General Assembly Adjourns, Sending Key Building Industry Bills to Governor

The key legislation for the real estate and building industry are summarized below:

HB 252 (Building Code Regulatory Reform) Status: On Governor’s Desk

One of the top priorities for the North Carolina Home Builders Association (NCHBA), HB 252 passed both chambers by near-unanimous votes, and was delivered to Governor Cooper, who is expected to sign it into law.

The bill refines and clarifies several provisions in legislation which NCHBA sought and which passed in 2015 (S.L. 2015-145) as well as enacting several new provisions:

No grandfathering of inspections prohibited by S.L. 2013-118;Provides more flexibility for field inspection of building component;No additional certification required by a licensed engineer or architect for previously certified component or element;City and County inspection departments to create informal internal review;Ensures that all relevant codes are reviewed by residential committee of Building Code Council;Allows building permit holder choice between new and old interpretation for project under construction; and,Eliminates dual meter requirements for lots on septic systems.

The change added to the bill in the Senate is a provision that requires an inspector on commercial projects to conduct all inspections requested by the permit holder for a scheduled inspection. In addition, the inspector is required to inform the permit holder of discrepancies in which the inspected work is incomplete or otherwise fails to meet North Carolina Building Code.  A similar requirement is already in effect for one- and two-family dwellings after the passage of HB 255 Building Code Regulatory Reform in 2015.

HB 436 (Local Government Regulatory Fees)Status: On Governor’s Desk

Last August, in a decision on the Quality Built Homes v. Carthage case, the North Carolina Supreme Court struck down the Town of Carthage’s impact fees for future water and sewer services, calling into question similar fees in other jurisdictions. NCHBA participated in this case by filing an amicus brief on behalf of the builder. As refund lawsuits began to be filed across the state, the local government associations sought legislation to limit the liability of their members and to obtain the authority to legally impose fees for future water and sewer availability services. The legislative leadership asked NCHBA to work with these groups to see if a compromise was possible.

After months of negotiation, a deal was struck which provides authority for local governments to impose lawful water and sewer capacity fees in the future, but under a new structure which has clear standards and limitations. The responsibility for paying for future water and wastewater capacity will be shared between the development community and existing customers unlike the situation that currently exists in a number of jurisdictions. The bill also creates a three-year statute of limitations for refund lawsuits for the recovery of any unlawful fee collected by a unit of local government for water or sewer services.

The agreed-upon language was inserted into HB 436 (Local Government Regulatory Fees) which passed both chambers unanimously, and has been sent to the Governor for his expected signature. Senator Paul Newton (R-Cabarrus) did an excellent job of overseeing the negotiations and getting the bill through the legislative process.

HB 707 (Lien Agent/Notice of Cancellation)Status: On Governor’s Desk

This bill requires a potential lien claimant who has filed a Notice to Lien Agent to cancel that notice within a reasonable time after the entity filing the notice has confirmed receipt of final payment for the improvement to which the notice relates. Cancellation will be accomplished on the website used to file the original notice.

Three legislative priorities did NOT make it to the Governor’s desk, but may be considered when the Legislature reconvenes in August …. or next year.

SB 628 (Various Changes to Revenue Laws)Status: In Conference CommitteeThis bill, which contains numerous requested changes to the state Sales Tax on Repair, Maintenance & Installation (RMI) services, hit a snag and failed to emerge from a joint Senate-House conference committee. Both NCHBA and the North Carolina Association of Realtors (NCAR) supported separate provisions is this bill, which would have brought clarity to sections of the law dealing with home renovations, capital improvements, and property management agreements.HB 507 (Land Use Regulatory Changes) Status: Passed House, in Senate RulesDespite its unanimous approval by the House, this regulatory reform bill contains several sections which are not popular with the local government associations. We are hopeful that the bill will be heard early in next year’s session.HB 457 (Performance Guarantees/Subdivision Streets)Status: Passed House, in Senate RulesAnother bill that failed to get a hearing in the Senate, HB 457 would authorize counties to be able to require “residual performance guarantees” from developers, but, in return, requires NCDOT to expedite the acceptance of county subdivision roads.  Despite the fact that these roads are constructed to DOT standards and are given to the state at no cost, the NCDOT has historically been slow to accept them into its system.

The legislation would also direct NCDOT to work with counties to create a database that would convey the status of roads within each county (i.e., “public” or “private”).  This database would provide Realtors® and property owners much-needed information about the maintenance responsibilities associated with many of the state’s orphan roads, as well as establish a greater understanding for road ownership for properties across the state.

NCHBA and NCAR are both committed to ensuring this bill gets a hearing during the 2018 short session.

#NCGA