North CarolinaHB 402025-2026 SessionHouseWALLET

AN ACT TO MAKE TECHNICAL CORRECTIONS TO THE GENERAL STATUTES AND SESSION LAWS, AS RECOMMENDED BY THE GENERAL STATUTES COMMISSION.

Sponsored By: Jr. Ted Davis (Republican)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

65 provisions identified: 30 benefits, 7 costs, 28 mixed.

Higher Special Assistance and in-home coverage

The law raises State‑County Special Assistance to $1,285 a month (Basic) and $1,647 (Enhanced), starting January 1, 2023. The rates increase every January 1 by the Social Security COLA. The state must also apply to let eligible people in in‑home living arrangements qualify for Special Assistance and add Medicaid coverage for them. These federal approvals start with applications due within 30 days of the effective date (retroactive to January 1, 2023).

Stronger protections for spouses and co‑owners

A surviving spouse can choose a life estate worth one‑third of the deceased’s real estate, or a life estate in the usual dwelling, and keep household furnishings in full ownership. The spouse must file a petition and record notice within the deadlines. Also, phrases like “joint tenants with right of survivorship” are treated as creating survivorship ownership unless the deed says otherwise, effective back to June 30, 2020.

Modern rules for securities ownership

Effective October 1, 2025, the law updates who and what counts as a financial asset and how buyers get control of paper and electronic securities. It sets which jurisdiction’s law applies to key securities issues. A protected purchaser who gives value, lacks notice of claims, and gets control takes free of adverse claims. If a paper is a security certificate, Article 8 rules apply, and a negotiable instrument in a securities account can become a financial asset.

Modern UCC rules for digital assets

The law defines when a party has control of electronic money and electronic titles. It clarifies letter‑of‑credit choice‑of‑law and treats each bank branch as a separate location for those purposes. Revised Articles take effect October 1, 2025, with an adjustment date of October 1, 2026 for perfection and priority under the new rules.

6.5% regulatory charge on insurers

The law sets a 6.5% insurance regulatory charge on taxable premiums each year. The money goes to an Insurance Regulatory Fund and can be used only by legislative appropriation. Insurers may reflect this cost in their pricing.

New community property rules at death

Beginning January 1, 2026, North Carolina sets clear rules for community property at death. If the decedent lived in North Carolina, personal property that was community property, and real property in North Carolina traceable to community property, are covered. The surviving community‑property spouse owns one‑half of covered property, and the decedent cannot give away that half. Spouses can sign a record to split or reclassify property; unless stated otherwise, each gets half. A surviving spouse, heirs, or transferees must act within one year, and buyers or lien creditors acting in good faith are protected unless a recorded notice was filed; courts apply equitable principles and may consider other states’ community‑property law.

New divorce and spousal property rules

Starting October 1, 2025, courts must identify marital and divisible property and presume an equal split unless facts show otherwise. A divorce judgment ends marital rights and kills equitable distribution claims unless you filed before the judgment. If you were served by publication or the court lacked jurisdiction, you have six months after judgment to file. A surviving spouse can take a one‑third life estate in real estate unless the spouse waived it by specific actions. Beginning January 1, 2026, new probate rules apply to cases filed on or after that date, and prior limitation periods that already began keep using the old rules.

Car makers count as sellers for warranties

If a vehicle maker gives you an express warranty, the law treats the maker as the seller. You can use seller remedies against the manufacturer even if you did not buy the car directly from the maker.

Clearer rules for car and consumer leases

A motor vehicle operating agreement counts as a lease if it meets the IRS test in section 7701(h). A consumer lease exists when you lease goods for personal or family use from a business lessor and total payments are $25,000 or less, not counting renewal or buy options. These definitions decide which lease protections apply.

Stronger protections after loan default

A secured party can accept collateral only with your signed, authenticated consent and no timely signed objections. In a consumer deal, the creditor cannot accept collateral in partial satisfaction. If you paid at least 60% of the cash price or principal and the creditor took the goods, the creditor must sell them within 90 days unless you and any secondary obligors sign a later agreement. You cannot waive key post‑default rights until after default, and then only in a signed record.

