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: Ted Davis, Jr. (Republican)

Signed by Governor

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Bill Overview

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115 provisions identified: 45 benefits, 12 costs, 58 mixed.

Higher Special Assistance checks with COLA

State‑County Special Assistance now pays up to $1,285 a month for the basic rate. It pays up to $1,647 a month for the enhanced rate for Alzheimer’s or special care. Starting January 1, 2024, both rates adjust each January 1 with the Social Security cost‑of‑living increase. These changes take effect retroactively to January 1, 2023.

Retirement system property and income tax‑free

Property owned by the Teachers’ and State Employees’ Retirement System Board is exempt from all State and local taxes. The Board’s income is not subject to State income tax.

Tighter rules on UST cleanup payments

The Department now requires full documentation before authorizing or paying cleanup tasks from the Commercial Fund. It schedules work by priority and will not approve a task unless it expects enough money to pay within 90 days of a complete claim. Owners who willfully broke tank rules, caused releases by willful misconduct, or failed to pay the annual tank fee cannot get reimbursements, and the State must try to recover any money already paid.

Higher fines for safety and facility violations

Breaking radiation safety rules can cost up to $10,000 per day, per violation. Water‑system operator violations can draw up to $100 per day. If penalties are not paid within 60 days after notice or after a hearing decision, the state can sue to collect. Clear proceeds go to the Civil Penalty and Forfeiture Fund.

Help and rules for tank cleanups

If you own land with a release from an underground storage tank, you can elect payment from the Commercial Fund for cleanup costs above the owner/operator share once you pay that share and document your spending. The Department may require preapproval for certain cleanup tasks and may deny payment if preapproval was required and not obtained. The Department pays only eligible, reasonable, and necessary costs and keeps a schedule of approved costs. It may also authorize non‑priority tasks with deferred payment, and it can approve emergency work when there is an imminent threat.

New community‑property rules in 2026

Beginning January 1, 2026, a surviving spouse keeps one‑half of covered community property and the decedent controls the other half by will. These rules do not cover assets that pass by survivorship, a revocable trust, or other nonprobate transfer, and they do not change year’s allowance or exemptions. Spouses living in North Carolina can partition or reclassify property by signing a record together; waivers must follow North Carolina law. Courts use general law and fairness when the Article is silent and aim for uniform results across states with the same Act. The Part applies to court cases that start on or after January 1, 2026.

Tank owners face stricter cleanup reimbursements

Owners must pay required amounts first and submit proof before the state pays from the Commercial Fund. If the Commission says no cleanup is needed, the Fund pays only reasonable risk‑assessment costs unless cleanup is later ordered. If the Commission approves the least‑cost cleanup, the Fund pays only for that method, not pricier options or non‑UST sources. Federal cleanup money is used before the State Fund. The Department can seek reimbursement, with attorneys’ fees, but must start most actions within three or five years. The state cannot withhold approved Fund payments to offset other disputes unless you consent or there is a final order. Small farm or home tanks of 1,100 gallons or less and other listed tanks are excluded from these commercial‑tank rules.

More adoption info for prospective parents

This Part covers adoptions of children in foster or institutional care, children previously adopted, foreign adoptions, children coming from another country, and non‑U.S. citizens. Starting 60 days after this section takes effect, agencies must give you general adoption guidance before placement. They must also share nonidentifying, material information about the child’s background, health, medical history, prior placements, immigration status, and available services. Agencies must give new material info before finalization and try to notify you after finalization.

Repossession: faster sales and clearer notices

If a creditor takes your consumer goods and you paid 60% of the cash price or 60% of the principal, they must sell the goods within 90 days unless you and all secondary obligors agree after default to extend. Sale notices must say if you could still owe a deficiency and give a phone number for your redemption amount and a contact for more details. After the sale, you can request a surplus or deficiency explanation; the creditor must reply within 14 days. You get one free response every six months; extra responses can cost up to $25. In consumer deals, a creditor cannot accept collateral as only partial payment.

Medicaid help for in-home adults

The Department of Health and Human Services must add coverage for eligible State‑County Special Assistance recipients who live at home. It applies by asking Social Security to recognize in‑home SCSA under the Optional State Supplement and by sending a Medicaid State Plan amendment to add this group. The law is retroactive to January 1, 2023, and DHHS had to submit the plan change within 30 days of the section’s effective date.

More retirement options for local workers

County boards and city councils can enroll employees in State-run retirement systems or in a local plan that an actuary certifies as sound. Local governments can pay into the chosen plan for their workers. Cities may also add local money to supplement State benefits.

Stronger whistleblower protections for State employees

State employees are protected from retaliation for reporting wrongdoing or refusing illegal or dangerous directives. Reports to the State Auditor and certain legislative bodies are covered. The protection does not apply if the employee knows or has reason to believe the report is inaccurate.

