HOA and condo association foreclosure in North Carolina

HOA and condo collection rules in North Carolina, step by step

• Which law covers your community

  Check when your community was created

  The Planned Community Act (Chapter 47F) covers HOAs created on or after January 1, 1999, except those with 20 or fewer lots unless the declaration opts in. Its lien and fine rules also apply to older HOAs unless their documents say otherwise. The Condominium Act (Chapter 47C) covers condos created after October 1, 1986, and its lien and fine rules also reach older condos that were set up under the Unit Ownership Act.

  N.C.G.S. §§ 47F-1-102(a) to (c), 47C-1-102(a)

• Statement of what you owe, then a claim of lien

  Assessment 30 days late; statement at least 15 days before the lien

  An unpaid assessment becomes a lien only when the association files a claim of lien with the clerk of superior court. At least 15 days before filing, it must mail you a statement of the amount due. The claim of lien must warn in bold capital letters that the association may foreclose, and it must be served on you like a lawsuit. The lien ends unless the association starts enforcing it within 3 years.

  N.C.G.S. §§ 47F-3-116(a) to (c), 47C-3-116(a) to (c)

• 15 days to pay before attorneys' fees

  15 days from the mailing of the fee notice

  You cannot be charged attorneys' fees or court costs until the association mails you a notice of the balance and says it will seek those fees. If you pay the balance within 15 days of that mailing, you owe no attorneys' fees. The notice must also name a person you can call to discuss a payment schedule. The board may agree to installments, but neither side has to.

  N.C.G.S. §§ 47F-3-116(e), (i), 47C-3-116(e), (i)

• Fines need a hearing, and fines alone need a court

  Before any fine is imposed

  Unless the declaration sets its own procedure, the board or a panel must give you notice of the charge and a hearing before fining you, and a fine can be up to $100 a day for a continuing violation. Fines become part of the lien. But a lien made up only of fines, interest on fines, or attorneys' fees for fines can be foreclosed only through a court case, not by the trustee sale process.

  N.C.G.S. §§ 47F-3-107.1, 47F-3-116(h), 47C-3-116(h)

• Foreclosure by trustee sale after 90 days

  Assessment unpaid 90 days or more, after a board vote

  The association can foreclose under Chapter 45's power of sale, with a notice of intent, a hearing before the clerk and a sale by a trustee it appoints, or it can sue in court. If you do not contest the debt, attorneys' fees and the trustee's commission together are capped at $1,200, not counting costs. You have the same right as a borrower to ask a judge to stop the sale on legal grounds.

  N.C.G.S. §§ 47F-3-116(f), (g), 47C-3-116(f), (g); N.C.G.S. § 45-21.34

• Pay off until the upset bid period ends

  Until the 10-day upset bid period after the sale ends

  If you pay the debt and all costs, including advertising, attorneys' fees and the trustee's commission, before the upset bid period ends, the trustee must dismiss the foreclosure and the association must cancel the lien. After that period ends, the trustee can deed the home to the high bidder.

  N.C.G.S. §§ 47F-3-116(f)(8), (10), 47C-3-116(f)(8), (10); N.C.G.S. § 45-21.27

• No priority over an earlier mortgage

  At any sale

  The claim of lien comes ahead of other liens except a mortgage or deed of trust recorded before the lien was filed, and property taxes. So an association sale does not wipe out your mortgage. If your lender forecloses first, the buyer does not owe the dues that came due before it took title; those are spread to all owners.

  N.C.G.S. §§ 47F-3-116(d), (j), 47C-3-116(d), (j)

Common questions in North Carolina