agreements must be in writing to be enforceable for recovery
• ✓The contract must be signed by the party to be charged or a lawfully authorized person

The declaration must specify the basis for adding timeshare units/amenities/projects, who may add them, fiscal impact, and owner consent rights. The authorized person must comply with the one-to-one use night to use right ratio and G.S. 93A-63 requirements when evaluating additions.

• ✓Additions must comply with the one-to-one use night to use right ratio
• ✓The declaration must state who may make additions and the fiscal impact

Substitutions must provide a substantially similar or improved vacation experience. A developer/affiliated managing entity may not substitute more than 10% of total annual use availability in a year; a non-affiliated managing entity may not exceed 25%. Timeshare estate units require owner approval. Owners may object, triggering a meeting; unlimited substitutions require advance majority approval with 25% voting.

• ✓Replacements must offer a substantially similar or improved vacation experience
• ✓Developer/affiliated managing entity substitutions are capped at 10% of annual use availability
• ✓Non-affiliated managing entity substitutions are capped at 25%
• ✓Substitution notice must be given at least six months in advance

Casualty deletions require replacement-cost casualty insurance, 30-day owner notice of unavailability, and application of proceeds to replacement or owner removal to maintain the one-to-one ratio. Eminent domain deletions apply proceeds similarly. Term-expiration deletions require sufficient owner or unit adjustments to maintain no greater than a one-to-one ratio.

• ✓Casualty insurance must equal the replacement cost of units/amenities
• ✓Owners must be notified of casualty unavailability within 30 days
• ✓Deletions must maintain no greater than a one-to-one use night to use right ratio

Consumer timeshare resellers must use a resale purchase contract identifying the timeshare, the program and managing entity, a conspicuous assessment/tax disclosure, any delinquency disclosure, and a conspicuous five-day cancellation notice, plus the year the purchaser may first use the timeshare. Cancellation notice is effective upon the date sent, and closing before the five-day period expires is prohibited.

• ✓Contract must include a conspicuous five-day right of cancellation
• ✓Cancellation notice is effective on the date sent and must be in writing
• ✓Closing before expiration of the five-day cancellation period is prohibited
• ✓Delinquent assessments/taxes must be disclosed in the required statement

If a required resale purchase contract is not used or is noncompliant, the transaction is voidable at the purchaser's option for one year after transfer. It is unlawful for any resale broker to collect an advance fee for listing any timeshare.

• ✓Noncompliant contracts are voidable at the purchaser's option for one year after transfer
• ✓Resale brokers may not collect any advance listing fee

The Real Estate Education and Recovery Fund is a special fund maintained by the Commission to pay unsatisfied judgments where an aggrieved person suffered direct monetary loss from certain broker acts, and to fund education. No educational expenditures may reduce the fund below $200,000. If the fund falls below $50,000 on December 31, the Commission may impose a fee up to $10 per broker at renewal.

• ✓The Fund pays unsatisfied judgments for direct monetary loss caused by brokers
• ✓Educational expenditures may not reduce the fund below $200,000
• ✓If the fund is below $50,000 on December 31, a replenishment fee up to $10 per broker may be added at renewal

An aggrieved person suffering direct monetary loss from conversion of trust funds by a licensed broker may recover if: the conversion occurred on or after September 1, 1979; they sued the broker and filed notice with the Commission within 60 days of commencement (or 60 days after proceedings for claims under $3,000); obtained final judgment on grounds of conversion; and execution was returned unsatisfied. Application must be filed within one year after all proceedings end.

• ✓Recovery requires a final judgment against a broker for conversion of trust funds
• ✓Written notice of the lawsuit must be filed with the Commission within 60 days of commencement
• ✓Execution of judgment must have been attempted and returned unsatisfied
• ✓'Trust funds' includes earnest money, down payments, sales proceeds, and tenant security deposits

Resale service providers, transfer service providers, and lead dealers must keep records for three years from when each piece of personal contact information is obtained, including a copy of all information, source lead dealer details with transaction data and receipts, or, if self-researched, descriptions of sources, methodologies, dates, and researcher identities.

• ✓Records must be retained for three years from when contact information is obtained
• ✓Records from lead dealers must include full dealer identity and transaction/receipt details
• ✓Self-researched information requires records of source, methodology, date, and researcher identity

Recovery claims are barred unless made within one year after all proceedings end. The fund is not liable for more than $50,000 per transaction. Payments may not exceed $25,000 aggregate per licensee in a single calendar year, and never exceed $75,000 aggregate for any one licensee. The fund is not liable for consequential, punitive, incidental, or special damages, penalties, interest, or court costs.