State can step in on tank leaks

The Department can investigate certain petroleum releases and start cleanup when owners are unknown or fail to act. It can give interim drinking water to affected neighbors and pay initial costs for a permanent water source. This applies to listed tank situations, including some old commercial tanks closed before 1974.

Stronger laws on assaults and racketeering

Assaults on emergency personnel during declared emergencies or near riots are felonies, with higher classes for weapons, serious injury, or death. Racketeering now includes more crimes, including money laundering, and follows federal definitions. A pattern needs at least two incidents, one after October 1, 1986, within four years of another. The law broadens what counts as an “enterprise,” including government entities and informal groups.

Clearer rules for leasing goods

Lease rules now cover hybrid deals; lease‑of‑goods parts apply when they predominate. A consumer lease is one with total payments of $25,000 or less (not counting options to renew or buy). A lease needs a signed record if total payments are $1,000 or more, with exceptions for custom goods, admissions, or goods accepted. Merchant lease offers in signed records can be held open without consideration for up to three months, and lease changes need no new consideration (but can require a signed record). Seals do not change lease records, and courts follow parol‑evidence rules for final records. These updates take effect October 1, 2025.

Clearer rules for selling goods

A seal on a sales record does not change the contract rules. A merchant’s signed offer that promises to stay open is irrevocable for the stated time, or a reasonable time up to three months (a separate signature is needed if the offeree supplied the form). You can modify a sales contract without new consideration, but a signed record can require written changes; waivers can be retracted with reasonable notice if that is fair. These updates take effect October 1, 2025.

Court tools to prevent child abduction

The law creates a court process to prevent child abduction in custody cases. You can file in district court when that court has custody power, and the court can act fast in an emergency if it finds a credible risk. Your verified petition must list risk factors and, when known, key details like the child’s info, locations, and any related past actions.

Stronger tools to stop child abduction

Courts must weigh listed risk signs, like past abduction, travel plans, forged papers, or ties to non‑Hague countries. If risk is found, courts issue an abduction prevention order with clear custody terms and warnings. Orders can limit travel, require itineraries, block passports, require surrender of passports, and set other safeguards. Courts may require supervised visits, a bond to deter abduction, and education about the harms. Starting October 1, 2025, courts can issue ex parte warrants for immediate custody when a child faces imminent removal and must hold a quick hearing; bad‑faith petitioners can be ordered to pay the other side’s legal costs.

Stronger protections for long-term care residents

The law updates key terms for the Long‑Term Care Ombudsman Program. It clarifies who is a resident, who serves as a regional or State Ombudsman, and what counts as willful obstruction of their work. This strengthens advocacy and protections for people in long‑term care facilities.

More budget flexibility for some universities

Certain special‑responsibility universities receive continuing‑operations money as a single sum. Chancellors may use overhead receipts and General Fund money and transfer funds between budget codes, following Board of Governors directives. Transfers are treated as certified, and all funds remain subject to normal recording, reporting, auditing, and quarterly allotments.

Clearer electronic checks and chattel paper

Beginning Oct 1, 2025, the law sets which state’s law applies to chattel paper kept electronically and how to perfect interests when both paper and electronic copies exist. An instrument is issued when, if the payee agrees, a check image and data are sent that let a bank collect it as an electronic check. If you demand payment in certain funds‑transfer disputes and the demand is refused before suit, you can recover reasonable attorney fees.

New rules for digital asset records

Beginning Oct 1, 2025, the law creates clear rules for digital assets called controllable electronic records. It defines when a person has control, which state’s law applies, and when buyers take rights free of claims. Control of an electronic record also gives control of a linked account or payment right. If a creditor controls an electronic record that lacks your identifying information, normal liability limits do not protect that creditor. The law also defines control of electronic money.

Stronger protection for good-faith buyers

A protected purchaser must pay value, lack notice of an adverse claim, and obtain control of the security. A protected purchaser takes the security free of prior adverse claims.

One‑year deadline to claim property

Starting January 1, 2026, a surviving spouse, heir, devisee, or nonprobate transferee must file in court within one year of death to claim property, or meet the six‑month filing path after estate letters are issued. Incapacity does not pause these limits. If no timely claim is made, the personal representative may distribute assets without personal liability for that claim.

One-year deadline for tank cleanup payback

Owners, operators, or landowners with eligible underground storage tank cleanup work must ask the Department for an eligibility ruling within one year after an eligible task is done. Missing the one‑year mark can make you lose payment or reimbursement from the Commercial Fund.

6.5% regulatory charge on insurers

The insurance regulatory charge is set at 6.5% each taxable year. The Department of Insurance must propose a charge rate with its budget request, and the Governor must submit the proposed rate to the legislature each year.

