§ 159B-23. Limited liability. - North Carolina Statutes

§ 159B‑23.  Limitedliability.

(a)        Bonds shall be special obligations of the municipality orjoint agency issuing them. The principal of, premium, if any, and interest onthe bonds shall not be payable from the general funds of the municipality orjoint agency.  Bonds issued to pay the cost of a project and, except asprovided in this subsection, bonds that are not issued to pay the cost of aproject shall not constitute a legal or equitable pledge, charge, lien, orencumbrance upon any of the municipality's or joint agency's property or uponany of its income, receipts, or revenues, except the funds pledged under theresolution authorizing the bonds or the trust agreement securing the bonds.Bonds that are not issued to pay the cost of a project and that are secured bya pledge, assignment, mortgage, or grant of a security interest in propertyshall constitute an encumbrance on the municipality's or joint agency'sproperty as provided in the resolution authorizing the bonds or the trustagreement securing the bonds.

(b)        Neither the faith and credit nor the taxing power of amunicipality or of the State are, or may be, pledged for the payment of theprincipal of or interest on bonds, and no holder of bonds shall have the rightto compel the exercise of the taxing power by the State or a municipality.  Noholder of bonds issued to pay the cost of a project shall have the right tocompel the forfeiture of any of the municipality's or joint agency's propertyin connection with any default on the bonds.  A holder of bonds that are notissued to pay the cost of a project and that are secured by a pledge,assignment, mortgage, or grant of a security interest in property may compelthe forfeiture of the property to the extent allowed in the resolutionauthorizing the bonds or the trust agreement securing the bonds.

(c)        Every bond issued to pay the cost of a project shall recitein substance that the principal of and interest on the bond is payable solelyfrom the revenues pledged to its payment and that the municipality or jointagency is not obligated to pay the principal or interest except from theserevenues. A bond that is not issued to pay the cost of a project shall recitein substance that the principal of and interest on the bond is payable andsecured as provided in the resolution authorizing the bond or the trustagreement securing the bond. (1975, c. 186, s. 1; 1991, c. 513, s. 6.)