NC Legislation Provides COVID-19 Liability Protection for HOAs

We are monitoring the passage of HB 118 and would like to share the following information from Jordan Price Law Offices:

“Several of you know that our firm has been closely monitoring and lobbying legislation which would provide liability protection for HOAs against COVID-19 claims arising from the re-opening of swimming pools and other association common areas.  We are pleased to report that on June 23rd the North Carolina General Assembly passed House Bill 118: “An Act to Provide Limited Immunity from Liability for Claims Based on Transmission of COVID-19”.   The bill is currently on the Governor’s desk and we are hopeful the law will go into effect by the July 4th holiday – we will keep you posted.

Unlike some specific legislation that was directed specifically to HOA swimming pools, this law will apply to all businesses and nonprofits across North Carolina, including HOAs.  After the effective date of the law, associations will not be liable as a result of ordinary negligence in any claim brought by someone who claims to have contracted COVID-19 while on HOA or condominium common areas.

While this law does give some reassurance for associations in light of the lack of available insurance coverage for claims related to pandemic, virus and disease, , associations should be aware that gross negligence, willful or wanton conduct or intentional wrongdoing is not protected under the new law.  A reckless disregard for following local and state guidance on reopening swimming pools or other amenities may very well fall into that unprotected category, so it is important for associations to be diligent about compliance with all state and local Executive Orders and decrees.  The law will require an association to “provide reasonable notice of actions taken to reduce the transmission of COVID-19 on the premises”, and once that notice is provided, the association will not be liable for the failure of individuals to follow the rules or guidance called for in the notice.  This provision in the law makes the posting and publication of detailed rules and guidelines extremely important in the association’s liability protection.  Please see our earlier advisements on the importance of posting notices and adopting new, specific and detailed pool rules for the 2020 season.

We have spoken to many boards in the last few weeks who made the fiduciarily responsible decision not to open swimming pools given the lack of insurance coverage.  Should you wish to reconsider your decision to open the pool, and assuming North Carolina remains in a reopening phase which allows same, please be sure to confirm that your notices and new pool rules will allow you to take advantage of the protections in this new law.  As always, we are available to answer any questions you may have.”

 Community Association Practice Group

Jordan Price Law Offices

HOA Virtual Annual Meetings

Below, our friends at Jordan Price Law Office provide insights into holding HOA meetings virtually.  For additional information or guidance from Jordan Price please see contact information at the bottom of the article.

“We are hearing from many of our clients that your focus is shifting to your annual meetings and how business can be conducted given the challenges of the continuing COVID-19 pandemic.  Unfortunately, all sources seem to indicate that a group membership meeting any time this year will be unlikely, either because of continuing gathering limitations by state or local order, or simply because social distancing is too difficult to achieve in a setting that might accommodate live membership attendance. As we have previously shared, Governor Cooper has, by Executive Order, encouraged all nonprofit corporations in the state to hold annual meetings by remote means (which would include all owners associations).  Specifically,  the order provides that any annual meeting that is held by “remote communication” be held in such a way that members shall have the right to participate by remote communication, “including with respect to the conduct of the business of such members’ meeting.”  Further, the order reaffirms the process of voting by mail ballot, which has existed under NC statute for years but was seldom used in the context of annual meetings.

 

We want to clarify that there are 2 components of a “virtual” annual meeting:  (1) voting and (2) meeting with opportunity for member participation.  Statutory laws in North Carolina have not yet evolved to authorize electronic  or online voting without specific authority in the bylaws, and the vast majority of HOA bylaws do not contain those provisions.  What this means is that your annual meeting official business—voting on open director seats, approval of minutes from the prior annual meeting, ratification of budgets, and any other matter on which a vote must be taken—is all conducted by mail ballot either before or after the virtual meeting, pursuant to Section 55A-7-08 of the NC General Statutes (the NC Nonprofit Corporation Act).  The virtual meeting can be used to provide committee/financial/board reports and perhaps quell any unrest on any major issues before election voting is to take place.  Alternatively, the ballots may be collected prior to the virtual meeting and announcement of election results provided at the meeting.  We would be happy to discuss which option might best suit your HOA.   In any event, there is no voting during the online meeting; all voting must be done by mail ballot pursuant to the statute.

 

Anticipating the need to address these virtual meetings, and recognizing that most associations do not have the budget for purchasing hosting software for what may be a one-off meeting, our Firm has procured software that allows interactive hosting of virtual annual meetings.  Several attorneys in the firm are trained to operate the software and host your meeting as a “virtual Parliamentarian.”  We have run through over a dozen of these with different HOA boards at this point, and the results have been very positive.  Some frequently asked questions on voting and how the virtual meeting would operate using this software are answered below:

 

  • No proxies are sent because all members vote by mail ballot
  • Quorum is established based on number of ballots received by a deadline date
  • Written meeting notice is sent with a web address for members to register individually for the virtual meeting
  • Board members, community manager and/or committee members can be set up as presenters to present financials and committee reports to the membership;
  • All members are muted and only the meeting host can unmute, eliminating the potential for unruly “zoom” type meetings
  • Boards can make the decision to limit questions to written format or for members to be recognized by the host to verbally address the meeting (most boards are choosing written questions)
  • Private chat function between presenters protects attorney-client privilege between legal counsel and board members during the meeting

 

We know many of you already have a backlog and will have questions about this process and how to get started.  Our own Matt Waters will address many of your questions next Friday, June 26th,  as a presenter for a CAI Virtual Annual Meeting Webinar – follow the link to register or learn more.

As always, please let us know if you have further questions or would like to schedule your annual meeting or other virtual meeting open to your membership.  Because only one meeting can be hosted in a particular time slot, early reservation of your date and time is recommended.”

 

Community Association Practice Group

Jordan Price Law Offices

919-828-2501 (Main) | 919-831-4484 (Fax) | www.jordanprice.com