Stronger county powers in paternity cases

A county can start or join paternity or child‑support cases where the mother, father, or child lives or is found. A parent can be subpoenaed to testify, and spousal privilege does not block testimony. Courts can compel answers. If a parent is forced to answer, they cannot be later prosecuted for crimes tied to conception or support, except for perjury.

Bigger remedies and faster RICO cases

Injured innocent people can sue for three times their actual damages plus reasonable attorneys’ fees in racketeering cases, and they must notify the Attorney General. An injured person has priority to forfeited property or its proceeds if they intervene before the case ends. The Attorney General must review a seizure and, if warranted, file for forfeiture within 30 days. Courts may allow seizure without prior notice when notice risks loss or destruction, and repeat convictions within four years create a per se violation. These changes apply to actions that start after the law takes effect.

Collateral, sale proceeds, and title rules

An after‑acquired clause usually does not reach consumer goods unless you get them within 10 days after the lender gives value, and it does not reach commercial tort claims (except proceeds). When collateral is sold, cash proceeds pay sale costs first, then the main secured claim, then qualifying subordinate claims and consignors who make signed demands before distribution. Debtors are not entitled to a surplus, and obligors do not owe a deficiency, when selling certain intangibles like accounts or promissory notes. If a related‑party sale brings too little, surplus or deficiency is calculated as if sold to an unrelated buyer at a commercially reasonable price. A secured party’s signed transfer statement lets offices update records and issue a new title. If consumer or pawnbroker laws conflict with these rules, those State laws control.

Criminal checks before adoptive placements

Before placement, DHHS must ensure county, State, and federal criminal checks for all adults in the prospective adoptive home. County DSS decides if the home is fit based on those checks. If a required person has a disqualifying record or is found unfit under the statute, the county must issue an unfavorable preplacement assessment. Prospective parents denied a favorable assessment can request review.

Fee awards capped in money cases

In cases mainly about money damages, a court’s award of attorneys’ fees cannot be more than the amount in controversy. This limits fee exposure for the losing side and can reduce fee recovery for the winning side.

New rules for bank special deposits

Beginning Oct 1, 2025, banks and customers get clear rules for special deposits like escrows. A special deposit must name at least two beneficiaries, serve a listed purpose, and be subject to a contingency. A bank pays a beneficiary only from actually and finally collected funds, and may pay available or pro‑rata funds if money is short. Payment to a beneficiary discharges the bank’s duty to that person. You do not own the deposit itself; you have a right to payment when the bank is obligated. Unless the agreement says otherwise, a special deposit ends five years after first funding.

Stronger protections for special deposits

Creditors cannot garnish money in a special deposit unless the bank is obligated to pay and the creditor serves the bank with enough information and time to act. Banks generally cannot set off special deposits except for narrow, agreed reasons like fees tied to the account or direct costs. Banks have no fiduciary duty here and owe only direct damages; they can rely on records in good faith. Courts can block a payment only to prevent material fraud, and early creditor process does not create bank duties. These rules apply to account agreements signed on or after October 1, 2025, and other laws like the UCC and consumer laws still supplement this chapter.

Local retiree health options and limits

Counties and cities that offer employee health insurance may also cover some former employees, including people getting certain benefits or those age 65+. The local government decides who pays the premium: the government, the former employee, or both. If a county elects State Health Plan coverage only for active employees (or for actives and retirees), it cannot place other former employees on the State Health Plan, but it may offer other coverage types.

Clearer deed and spousal property rules

Starting Oct 1, 2025, when one spouse deeds entireties property to the other, the receiving spouse takes title without the grantor also joining. That transfer does not waive the grantor’s elective life estate or equitable‑distribution rights unless the deed expressly waives them. A spouse who earlier deeded their interest and expressly waived the life‑estate right cannot later claim the statutory life estate. Deeds to two or more people create a tenancy in common unless the deed clearly creates a joint tenancy with survivorship. Some elective life‑estate rules apply even to older conveyances.

New divorce property division rules

Starting Oct 1, 2025, marital property includes nearly all assets gained during marriage, including vested and nonvested pensions and deferred pay. Separate property still includes gifts and inheritances, but gifts from a spouse count as separate only with written proof of the giver’s intent, and real‑estate gifts need a separate written agreement. Courts must include post‑separation value changes and passive income before distribution, and must weigh each spouse’s actions after separation that grew or wasted assets. Couples cannot set the property split inside a deed; they must use a signed marital agreement.

New rules for small employer health plans

Stop‑loss coverage must not kick in for any one person until at least $20,000 of claims (indexed each year) are incurred. The annual group attachment point must be the greater of 120% of expected claims or an indexed $20,000 floor. Carriers must use adjusted community rating and may vary premiums only by age, gender, family size, area, and industry. If not using composite rating, carriers must price with set age brackets and define areas so total rates are revenue‑neutral across regions. For family plans, age and tobacco rating apply to each covered family member’s portion of the premium.