• ✓The fund is liable for no more than $50,000 per transaction
• ✓Payments may not exceed $25,000 per licensee per calendar year
• ✓Aggregate payments never exceed $75,000 for any one licensee
• ✓The fund does not pay punitive, consequential, or incidental damages, penalties, or interest

Before providing resale advertising services, a provider must give the reseller a written description of all fees/costs and when due. A resale service provider may not engage in real estate broker activities without holding an active Article 1 license.

• ✓Written fee/cost disclosure is required before providing advertising services
• ✓A resale provider may not perform broker activities without an active Article 1 license

Resale advertisers may not imply they provide brokerage services beyond advertising, claim an interested buyer without providing that buyer's contact information, claim sales/rentals without documentation and ratios, or state a specific resale value. They may not charge over $75 aggregate in 12 months without a signed compliant contract and agreed terms.

• ✓May not claim an interested buyer without providing that person's name, address, and phone
• ✓May not charge over $75 in any 12-month period without a signed compliant contract
• ✓May not state or imply the timeshare has a specific resale value

A signed written brokerage agreement in at least 12-point type is required, containing provider contact info, service descriptions, itemized/total costs, and a conspicuous unwaivable five-day right of cancellation. Providers must honor cancellations within five days and refund within 20 days of cancellation or five days after cleared funds, whichever is later.

• ✓Brokerage agreement must be in at least 12-point type and signed by the reseller
• ✓An unwaivable five-day right of cancellation must be provided
• ✓Refunds due within 20 days of cancellation or 5 days after cleared funds, whichever is later

A noncompliant contract is voidable at the reseller's option for one year. The resale service provider must supervise, manage, and control all offering aspects, and violations by agents are deemed the provider's violations. Any violation is an unfair or deceptive act under G.S. 75-1.1.

• ✓Noncompliant contracts are voidable at the reseller's option for one year
• ✓Providers must supervise agents; agent violations are deemed provider violations
• ✓Any violation is an unfair/deceptive act under G.S. 75-1.1

The reseller may cancel until midnight of the fifth day after execution; this right cannot be waived. Refunds are due within 20 days of demand or five days after cleared funds. Before any agreement, the provider must establish an independent escrow account, and no fees may be received until all promised services are fully performed with documentary proof delivered.

• ✓Reseller has an unwaivable right to cancel until midnight of the fifth day
• ✓An independent escrow account must be established before any agreement
• ✓No fee may be received until all promised transfer services are fully performed and documented
• ✓Escrow agent must retain agreements and records for five years

No person may provide transfer services for compensation without a signed compliant agreement. Providers may not advise ceasing assessment/tax/loan payments, misrepresent that owners cannot contact developers/lienors, arrange disposal via foreclosure for nonpayment, or charge fees for arranging voluntary relinquishment in lieu of assessment payment.

• ✓A signed compliant written agreement is required before charging for transfer services
• ✓Providers may not advise owners to cease assessment, tax, or loan payments
• ✓Providers may not arrange disposal through foreclosure for nonpayment

The agreement must state no fee is due until written performance evidence is delivered, name the independent escrow agent, detail each service with completion dates and costs, disclose foreclosure risks conspicuously, and include a specified cancellation statement. Escrow funds release only upon a sworn affidavit of full performance or to a managing entity/government to complete the transfer.

• ✓Agreement must name the independent escrow agent and detail all services and costs
• ✓A conspicuous statement warning of foreclosure/credit risk is required
• ✓Escrow funds release only upon sworn affidavit of full performance or to complete the transfer

Intentional escrow noncompliance is a Class E felony. The section's transfer-provider provisions do not apply to compliant resale brokers, NC-licensed attorneys, title insurers/agents in good standing, or mortgagees/servicers/lienors regarding their own obligors. Only NC-licensed attorneys or authorized nonjudicial foreclosure persons may offer involuntary transfer services. Violations are UDAP under G.S. 75-1.1.