Stronger repo notices and balance info

Before a lender sells your collateral, the law requires a signed notice to you and any secondary obligor. In consumer deals, the notice must say if you may owe a deficiency and give phone numbers to redeem or ask questions. After a sale, you must get a clear explanation of any surplus or deficiency, with one free response every six months. Extra explanations can cost up to $25 each. If there is no debt left or the original filing was unauthorized, the lender must file a termination within one month or within 20 days after your signed demand.

New protections for special bank deposits

Starting October 1, 2025, a “special deposit” can be set up for at least two beneficiaries and subject to a contingency. Banks must pay beneficiaries from actually collected funds and may pay pro rata if funds are short. Creditors usually cannot reach these deposits except for amounts the bank is obligated to pay when properly served and identifiable.

Fairer school discipline and make‑up work

School boards must adopt discipline rules with input from teachers, parents, and local law enforcement. They must send updated policies to the state by September 1 each year. Schools cannot suspend or expel students long‑term for truancy or tardiness, and short suspensions for those are capped at two days. Absences under G.S. 130A‑440 are not suspensions; students keep access to textbooks, assignments, and make‑up exams.

Stronger whistleblower protections for State workers

State employees are protected from being fired, threatened, or treated badly for reporting wrongdoing under G.S. 126‑84. They are also protected if they refuse orders that break the law or create serious danger. State employees may not retaliate against coworkers who report or refuse. Reports to the State Auditor and legislative committees are covered.

Stronger lender priority for financed livestock

A perfected purchase‑money interest in livestock has priority over other liens if four steps are met. It must be perfected when the debtor receives the animals. The PMSI holder must send an authenticated signed notice to the other creditor. That creditor must receive the notice within six months before the debtor gets the livestock, and the notice must describe the PMSI and the animals.

Clearer state cybersecurity and IT rules

The law updates state IT definitions, including what counts as a cybersecurity incident and ransomware attack. It clarifies which agencies must follow statewide IT rules and the duties of the State CIO. It creates a process for agencies to ask for and review deviations from IT rules.

Harsher penalties for assaulting emergency workers

The law raises penalties for attacking emergency personnel during a declared emergency or when a riot is occurring or imminent. Simple assault is a Class H felony. Assault with a dangerous weapon or substance is a Class F felony. Assault causing serious injury is a Class E felony, and causing death is a Class D felony.

More flexibility for local development grants

Cities and counties in formerly distressed counties can keep program income from Small Cities CDBG economic‑development grants to run local revolving loan funds. Local governments can also use federal Section 108 loan guarantees and may pledge current and future CDBG funds. These pledges are not debts of the State or local taxpayers.

Clear rules for bank transfers and letters of credit

The law defines a payment order and when a bank’s rejection notice takes effect. It defines security procedures, allowing codes, biometrics, encryption, and call‑backs; checking a signature or known address alone is not enough. Letters of credit and related notices can be issued as authenticated records, and the law clarifies who counts as the issuer of documents of title. Financial transaction cards are excluded from the covered Article.

Modern rules for checks and notes

A check or note can include extra clauses, like collateral terms or a forum choice, and still be negotiable. A signature can be a name, mark, or machine‑made mark if intended to authenticate. Destroying a paper check during imaging does not cancel the duty to pay. Sending an agreed check image that lets the bank collect electronically counts as issuing the item.

Modern rules for electronic collateral and sales

The law clarifies how lenders control electronic records and the payment rights they evidence. A lender with control gets priority over others who do not. It allows perfection of chattel paper by holding each authoritative paper copy and controlling each authoritative electronic copy. Custodians are not required to acknowledge control and have limited duties when they do. It also clarifies when sales law applies to mixed deals and provides standard notice content for non‑consumer dispositions.

Modern rules for electronic contracts and sales

The law updates electronic commerce rules. It defines electronic documents and delivery by control. It explains what counts as giving value and when a buyer has received goods. Parties can choose North Carolina law for deals that relate here. An aggrieved party can release breach claims by signing an authenticated record. It also sets which lease rules apply to hybrid leases.

Stronger priority rules for secured loans

The law updates secured lending rules. It clarifies attachment, control, and perfection by possession. Buyers and lessees get clearer ways to take property free of some liens. Lenders get stronger purchase‑money priority, including a 20‑day window for non‑inventory and a five‑year notice rule for inventory. It also sets priority for future advances, software tied to goods, and tie‑breakers among purchase‑money claims.

