Many people don’t realize the enormous foreclosure power that HOA’s (aka Home Owner’s Association), in North Carolina possess, but it’s true that they can actually foreclose on a homeowner’s property for what may seem to be a very nominal amount of dues owed.
According to North Carolina General Statute Chapter 47F-3-116, the homeowner’s “association, acting through the executive board, may foreclose the claim of lien in like manner as a mortgage on real estate under the power of sale… if the assessment remains unpaid for 90 days or more.” That means that if a homeowner is 90 days or more delinquent on his or her HOA dues, the association has the same power as a bank or mortgage lender to foreclose on the property. Often this occurs when a homeowner ignores notices and letters from the HOA claiming the fees are due because they don’t understand the serious consequences for non-payment.
When the association sends out a notice of fees due, the homeowner has 15 days to pay the outstanding balance without incurring attorney’s fees and court costs which often can exceed the amount due. The homeowner may also contact the homeowner’s association board and try to negotiate a payment schedule for the outstanding balance but the board is under no obligation to enter into such an agreement.
If the claim is filed by the association it must contain the following statement in bold letters: “THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY, AND IF THE LIEN IS NOT PAID, THE HOMEOWNER’S ASSOCIATION MAY PROCEED WITH FORECLOSURE AGAINST YOUR PROPERTY IN LIKE MANNER AS A MORTGAGE UNDER THE NORTH CAROLINA LAW.”
Although the HOA can foreclose for outstanding balance of dues, they cannot foreclose on a lien consisting of fines imposed by the association, interest on unpaid fines, or attorney’s fees associated with fines imposed by the association. For example, if the HOA has imposed fines on a homeowner for not maintaining a properly manicured lawn, or parking an RV in the driveway, they can place a lien on the property but cannot foreclose on a lien that is associated with fines.
It is important to be aware of the homeowner’s association’s powers because they can carry as much weight as a mortgage lender or bank when it comes to foreclosure proceedings. If you are unsure if your homeowners’ association is exercising its rights properly, please call an experienced real estate attorney at the Alford Law Firm for a free consultation, you can reach us at 919-562-0770.