• ✓Intentional escrow noncompliance is a Class E felony
• ✓Compliant resale brokers and licensed attorneys are exempt from transfer-provider provisions
• ✓Only NC-licensed attorneys or authorized foreclosure persons may offer involuntary transfer services
• ✓Violations are unfair/deceptive acts under G.S. 75-1.1

When the Commission pays from the Recovery Fund to settle a claim or satisfy a judgment against a broker, the broker's license is automatically suspended on the effective date of the payment order. The broker cannot be reinstated until the fund is repaid in full, including legal-rate interest.

• ✓A broker's license is automatically suspended when payment is made from the fund on their behalf
• ✓Reinstatement requires full repayment to the fund plus legal-rate interest
• ✓The Commission is subrogated to the judgment creditor's rights to the extent paid

No entity may operate as a private real estate education provider (offering prelicensing, postlicensing, or continuing education for profit) without certification from the Commission. Each branch location requires separate certification. Application fees may not exceed $250 per provider and $50 per course. Providers must meet standards on program quality, qualified instructors, facilities, records, and financial soundness.

• ✓Private education providers must obtain Commission certification before operating
• ✓Each branch location requires a separate certification
• ✓Application fees are capped at $250 per provider and $50 per course
• ✓Providers must meet standards including good reputation, financial soundness, and non-misleading advertising

Unless the declaration provides a lower percentage, at least 66% of eligible voting interests present at a duly noticed meeting may extend the program term. Quorum is 50% unless a lower quorum is stated. The managing entity may deem interests delinquent more than two years ineligible to vote, and proxies are valid up to three years.

• ✓At least 66% of eligible voting interests present may extend the program unless a lower percentage is set
• ✓Quorum for the extension meeting is 50% of eligible voting interests unless lower is stated
• ✓Extension proxies are valid up to three years

Unless the declaration provides otherwise, 60% of all voting interests may terminate the program at any time. After termination, the managing entity/board serves as termination trustee to partition or sell the former property (majority tenant approval), with expenses paid proportionately by tenants in common. Generally applies only to programs in existence at least 25 years.

• ✓60% of all voting interests may terminate the program unless the declaration provides otherwise
• ✓The managing entity/board serves as termination trustee with fiduciary powers
• ✓Termination generally applies only to programs existing at least 25 years

A licensee other than a provisional broker may prepare a BPO/CMA and charge a fee if the license is active and in good standing and the BPO/CMA meets the required contents. Article requirements do not apply to a BPO/CMA performed for no fee.

• ✓Provisional brokers may not prepare a BPO/CMA for a fee
• ✓The preparing licensee must have an active license in good standing
• ✓Requirements do not apply when performed for no fee or consideration

A BPO/CMA must be in writing and include the intended purpose, property description, basis of reasoning, assumptions/limiting conditions, interest disclosures, effective date, broker name/signature/license number, firm name, signature date, the required non-appraisal disclaimer, and a copy of the assignment request.

• ✓A BPO/CMA must be in writing
• ✓It must include the required disclaimer that it is not an appraisal and cannot be used in lieu of one
• ✓It must include the broker's name, signature, license number, and firm name

A licensee may not knowingly prepare a BPO/CMA in lieu of an appraisal when an appraisal is required by federal or state law. A BPO/CMA estimating value rather than sales/leasing price is deemed an appraisal and may only be prepared by an appraiser. It may never be called a valuation or appraisal and may not report a predetermined result. Electronic signatures and separate attachments are permitted under specified conditions.

• ✓A BPO/CMA may not be prepared in lieu of a required appraisal
• ✓One estimating value rather than price is deemed an appraisal requiring an appraiser
• ✓A BPO/CMA may never be referred to as a valuation or appraisal
• ✓A BPO/CMA may not report a predetermined result

A broker price opinion (BPO) or comparative market analysis (CMA) is an estimate prepared by a licensed broker detailing the probable selling or leasing price of a property, providing detail on condition, market, neighborhood, and comparables, but excluding an automated valuation model.

• ✓A BPO/CMA estimates probable selling or leasing price, not value
• ✓An automated valuation model is not a BPO or CMA

A licensee may prepare a BPO/CMA for existing/potential sellers, buyers, lessors, lessees, third parties performing due diligence, and lienholders/third parties for purposes other than as the basis to determine value for mortgage loan origination. A BPO/CMA may be used alongside or in addition to an appraisal.

• ✓A BPO/CMA may not be the basis to determine value for a mortgage loan origination
• ✓A BPO/CMA may be used in conjunction with or in addition to an appraisal