North Carolina banned fine-based pay for managing agents and capped their contracts at two years. New York has no equivalent.

North Carolina Session Law 2026-51 (H.B. 372), signed by Governor Josh Stein on July 7, 2026, amended both the North Carolina Unit Ownership Act (N.C.G.S. Chapter 47C) and the Planned Community Act (Chapter 47F) to add two new constraints on managing agent conduct. Managing agents may no longer be compensated based on the fines they collect on behalf of the association. And no association may sign a management contract with a term longer than two years. New York Real Property Law Article 9-B and the Business Corporation Law contain neither restriction.

The fine-collection incentive.

A managing agent's job is to administer a building or community on behalf of the board. Part of that job is enforcing rules and levying fines when owners violate them. Before Session Law 2026-51 took effect, a North Carolina firm could structure its compensation so that some share arrived as a percentage of fines it collected. The problem with that structure is the incentive it creates. An agent paid per fine collected has a financial reason to find more violations, to treat borderline situations as clear infractions, and to set fine amounts that increase revenue rather than deter repeat conduct.

Session Law 2026-51 added a single prohibition to both Chapter 47C and Chapter 47F: a managing agent may not be compensated "in whole or in part" based on fines collected on behalf of the association. The provision applies to contracts entered on or after January 1, 2026. The law does not state that the practice was widespread in North Carolina. It states that the incentive the practice created was incompatible with an agent's duty to the board and the owners it serves.

The provision does not require agents to hold a license, does not create a state regulatory office, and does not set a cap on the fine amounts associations may levy. It removes a single financial feature from the permissible compensation menu. That is a narrow fix, and the legislature enacted it anyway.

What the contract-term cap does.

The second provision in Session Law 2026-51 limits management contracts to two years. A contract may not include an automatic renewal clause that requires the association to give more than 60 days' notice to avoid renewal. Any contract that does auto-renew is terminable by the association for any reason on 90 days' notice.

Standard management contracts in many markets run three to five years, or longer. Auto-renewal clauses frequently require notice of nonrenewal six months before the anniversary date, which means a board that missed the window is locked in for another full term. Early-termination penalties in those contracts typically run two to six months of management fees. A board that wants to replace a poorly performing agent has to pay to leave.

The two-year cap does not prevent boards from signing shorter contracts or negotiating more favorable terms. It sets a ceiling on how long an association can be bound, and a floor on how easy exit must be. A board that signed a two-year contract and found the agent's performance unsatisfactory knows it has, at most, two years remaining before it can replace the firm at no penalty.

NC versus NY: the managing agent accountability gap.

New York's position on both provisions.

New York Real Property Law Article 9-B, which governs condominiums, contains no provision restricting how managing agents may be compensated. The Business Corporation Law, which governs co-op corporations, is equally silent. No state agency publishes standards for management contracts, no statute restricts their duration, and no licensing board can condition a renewal on compliance with any conduct rule because New York has no managing agent license to condition.

That absence is not for lack of a model. The managing agent registration bill, S.71, was introduced in each of the last ten legislative sessions. It would have required agents to register with the Secretary of State and obtain certification from an approved organization. It did not receive a committee hearing in any of those ten sessions. In February 2026, its longtime sponsor, Senator Brian Kavanagh, announced he would not seek re-election. The 2027 legislative session has no identified sponsor for any version of the bill.

A compensation-restriction provision equivalent to Session Law 2026-51 has not been introduced in New York. No Senate or Assembly member has introduced legislation capping management contract terms or requiring boards to retain an exit right on auto-renewed agreements. Both provisions, like the registration bill itself, would amend statutes that already exist and govern every condo and co-op in the state.

What a board can do today.

A New York condo or co-op board that wanted to prohibit fine-based compensation in its management contract could add that language to the contract today. Nothing in New York law prevents it. A board that wanted to limit its contract to two years with an exit right could negotiate for those terms. The difficulty is leverage: management contracts are typically drafted by the managing agent firm or its counsel, and boards signing them rarely have independent legal counsel reviewing individual clauses.

Boards facing contract renewal can treat the North Carolina provision as a drafting reference. The key language banning fine-based compensation is a single clause. A board can propose it as a condition of signing. An agent that refuses to accept the term is providing information about the role fines play in the firm's revenue model.

On contract length, a board that cannot negotiate a two-year cap can at minimum request a 60-day nonrenewal notice window, in place of the 90- or 180-day windows that appear in many standard contracts. That single change reduces the effective lock-in by several months and gives the board more calendar room to assess whether it wants to renew.

Bottom line.

North Carolina Session Law 2026-51 is not a licensing regime. It creates no regulatory office and no enforcement mechanism beyond what existing condo and HOA statutes already provide. It adds two sentences to statutes that already govern every condo and HOA in the state. One sentence removes a financial incentive that ran against owners' interests. The other gives boards a path out of contracts that outlast their usefulness. New York's Condominium Act and Business Corporation Law could be amended with identical language in a single legislative session. The compensation-restriction provision has never been introduced in Albany. The contract-term cap has never been introduced in Albany. The managing agent registration bill has been introduced ten times and has never received a committee hearing.

Primary sources:
North Carolina H.B. 372 (Session Law 2026-51) — NC General Assembly bill lookup
N.C.G.S. Chapter 47C — Unit Ownership Act (condominiums)
N.C.G.S. Chapter 47F — Planned Community Act (HOAs)
NY Senate Bill S.71 — managing agent registration, 2025–2026 session

Companion resources: The managing agent bill has no Senate sponsor going into 2027 · Managing agent licensure gap — regulatory inventory · Florida's post-Surfside reform and New York's structural gap · Georgia required every HOA and condo board to register with the state · Full regulatory gap inventory