Changes to Development Laws Create New Requirements in Filing Assessment Liens
For our Homeowner Association clients, whether Planned Community Subdivisions (regulated under Chapter 47F of the North Carolina general Statutes), or a condominium (regulated under Chapter 47C of the North Carolina General Statutes), there have been a few major changes to the North Carolina General Statutes which will directly impact your operations. This is especially true as it regards taking action to collect delinquent assessments (including the filing of liens), as well as foreclosure procedures required to be complied with in any attempt to enforce properly filed liens. This post will address collection efforts including initial collection letters, demands for attorney fees and the filing of liens. My next post will discuss the process of filing a foreclosure to enforce a properly filed lien against a planned community lot or condominium unit.
Prior to October of this past year (2009) there was a basic understanding that an Association could simply file a lien for assessments once those assessment was over 30 days overdue. NCGS 47C-3-116 (and corresponding 47F-3-116) basically stated that back assessments constituted a lien when overdue and when a lien was filed. In most cases, Associations made repeated attempts to collect prior to filing a lien, but there was no uniform notice requirement other than having the 30 day delinquency. The change to the statute is such that now, once you have waited the 30 day period, a notice letter must first be sent to the lot or unit owners giving them a 15 day period to pay the assessments in full, prior to the filing of a lien being authorized. Fortunately, there remains a 15 day period for assessing attorney fees and costs as well, such that the notice for payment of assessments prior to a lien being filed, and for giving notice of the intent to charge attorney fees, can run contemporaneously.
Assuming that assessments are not paid within the 15 day period, and therefore the Association is entitled to file a lien for the amount of assessments delinquent, it is critical to note that the statute has changed the amount of information required to be supplied in the lien document to be filed with the Clerk of Superior Court, and additionally the statute now requires that the lien holder must certify that the lien has been served on the owner in the same manner as service of process in a lawsuit, and that the certificate of service be filed along with the lien.
So what does this mean for most of our Association clients? Basically, if you have not revised your lien forms and processes lately (since late in 2009), most likely you are working with old, out of date forms and procedures. Use of old forms and processes may negatively affect your ability to successfully collect delinquent assessments.
To review the condo statute or the current planned community statute follow the links below:
Condo: http://tinyurl.com/y83mmfo
Planned community:
Feel free to contact me if you have any questions regarding these statutes.
Tom Grella
Subscribe