Specifically, board members, officers, and directors have a duty to act in good faith, with loyalty to the members of the association, and within their scope of authority. Chapter 47F outlines how HOAs can operate, including how HOAs can impose fines or community suspensions, conduct meetings and voting, and fine property owners interest for past due assessments.
HOAs are also required to conduct an annual meeting that satisfies basic quorum requirements. Specifically, this law enables HOAs to hire, fire, and manage agents and employees on behalf of the community; regulate the use, maintenance, and repair of shared property; grant easements, leases, or licenses as part of the shared property; impose reasonable fines or suspensions for violation of community rules; impose late fees for failure to pay community assessments; and collect owed debts with judicial and nonjudicial foreclosures.
Article 3 of Chapter 47F provides HOAs with the power to place a lien on a property if a charge is delinquent for 30 days. A lien is a security interest in property that can be used to get an owed payment or performance.
Under North Carolina law, an HOA can include past-due assessments, late charges, fines for violating HOA rules, interest on past-due common expenses, and expenses in connection to collecting the owed debt as the basis for the lien. In order to file a lien, the HOA must comply with particular notice requirements. First, Chapter 47F states the HOA must send the property owner notice of the owed debt 15 days prior to filing the claim of lien. This means the HOA must provide the property owner with personal notice of the claim of lien or post the notice on the property after certifying the property owner cannot be reached.
This means the HOA has the first right to get paid from the funds generated through foreclosure of the property unless there is a claim by a preexisting mortgage lender, or the government has a claim for unpaid property taxes. Chapter 47F gives HOAs the power to initiate judicial or nonjudicial foreclosure proceedings to enforce its lien and get the owed debt from the proceeds of the sale of property.
In order to initiate foreclosure proceedings, the HOA must wait for the assessment to be delinquent for 90 days before initiating these proceedings. Once the process starts, the foreclosure will usually proceed as a nonjudicial foreclosure , which occurs without court supervision. A judicial foreclosure is initiated through a lawsuit and involves much more oversight from the court.
If the court does not oversee the foreclosure process, the property owner is still entitled to the procedural rights and remedies associated with foreclosures. Specifically, property owners are entitled to proper notice and hearing of the foreclosure, have the right to remedy the delinquency before the foreclosure window closes, and can bring any issues of bad faith that may arise throughout the foreclosure process to the attention of the court.
Though an HOA has every legal right to engage in this conduct, property owners can take affirmative steps to stop this from happening.
In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. I'm behind in HOA dues but not my mortgage. If you get behind in HOA dues, you might lose your home to foreclosure—even if you're current on your mortgage.
Question I own a house in a development that has a homeowners' association HOA. Answer Probably yes. Talk to a Lawyer Start here to find foreclosure lawyers near you. Practice Area Please select Zip Code.
How it Works Briefly tell us about your case Provide your contact information Choose attorneys to contact you. Foreclosure Laws. Foreclosure: The Basics. Foreclosure and Bankruptcy. Naturally, there are consequences that you must face if you fail to pay these assessments. Perhaps one of the most well-known consequences is an HOA lien and foreclosure. That means even if you stay up-to-date on all your mortgage payments, you can still lose your home to the HOA if you stop paying assessments.
Even if you are only a few hundred dollars in debt to your HOA, the association can still have the power to foreclose on your property. This type of foreclosure typically undergoes the same process as a foreclosure brought on by your mortgage lender. When an HOA forecloses on your property, it can take the judicial or non-judicial route. A judicial foreclosure requires a lawsuit and takes the matter to court, whereas a non-judicial foreclosure does not.
When you fail to pay your HOA assessment or fee, a lien automatically attaches to your property. Often, an HOA will record this lien with the county records office, though this is not a mandatory step. If you want to remove the lien from your house, you need to settle your debt with the HOA.
That includes the original assessment amount as well as any fines, interest, or penalties associated. You may even need to pay for attorney fees. When you have a lien attached to your property, you will have a hard time selling it because you lack a clear title.
When an HOA places a lien on a property, the lien usually takes precedence over other existing liens. This includes the mortgage, but not the first mortgage, provided it was recorded prior to the lien placement. Though, if you signed any promissory notes, you will still need to settle those debts. If you have a lien on your home, the HOA will not be responsible for keeping up with mortgages. That means you will still need to pay off your mortgage to your lender. Once the HOA decides to foreclose on your home, though, you can stop paying your mortgage.
The HOA will then assume the responsibility of making the rest of the mortgage payments.
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