Revised Assessment Lien Statute

Last week I posted a Q&A discussion on the new HOA/Condo Prelitigation Mediation Law.  The other significant community association legislation adopted in North Carolina this year was HB 331 (“HOAs/Uniform Lien Procedure.”), which takes effect October 1, 2013. Here’s a link to the new law:

The changes to NCGS 47C-3-116 (NC Condominium Act) and 47F-3-116 (NC Planned Community Act) may appear to be a complete rewrite of the “Lien for Assessments” sections, but most are technical changes. That is, much of the current wording is stricken, but most everything is then put back in through revised language. There were several purposes behind the bill. Although HOA/condo foreclosures are much less common than bank foreclosures on mortgages, differences in the process have long concerned title insurance companies and real estate lawyers. For instance, did the lack of a third party trustee unfairly taint the process, or did the previous language even pass clear title in the rare instance of an HOA/condo foreclosure sale? Also, due to numerous amendments to the statute over the years, the wording was disorganized, confusing, and even conflicted with itself. The new language reorganizes the statute in logical order and groups related provisions. Not only is the process now more defensible going forward, but the law addresses past concerns by providing that HOA/condo nonjudicial foreclosures prior to October 1, 2013, are validated unless an action to set aside the foreclosure is commenced by October 1, 2013, or within one year after the date of sale, whichever is later.

While details of the rewritten statute will mostly be of concern to collection attorneys, here’s a listing of some of the changes:

  1. Clarifies the sums secured by the claim of lien, including amounts due post-filing
  2. Clarifies that the 15 day attorneys’ fees letter does not need to be mailed to a vacant unit or location with no postal address, such as an empty lot or boat slip
  3. Clarifies that the 15 day pre-lien notice does not need to be mailed to a vacant unit or location with no postal address, such as an empty lot or boat slip
  4. More closely aligns the association foreclosure process with Chapter 45 power of sale foreclosures
  5. Provides for the appointment of a trustee to conduct a nonjudicial foreclosure, which association counsel may serve as if the owner does not contest the obligation to pay or the validity, enforcement or foreclosure of the claim of lien
  6. Provides owners with rights and remedies to ensure the timely satisfaction and cancellation of claims of lien when they are paid in full
  7. Removes disincentives for an association to discuss or approve installment payments
  8. Clarifies that attorneys’ fees may be incurred in the accepting and processing of installment payment plans
  9. Clarifies the right of the association to bid at foreclosure sale
  10. Clarifies “acquisition of title” with regards to bank foreclosures
  11. Clarifies that prevailing party in a judicial foreclosure or lawsuit is entitled to costs and reasonable attorneys’ fees (addressing issues from the Willow Bend Homeowners Association, Inc. v. Robinson Court of Appeals case)

If you have specific questions about the new provisions, feel free to contact any of the HOA / condo attorneys at Law Firm Carolinas.

HOA & Condo Associations