The Community Association Lawyers of Cannon Law, P.C. provide assistance in collection of assessments from delinquent members. The law regarding collection of assessments can be difficult to understand and we strongly urge you to contact us with any questions you may have regarding collection of past due assessments. However, here are some general guidelines to assist Community Associations in understanding the options available for collecting past due assessments. These guidelines are organized into three groups: (1) information applicable to all Community Associations, (2) information applicable to Planned Community Act Associations and (3) Information applicable to Condominiums.
Community Associations can collect assessments by filing suit without an attorney in the Small Claims Division of District Court in the county where the Association is located. An attorney can be used to file suit there as well. An attorney is required if the Association wishes to file suit in the District or Superior Court Divisions. However, this option is only available for suits against residents of North Carolina. Nonresidents must be sued in the District or Superior Court Division where an attorney is required to represent the Association. Collection suits may not be filed in the Small Claims division if the amount sought exceeds $ 10,000.
If the member does not answer the suit a default judgment can be entered and a writ of execution issued by the Clerk of Court allowing property of the member to be sold at a public sale in order to satisfy the judgment. If the member responds and contests the suit, a trial may be required before judgment can be entered and a writ of execution can be issued.
A filed judgment creates a general lien upon all of the member’s property in the county where the judgment is filed. The judgment can also be filed in other North Carolina counties where the member’s property is located. In addition, the judgment can also be domesticated in another state where the member has property.
Another option for Associations is to file a lien against the member’s condominium or lot for the unpaid assessments due on that lot or unit. The North Carolina Planned Community Act and the North Carolina Condominium Act have similar provisions for filing the lien and foreclosing the lien at a public sale. Liens are most effective when the Association has reason to believe that a sale of the unit or lot is imminent and the lien will be paid off at the closing of the sale. A lien may be placed upon a lot or unit only for the assessments due for that lot or unit and are not a general lien upon property like the judgment lien discussed above.
Actions to foreclose the lien must be brought within 3 years of filing of the lien or the lien becomes void. Foreclosure of a lien uses the same procedure as used when foreclosing a deed of trust under a power of sale. A public sale takes place and the proceeds are used to satisfy the lien and all associated costs of the proceeding.
If your Association attempts to file a lien without consulting with one of our Community Association Lawyers, it should carefully read, understand and follow all of the applicable statutes and appellate cases related to liens. Improper filing of a lien can make the lien ineffective and even subject the Association to liability for slander of title.
North Carolina only permits the Association to collect its attorney fees when specifically provided by law. The Planned Community Act and the Condominium act permit collection of attorney fees under some circumstances. Contact the Community Association Attorneys at Cannon Law, P.C. for more detailed information about the ability to collect attorney fees when taking action to collect assessments.