Small employer health plan rating limits

The law sets tight rating rules for small‑employer health plans. Premiums for similar groups must stay within 25% of the adjusted community rate. Adult age factors are capped at 3:1 and tobacco factors at 1.2:1. Industry factors cannot be more than 20% above the lowest industry factor. Insurers must hold your rate for 12 months, unless benefits change or a composite‑rated group shifts by 20% or more. Small employers cannot buy stop‑loss or similar policies that pay an individual’s medical bills.

Expunction rules: what records are shared

Expunctions under listed laws now follow the general rules in G.S. 15A‑153. After an expunction, you are not guilty of perjury for not disclosing the cleared record, except for limited cases in the statute. At a later sentencing, however, a court can consider your expunged records if you were convicted of a new offense. The law also makes it easier to file by allowing affidavits (not verified affidavits) and bars expunction for added sex, stalking, and some meth, heroin, and cocaine felonies.

Stronger oversight of public retirement plans

Counties and cities may not pay into locally authorized retirement plans unless a qualified actuary certifies the plan is sound. The Retirement Systems Division may pay actuarial administration costs from retirement assets. The actuary must investigate plan experience at least every five years and add a market‑basis analysis each year using the 30‑year Treasury rate. State entities may share limited name, address, and SSN data with the Retirement System so members and beneficiaries can be notified; improper disclosure carries penalties.

Health facility planning and MRI limits

DHHS and the State Health Coordinating Council must develop the State Medical Facilities Plan with broad public notice and hearings. Beginning November 21, 2026, a freestanding provider is a diagnostic center if its medical diagnostic equipment over $10,000 totals more than $3,000,000, adjusted each year by the Medical Care CPI. Also starting then, an MRI‑specific rule applies only in counties with 125,000 or fewer people (2020 census or later).

Updated health facility cost thresholds and oversight

The diagnostic center cost threshold starts at $3,000,000 and is updated each September 30 by the Medical Care CPI through November 21, 2026. Effective November 21, 2026, equipment costing more than $2,000,000 counts as major medical equipment, with annual CPI updates. The Department of Health and Human Services serves as the state health‑planning agency, sets rules, runs the State Medical Facilities Plan, reviews records, charges application fees, and makes certificate‑of‑need decisions.

Updated rules for surgery centers and equipment

Ambulatory surgical facilities must admit patients for less than 24 hours, have an operating or endoscopy room and a recovery room, keep emergency gear, and run quality review and record systems. The law clarifies that some outpatient services arranged by a home health agency can count as home health services, but travel is not covered. Starting November 21, 2025, a qualified urban ambulatory surgical facility is not a “health service facility,” which changes which state rules apply. Replacement medical equipment under $3,000,000 (indexed each September 30 by the Medical Care CPI) counts as replacement and includes all costs to make it operational.

Principals: staffing guarantee and licensing rules

Each school with seven or more state‑allotted teachers is allotted one principal. All principals and supervisors must hold or qualify for a State Board license, and provisional principal licenses are not issued. A local board may appoint a retired principal or assistant principal as an interim principal for the rest of a school year even without current licensure.

Optional insurance add‑ons allowed

Insurers can offer optional endorsements on auto, homeowners, dwelling, and residential private flood policies if the Insurance Commissioner approves them. Any extra premium must be filed and based on sound actuarial principles, and these enhancements sit outside the Rate Bureau. Insurers cannot require you to accept an optional enhancement to get or keep a policy. This takes effect July 1, 2025.

Clear choice-of-law for securities

The law sets that an issuer’s local law governs core issues like a security’s validity, registration, transfer, and adverse-claim rules. A securities intermediary’s local law governs key entitlement matters. These rules apply even if the deal has no other link to that place.

Clearer bank transfer security and check rules

A payment order is an instruction to a bank to pay a set amount; each payment in a multi‑payment message is its own order. A “security procedure” can include codes, biometrics, encryption, and callbacks; a simple signature or known email/phone alone does not count. If you and your bank agree to a commercially reasonable security method and the bank follows it in good faith, the bank can treat a verified order as yours. But the bank cannot enforce payment if you prove the order was not caused by a trusted person or was caused by unauthorized access, even if you were not at fault. Also, destroying a paper check during imaging does not cancel the payment duty if the image and data were sent for payment.

Clearer financing rules for health projects

The law rewrites key terms for the Medical Care Commission’s bond and financing work. It defines what counts as “cost” for health facilities, including construction, equipment, financing charges and interest, design work, consulting and legal services, administrative costs, and working capital and reserves.

Modern rules for e‑titles, secured loans

The law defines when someone controls an electronic document of title by using a single authoritative copy that is unique and shows who holds it. It updates secured‑transaction rules on October 1, 2025, with an adjustment date one year later on October 1, 2026. Pre‑effective filings and priorities generally stay valid until the adjustment date, then new rules apply. These changes give clearer rights for electronic records but require lenders and businesses to update filings and procedures.