Updated secured credit rules and protections

The law updates secured‑transaction definitions and clarifies how a lender gets control of a deposit account or electronic chattel paper. It confirms that consumer‑protection laws still apply and prevail in conflicts with secured‑credit rules. These changes make perfection and enforcement clearer for lenders, borrowers, and banks.

Tighter limits on expunction protections

If you already received an expunction under this section, you cannot get another for offenses you commit after that order. In general, a prior misdemeanor expunction blocks another misdemeanor expunction under this section, and the same for felonies. If you are later convicted of a new crime, your expunged record can be disclosed and used at your new sentencing hearing.

New steps and fee for expunctions

To file for an expunction, you must let the State Bureau of Investigation run state and national criminal checks and look for warrants and prior expunctions. For a nonviolent felony you committed before age 18, you must complete at least 100 hours of community service and wait at least four years after conviction or until any sentence, probation, or supervision ends. You must pay a $175 filing fee at filing, unless you are indigent.

One-year deadline for tank cleanup reimbursement

If you clean up a petroleum tank release, you must ask the Department within one year after finishing each eligible task to decide if the Commercial Fund will reimburse the cost. Missing the one‑year window can risk losing reimbursement for that task.

Counties can pursue paternity and support

A county may start or join paternity and child‑support cases where a parent or child lives or is found. Marital privilege does not block parent testimony. Courts can compel answers despite self‑incrimination claims. After compelled testimony, a parent cannot be prosecuted for acts tied to conception, except for perjury.

Criminal checks before county adoptions

If you seek to adopt a child in county custody, you and everyone 18 or older in your home must pass state and national checks before placement. You must give fingerprints and sign consent; refusal means an unfavorable assessment. Lying on the check is a Class 2 misdemeanor. Counties must issue an unfavorable assessment for disqualifying histories or unfitness, and agencies have limited immunity for these decisions.

Optional add-ons for home and auto insurance

Beginning July 1, 2025, insurers may offer optional policy add‑ons for auto, homeowners, dwelling, and private flood coverage if the Commissioner approves them. Any extra premium must be filed and based on sound actuarial principles. Insurers cannot make you buy an add‑on to get or keep coverage or for underwriting or rating.

New licensure rules for school principals

Local boards elect principals and supervisors on the superintendent’s recommendation. The State Board cannot issue provisional principal licenses. Principals and supervisors must hold or be qualified for a State Board license. A retired principal or assistant principal may serve as an interim principal for the rest of a school year regardless of license status.

Limits on small‑employer stop‑loss coverage

Insurers may not sell stop‑loss to employers with fewer than 12 eligible employees that covers individuals below $20,000 a year. The $20,000 floor is indexed by the South Region medical CPI and rounded to the nearest thousand. Annual aggregate attachment points must be at least the greater of 120% of expected claims or $20,000 (indexed). Small‑employer carriers must offer coverage to all eligible workers and dependents and follow rating and filing rules.

New licensing rules for pawn businesses

Pawnshops and cash‑currency converters must be licensed and keep records. The state may charge licensing and investigation fees and requires financial responsibility. The program aims to curb unlawful transactions and support enforcement.

Tougher RICO forfeiture with victim remedies

Property used in or gained from racketeering is subject to civil forfeiture. Seizures during a lawful arrest or search must be reported to the district attorney and then to the Attorney General, who can file a complaint within 30 days if there are reasonable grounds. Courts can order broad remedies and protect innocent parties. Innocent people hurt by a racketeering pattern can sue for three times their actual damages plus attorneys’ fees. Private plaintiffs must notify the Attorney General, and early intervenors can have priority to forfeited property or proceeds.

Stricter reimbursements for tank cleanups

The state strengthens action on leaking underground tanks. DEQ can investigate, fund initial cleanups, and then seek reimbursement. The Commission picks the most cost‑effective cleanup; if you choose a pricier method, the state will not pay the extra. Claims from the cleanup funds cannot be assigned under the usual assignment rule. Some older tank provisions are repealed.