Modern rules for loans and digital records

The law updates key UCC terms for electronic signing and sending and limits what counts as “money.” It sets clear priority rules for purchase‑money interests (often a 20‑day window) and future advances (often a 45‑day rule). Buyers, lessees, and chattel‑paper purchasers get defined protections if notices, possession, or control rules are met. Debtors must be told before collateral is sold; the law provides who to notify, when to search filings, and a model notice form. Only authorized parties can file financing statements, and secured parties must file terminations within set deadlines; anti‑assignment clauses cannot block creating or perfecting a security interest.

New rules for digital finance and contracts

The law updates commercial rules for electronic records, payments, and investment accounts. It defines key terms, like "adverse claim" and how you can legally "communicate" using agreed electronic methods. It clarifies which items count as financial assets (for example, negotiable instruments in a securities account do; commodity contracts do not). It requires owner consent before an issuer or intermediary follows a purchaser’s instructions, and says a firm’s control acknowledgment alone does not create a duty. It gives buyers and lenders clear priority rules when they obtain delivery or control of electronic chattel paper and controllable accounts/records, and lets business contracts use certain e‑signatures to enforce fee‑shifting clauses.

New rules for transfers and letters of credit

Banks may rely on account or routing numbers, and the sender must cover losses if those numbers are wrong. A nonbank originator is not obliged to pay if a number misidentifies someone, unless the originator had notice before acceptance. After a bank accepts a payment order, canceling or changing it works only if the bank agrees or system rules allow it; the beneficiary’s bank can reverse only for unauthorized orders or clear mistakes. You can get extra damages for late or wrong execution only if the bank agreed to them in a signed record. Rejection and letters‑of‑credit notices can be oral or electronic signed records, and parties can choose governing law in a signed record. These updates take effect October 1, 2025.

New secured‑credit rules for digital assets

The law updates secured‑credit rules to cover modern assets like controllable electronic records, controllable accounts, and electronic money. It clarifies when a security interest attaches and how to perfect it by filing, possession, or control, and when each method starts and ends. If your secured debt is fully paid, you can demand releases or a return of control within 10 days; account debtors must also be released. You can request an accounting, and the secured party must respond within 14 days; one is free every six months, and extra responses can cost up to $25. It clarifies which state’s law governs goods, deposit accounts (the bank’s jurisdiction), and investment property, and gives short windows to keep perfection when a debtor or collateral moves. Consumer‑protection and North Carolina credit laws still apply to these transactions. Many UCC changes take effect beginning October 1, 2025.

Clearer payment and repossession notice rules

If you owe on a controllable account tied to a controllable electronic record, paying the person in control discharges your debt. A former controller can be paid only if a signed notice identifies the new controller and gives a reasonable way to pay, and proof rules are met. For consumer debts, other consumer‑protection laws still apply. When creditors send a repossession‑sale notice, they must follow updated fill‑in instructions, include a phone number, and mark “None” where a charge does not apply.

No new fees at parks and zoo

The Department cannot remove all public hours at the NC Zoo, State parks, NC Aquariums, or the NC Museum of Natural Sciences. It also cannot start charging admission at a site that does not now charge unless the General Assembly approves.

Stronger protections after loan default

The law adds steps before a creditor can keep your collateral after default. You must sign consent after default, and you get 20 days to object to a written proposal. The creditor must also notify other secured parties and lienholders as the law requires. Waivers of notice, forced sale, and (outside consumer-goods cases) redemption are valid only if signed after default.

Stronger pre-adoption info and support

Placing agencies must give a written, non‑identifying background report before a child is placed. It must cover birth details, parents’ ages and heritage, education, appearance, and known health and genetic histories. Agencies must also give tailored guidance on likely needs such as trauma, sibling separation, cultural issues, and citizenship steps in intercountry adoptions. On request, the child or adoptive parent must get information on how to find financial help and support services. Health info is available to the adoptee at 18, or earlier if married or emancipated.

Clerks can hear community-property deaths

Starting January 1, 2026, clerks of superior court can decide claims about community property at death. Any party or the clerk can move the case to Superior Court. Usual estate rules apply if they do not conflict with the new Article.

Spousal property protections and estate rules

If spouses own a home as tenants by the entirety and only one is at fault, only the guilty spouse’s half can be forfeited. The title converts to tenancy in common to protect the innocent spouse. Starting January 1, 2026, North Carolina applies community‑property‑at‑death rules to a spouse’s personal property when domiciled here and to real estate in North Carolina that is traceable to community property.

Earlier recognition for geologists‑in‑training

You can be recognized as a geologist‑in‑training after passing the fundamentals (academic) part of the exam, even before completing the work‑experience years needed for full licensure.

Limits on city disability earnings rules

If you are a disabled former city employee getting disability pay from a city plan, the city may restrict your outside earnings only to the same extent allowed under the Local Governmental Employees’ Retirement System rule. This ties city limits to the LGERS standard.

More investment choices in local savings plans

If your county or city offers a deferred compensation plan, it may invest plan funds in life insurance, fixed or variable annuities, regulated investment trusts, or other investments approved by the State plan’s Board. This gives participants a broader set of retirement investment options.

No teacher bias for blindness

The State Board and local boards may not deny teacher credentials, training, practice teaching, or employment because a person is totally or partially blind. Qualified blind applicants must be allowed to train and work.

Schools must share rules; health absences protected

Each public school governing body must send its current discipline policies and Code of Student Conduct to the state by September 1 each year. An absence under G.S. 130A-440 is not a suspension. Students in that situation can take textbooks and school devices home, ask for missed work, and take missed exams when possible.

Better notice in agency appeals

The Office of Administrative Hearings now sends each party a copy of the judge’s final decision in contested cases. In Medicaid-related cases, the decision also tells the Department and the recipient how to seek court review. Mental health licensing appeals follow Commission rules and Chapter 150B.

Churches must consent to election use

County election boards cannot use tax-exempt church property for voter registration or voting without the church’s express consent.

Courts and UNC can join state IT

The General Assembly, the courts, and UNC (and its campuses) are exempt from the State IT Article but can opt in to State IT programs, services, or contracts. Each must make the choice in writing by the proper authority.

Free drop‑off to retire flags

The state accepts worn or damaged U.S. or North Carolina flags at no charge. You can drop them at the Raleigh office and at any State Veterans Home or Veterans Cemetery. The Department may add more sites and must arrange respectful disposal and post program details.

New Medal of Valor for responders

The Governor and Lieutenant Governor may each award up to two individual Medals of Valor a year, with a third allowed for special cases, plus one unit medal each year. Their websites must post nomination details and a form. Nominations come from a first responder unit’s highest‑ranking official or a unit member.

Rules for selling state firearms

State employees cannot sell or dispose of firearms in official duties except as allowed by law. State departments and UNC campus police can sell surplus weapons only to federally licensed dealers, under Department of Administration rules. Sale proceeds go to the General Fund.

State awards selection rules clarified

The North Carolina Awards Committee must find an achievement outstanding in merit, value, and distinction before giving an award. The Governor appoints five members, names the chair, and members serve without pay or travel. A majority is a quorum, and staff support comes from the Secretary of Natural and Cultural Resources.

Stronger rules for public retirement boards

Trustees of the State and Local retirement boards are generally immune from money damages for acts in their official roles, with exceptions for bad faith, gross negligence, improper personal gain, acting outside their duties, or vehicle‑related liability. Actuarial studies, assumptions, and reports become part of the Plan when the Board adopts them and take effect the first day of the next month unless a different date is set. The actuary must review experience and value assets and liabilities at least every five years and add a yearly market‑basis view using the 30‑year Treasury rate. State agencies can share members’ names, addresses, and Social Security numbers with the Retirement System to send benefit notices, but the data are confidential; unlawful disclosure is a Class 1 misdemeanor, and public officials face firing and a five‑year bar. Trustees must take an oath within 10 days; a prior local oath can count for certain officials.

Surplus state weapons for local police

The Department of Administration may sell listed surplus weapons to county or local law‑enforcement agencies. The buyer must file a notarized statement that the weapon is needed for law‑enforcement use.

Unsold surplus weapons destroyed

If a surplus weapon is not sold within one year of being declared surplus, the Department of Administration must destroy it.

Stronger child‑safety placement rules

Starting October 1, 2025, abduction prevention orders last until the time listed, the child is emancipated, the child turns 18, or a court changes the order. The Department of Health and Human Services can investigate placing agencies and can suspend or revoke a license for violations. These enforcement powers cover placements that begin 60 days after this section takes effect.

Medicaid changes take effect Jan 2023

Specific subsections in earlier session laws become effective January 1, 2023, tied to CMS’s approval of DHHS’s application. This clarifies when those Medicaid-related provisions apply.

Distressed counties keep CDBG repayments

Cities and counties in economically distressed counties can keep CDBG loan repayments and related income. They may run local revolving loan funds for Title I‑eligible projects that meet a federal national objective.

Clearer rules for electronic collateral

A purchaser has control of electronic chattel paper when a single authoritative copy names the purchaser, is kept by the purchaser or its custodian, and other copies and changes are clearly identified. Saying you hold control for someone else does not, by itself, create duties or require confirmations unless you agree or other law says so. These updates take effect October 1, 2025.

Negotiable instruments: liability and terms

An instrument can name the governing law and a forum for disputes without losing negotiability. A person is liable on an instrument only if they signed it or an agent signed in a way that binds them. These updates take effect October 1, 2025.