Stronger retirement fraud checks and board immunity

The Retirement Systems Division can inspect employer books, files, and facilities for fraud or compliance. Service providers must provide beneficiary service records upon a proper written request and may charge a reasonable copying fee under G.S. 90‑411. Members of certain medical boards and the local retirement board have civil immunity for acts within official duties, with exceptions for bad faith, gross negligence, willful misconduct, or improper gain. Insurance limits still apply.

New rules for health facility approvals

DHHS now leads health‑facility planning, runs certificate‑of‑need reviews, and collects application fees. A State Medical Facilities Plan must be developed with public notice and hearings. Ambulatory surgical facilities are included in the regulated group on November 21, 2025. Starting November 21, 2026, equipment over $2,000,000 counts as major medical equipment (inflation‑indexed), but MRI scanners in counties over 125,000 people do not alone trigger a diagnostic‑center label. The MRI county rule only applies in counties at 125,000 people or fewer (2020 census).

Clearer bank transfer and fraud protections

If you and your bank use a commercially reasonable security procedure, a verified payment order counts as yours. You can avoid loss if an entrusted person or someone who broke security caused an order the bank accepted under the procedure. Banks may rely on account or bank numbers when names do not match, and senders bear losses if they used wrong numbers. You can cancel or amend orders only before the receiving bank accepts them, unless an exception applies. If a bank breaches execution duties, it owes interest for delay or the originator’s expenses and losses.

Clearer enforcement, notices, and lien filings

The law clarifies how secured debts are enforced and recorded. Debtors can demand a termination filing within 20 days in certain non‑consumer cases. Offices must record transfer statements and issue new titles, and a termination filing ends a financing statement. Secured parties must send notices before accepting collateral and must apply cash proceeds in the set order; surplus and deficiency rules are set. Some secured‑party liability is limited and enforcement rights after default are restated.

UNC campuses get more budget flexibility

The state gives certain UNC campuses a single‑sum appropriation per budget code. Chancellors may spend overhead and General Fund money under Board rules and move funds between codes. They must follow quarterly allotments and normal reporting and audits.

Courts can order child abduction safeguards

Beginning October 1, 2025, courts can order steps to prevent a child from being taken when there is a credible risk. A parent or the court can start the process. Judges consider factors like past threats, planning signs, ties to other countries, immigration status, and abuse.

Free drop-off to retire worn flags

The Department of Military and Veterans Affairs accepts worn U.S. and North Carolina flags for free. Drop off at the Raleigh office, every Veterans Home, and every Veterans Cemetery. The Department may add sites and must post notices online and at drop‑off locations.

More adoption info and guidance for parents

Agencies must give prospective adoptive parents general information and nonidentifying facts about the child and family background. They must also offer tailored guidance and tell parents about financial help and support services. Before placement, a written summary of nonidentifying health and background details must be given, and later health updates must be kept. This section starts for placements 60 days after the effective date, and provided information is not used against providers in most legal actions.

Community property at death: clerk handles claims

Estate claims about community property at death are handled by the clerk of superior court. The case can be moved to Superior Court when allowed. A related older chapter is repealed.

Spousal property transfers keep marital rights

When one spouse deeds property to the other, the giving spouse keeps marriage‑based rights unless the deed clearly waives them. This protects spouses from losing rights by accident.

Clearer rules and fees for EHS licenses

Environmental health specialist applicants must meet education and practice standards, pass an exam, and follow a code of ethics. The application fee is capped at $100 and the exam admin fee at $150. The Board may issue an intern certificate for up to two years once education rules are met.

Courts can enforce arbitration subpoenas

Arbitrators can issue subpoenas for witnesses and records, served like civil subpoenas. Courts can enforce an arbitrator’s subpoenas and discovery orders on motion. Courts may also enforce out‑of‑state arbitrators’ subpoenas. Only a court, not an arbitrator, can hold someone in contempt.

More reporting on disability advocacy work

The Protection and Advocacy Agency must report twice a year on its actions for people with disabilities. During session, it reports to the House and Senate Appropriations Committee chairs on Health and Human Services. During the interim, it reports to two joint oversight committees. The Agency is encouraged to hold six public meetings each year.