Uniform rules for special deposits

Courts must consider consistency with other states that adopt the Uniform Special Deposits Act. This applies to accounts set up under agreements signed on or after October 1, 2025.

$175 fee to file expunction

You must pay a $175 fee when you file an expunction petition with the clerk. The fee is waived if you are indigent. The money goes to the General Fund.

More steps to file expunction

Expunction petitions must include your affidavit of good character and two affidavits from unrelated people. You must use the court’s approved form to let the SBI run State and national checks and the AOC search expunction records. The clerk files and sends the form to SBI and AOC for reports to the court.

Tighter screening for notary commissions

The Secretary may deny a notary application for incomplete or false filings, certain crimes, civil deceit findings, or past license discipline. There is a 10‑year bar after release for felonies and crimes of dishonesty. There is a five‑year bar after finishing a disciplinary order for prior license actions.

Attorney General runs RICO forfeitures

Only the Attorney General can file and prosecute RICO forfeiture cases that start after this law. The State no longer has to show special or irreparable harm or post a bond to get temporary restraining orders or preliminary injunctions in these civil cases.

Geology board requires NC residency

Members of the geology licensing board must be U.S. citizens and must have lived in North Carolina for at least six months before appointment. This limits who can be appointed to the board.

Emergency fund may run awards program

The state may pay the cost of administering this awards program from the Contingency and Emergency Fund. The Governor and the Council of State must approve using the Fund.

Police certification must list expunged convictions

If you apply for certification under Chapter 17C or 17E, you must disclose all convictions, even if expunged. If you request a disclosure statement from the Sheriffs’ Education and Training Standards Commission, you must report any felony convictions, even if expunged.

Old Chapter 31C is repealed

Chapter 31C is no longer in force. People who used those rules must now follow other laws or court rules for their claims. Check the current statutes to see what now applies.

Secured creditors’ duties and damage limits

A secured creditor holding your collateral must use reasonable care to keep it safe, but can charge reasonable costs like insurance or taxes and secure those costs with the collateral. The debtor bears accidental‑loss risk to the extent insurance does not cover it, and consumer goods may be used only as you agreed. Statutory damages under the cited rule are limited: no liability for failures to follow G.S. 25‑9‑616 under that subsection, and only one recovery per secured obligation. These updates take effect October 1, 2025.

Community property rights at death clarified

Beginning January 1, 2026, the law presumes property bought while spouses lived in a community‑property state stays community property here, unless a court sees proof otherwise. It gives surviving spouses, executors, heirs, and nonprobate transferees clear ways to bring claims and lets courts use fair‑equity rules and look to the law where the property was gained. Good‑faith buyers and lien holders are protected unless spouses recorded notice before the deal. Earlier filing deadlines that already started under old law still control those older rights.

Property split claims after a death

Beginning October 1, 2025, an equitable distribution claim survives a spouse’s death if the spouses were living apart at the time of death. A claim by the deceased spouse’s estate against the survivor must be filed in district court within one year of death or it is barred.

Self-storage notices can be emailed

Self‑storage facilities can treat the last known address as the mailing or email in your rental agreement. Verified email notice is allowed. The law broadens who counts as an owner and clarifies these units are not for residential use. This can speed notices to renters but raises the risk you miss an email.

Environmental health specialist licensing updated

You can qualify for certification through several education and experience paths, must complete specialized instruction, and must pass a Board exam. The application fee is up to $100, and the Board may charge exam costs and up to a $150 administrative fee. The Board may issue a two‑year intern certificate to qualified applicants working in the field.

Principal Fellows loans now managed

Outstanding Principal Fellows scholarship loans are now administered by the designated Authority. Your payments and interest are deposited into the Principal Fellows Trust Fund. For most borrowers, this is an administrative change and does not change how much you must repay right away.

Short-term school suspensions and student rights

A principal may impose a short‑term suspension for willful conduct listed in the local code. Suspended students can take textbooks home and, when practical, get missed work. They must have a chance to take any missed quarterly or semester exams.

Notary applicants need pen‑and‑ink signature

For an initial notary commission, your signature must be written with pen and ink. The Secretary of State may allow you to file the application electronically and set how your signature is submitted.

Auction license and firm definitions updated

The law clarifies who counts as an auctioneer or auction firm, including some sole proprietors and companies that run, advertise, or host auctions. It defines estate sales, consignment, and a designated person for firms, and renames the recovery fund. This tightens who must follow licensing and Board rules.

New rules for geologist licensing

You can teach geology or do geology research in North Carolina without a license, but licensed practice still needs a license. Nonresident geologists can work up to 90 days a year if licensed elsewhere and they file with the Board within 10 days of arrival. Applicants must apply under oath, show education and five years of experience (three supervised), and pass the Board exam. The Board sets an application fee and requires a seal for signed reports. The Board may license qualified out‑of‑state geologists by comity and keeps records of applicant qualifications.

Corrections skips some rulemaking steps

The Department of Adult Correction does not use Article 2A rulemaking for execution matters and for rules that relate only to people in its custody or supervision.

New rules for party committees

A party caucus can create an affiliated party committee only by a majority vote. The committee must file a public certification, adopt bylaws, appoint a treasurer, open a bank account, and may use the party’s name and symbol. It must file an organizational report and follow campaign‑finance rules.

Old statutes repealed and removed

The law repeals several old statutes. It removes G.S. 115C-315(a), G.S. 121-42, Article 29A of Chapter 143, and Article 5 of Chapter 77. Agencies and people no longer follow those rules.

Retroactive start date set for section

One subsection is treated as effective January 1, 2016. The rest of that section takes effect when the law took effect. This retroactive date can change rights or duties back to 2016 for matters covered by that subsection.

State pays adoption check costs

DHHS’s Division of Social Services pays the costs to carry out required preplacement criminal-history checks. The SBI may bill DHHS only for the national checks. State and local agencies and workers have no negligence liability for these duties, except for gross negligence, wanton conduct, or intentional wrongdoing, and insurance or indemnification can still waive immunity.

Stricter quorum for board votes

A board can vote only if at least seven members attend in person or by phone. A decision needs a majority of those present.

Underground tank cleanup rules and limits

The Department can hire contractors to review or defend cleanup claims but may spend only 1% of the Commercial Fund’s unobligated balance from the prior June 30. The Secretary must recover improper payments and return money to the Fund or original payer, seeking repayment from any misrepresenting agent first. All State agencies must give staff, equipment, and materials, when feasible, to support petroleum cleanups. Some older environmental provisions are repealed.

Clear rules for cyber incidents

The law defines a ransomware attack and what counts as a significant cybersecurity incident. Agencies use set thresholds, recovery ability, and impact to decide if an incident is significant. Any agency that was allowed to deviate from IT rules must make a plan with the State CIO to phase out unnecessary deviations and file it as directed.

Limits on electronic notices and signatures

For matters under the Article, the law changes how ESIGN applies starting October 1, 2025, but does not change 15 U.S.C. § 7001(c) and does not allow electronic delivery of the notices listed in 15 U.S.C. § 7003(b). In adoption placements covered by the Part, the law likewise does not allow those specific notices to be sent electronically.

New filings and privacy for small insurers

Small‑employer health insurers must file an actuarial certification each year by March 15 stating their rating methods are sound. They must give rating documents to the Insurance Commissioner when asked. Those documents are treated as trade secrets and generally cannot be shared outside the Department unless the carrier agrees, a court orders it, or there is a violation.

Stronger pension fraud checks, privacy

The Retirement Systems Division can inspect and copy employers’ and providers’ records during fraud or compliance investigations. Social and medical providers must give copies for a named beneficiary after a proper written request, and the Division pays a reasonable fee. The Executive Director keeps investigative files for 10 years and keeps work papers confidential unless law allows or a Wake County court orders release. The identity of anyone who reports fraud is confidential. The State Treasurer may appoint private lawyers to represent benefit‑program administration.

Targeted repeals and card rule change

Financial transaction cards defined in state law are excluded from this Article’s rules. The law also repeals G.S. 1‑18, Article 15A of Chapter 15, and Article 3 of Chapter 110. The effects depend on what those provisions previously required or allowed.

Retirement boards must agree on changes

Changes to the Contributory Death Benefit take effect only if both the State and Local retirement boards vote for the same change. The General Assembly’s two appointees to the State board cannot be active or retired teachers, State employees, or local government employees.

Temporary changes for hospice facilities

Until November 21, 2025, hospice inpatient, hospice residential, and ambulatory surgical facilities are included in the definition of health service facilities. If a hospital uses an acute care bed to provide inpatient hospice care under a contract with a licensed hospice, that bed is not reclassified and the hospital is not treated as a hospice inpatient facility.

Tighter rules for geology practice and titles

A subordinate may assist a licensed geologist but cannot take charge or use the title “licensed geologist.” Unlicensed practice, misuse of a seal, or signing with an expired or suspended license is a Class 2 misdemeanor. The Board can require exams or other steps and suspend a license until competence is shown.

Voter OK for some county spending

A county may not spend State or local tax dollars under the community development law for uses not listed in G.S. 153A-149 unless voters approve it. Counties must stay within the law or seek a public vote first.

Updated rules for sales contracts

A final record of a sale-of-goods agreement can be explained or supplemented by course of dealing, usage of trade, course of performance, and consistent extra terms. Courts may bar extra terms if the record was meant to be complete and exclusive.

Sponsors & Cosponsors

Sponsor

Ted Davis, Jr.
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