Clearer protections in long‑term care

The law updates definitions used by the Long‑Term Care Ombudsman Program. It clarifies who is covered, who ombudsmen are, and what counts as obstruction, aligning with federal rules. This helps residents and staff understand roles and protections.

Pen-and-ink signature for notary applications

Your initial notary application must include a pen‑and‑ink signature. The Secretary of State may let you file the application online and submit your signature before commissioning, including electronically. This adds a small step for new notaries.

Licensing now required for geologists

A new board licenses geologists. Public practice requires education, experience, and exams, with seals and recordkeeping. Unlicensed practice is banned and may be penalized.

Juveniles with adult sentences go to prison

When a juvenile is tried in superior court and gets an active sentence, the law sends them to the Division of Prisons. Until transfer, the youth may be held in a juvenile holdover or approved detention facility.

Separated spouses can waive support

A separated couple can sign a written contract that clearly waives or sets post‑separation support or alimony. Both must acknowledge it before a certifying officer. The contract stays valid even after a reconciliation and later separation if it met these rules.

Clearer rules for personal property leases

A lease is not enforceable in court unless total payments are under $1,000 or there is a signed writing that describes the goods and term. Usual exceptions still apply (specially made goods, in‑court admission, or goods received and accepted). An aggrieved party can also sign and deliver a written waiver that gives up all or part of a lease‑default claim.

More choices in local deferred plans

Counties and cities may invest deferred compensation plan funds in life insurance, fixed or variable annuities, mutual funds, or other options approved by the State plan trustees. These investments are exempt from some local government investment limits.

City and county retiree health rules

A county that offers health insurance may cover former workers with at least 10 years of county service who are not getting certain retirement benefits. A city that offers health insurance may cover former employees who get retirement benefits or are age 65 or older. But if a county uses the State Health Plan for active workers, it cannot use that Plan to cover certain former workers who are not receiving the listed retirement benefits. Premiums may be paid by the employer, the former worker, or shared.

New rules for self‑storage renters

The law updates self‑storage terms and notices and bans using a storage unit as a residence starting June 19, 2025. If the owner issues a warehouse receipt or similar title document, warehouse rules apply. These changes set clearer rights for owners, renters, and bidders.

Principal Fellows loans run by Authority

The Authority now administers all outstanding Principal Fellows scholarship loans and handles repayments. All repayments and interest are deposited in the Principal Fellows and TP3 Trust Fund.

Tighter attorney fee rules in business contracts

Fee‑shifting clauses in business contracts are enforceable only when all parties sign by hand or use qualifying e‑signatures that show clear acceptance. Any fee award cannot exceed the amount in controversy. This tightens how contracts can shift legal costs.

Older Chapter 77 rules repealed

The law removes a set of older state rules from Chapter 77. People and groups once covered only by those rules are no longer governed by them.

Rules for affiliated party committees

A political caucus can form an affiliated party committee by majority vote and filing with the State Board of Elections. Committees must adopt bylaws, name a treasurer, and keep a bank account. They can raise and spend money and use the party’s name and symbol as authorized.

State rulemaking eased for some fees

The state narrows which actions need full rulemaking or hearings. Revenue, Agriculture, and Natural and Cultural Resources can set some fees and hours, like State Fair and park admissions, without the full process. Two older administrative provisions are repealed.

Technical repeals and retroactive fix

The law repeals G.S. 1‑18, Article 15A of Chapter 15, and Article 3 of Chapter 110. It also makes one subsection effective retroactively to January 1, 2016. Practical effects depend on what the repealed or revised sections previously did.

Voting sites get clear boundaries and sign windows

County boards must mark voting place boundaries so no point is more than 100 feet from each ballot box. Precincts must allow candidates to place and retrieve signs at least 36 hours before opening and 36 hours after polls close. Signs outside those times may be removed by the property owner.

Pension wording moves only if other law

If House Bill 477 becomes law, one public‑pension sentence moves to a different statute. This changes placement only and does not change benefit amounts.

Sponsors & Cosponsors

Sponsor

Jr. Ted Davis
Republican • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 386 • No: 0

House vote • 6/18/2025

HB 40: Various GSC Recommendations.

Yes: 111 • No: 0 • Other: 9

Senate vote • 6/17/2025