NC HOA - Obligation for Delinquent Assessments

I am President of our HOA and need some assistance please. We have a foreclosed home in our small association and are not usually faced with this situation. HOA annual fees were due 6 months ago and we have not been able to locate former owners who had vacated their property 6 months prior. The lienholder has finally foreclosed, but are saying that they only owe the association dues from when it transferred title (last month)to current date; and their statement says "as per NC laws". My question is are they correct to site NC laws or does our covenants supercede as follows: "The obligation for delinquent assessments shall run with the land and pass to the successors in title."

Here is the complete section:

D. All assessments by xxxx Section 5 Homeowners Association, together with
interest, costs and reasonable attorney’s fees, shall be a charge and lien on the lot
against which each assessment is made, if such assessment is not paid within 30 days
after notice is sent each owner. Such assessments, together with interest, costs and
reasonable attorney’s fees, shall also be the personal obligation of the person who had
the ownership of such property at the time when the assessment falls due. The obligation
for delinquent assessments shall run with the land and pass to the successors in title.

Has anyone come across this in North Carolina? Thanks

Becky,

I have never before seen the phrase "The obligation for delinquent assessments shall run with the land and pass to the successors in title." This would seem to conflict with the general notion that the lien holder is not obligated to pay the past due assessments. Since the lender did not cite any particular statutes to support his argument there may be no such law.

The lender might have had no obligation to pay the fees had they sold the property at the foreclosure auction but, by taking title, they are now the property owner and subject to the same terms as any other owner. I assume that your HOA was not a defendant in the foreclosure action so there was no specific judgment against the association that would erase the debt. Had the home sold at foreclosure, the new owner would have been liable just as the lender is now.

If the above phrase was in the CC&R's when the former owners obtained their mortgage, then the lender was aware of the condition and accepted it willingly. The reality is that if your association sues to recover the back assessments their lawyer will advise them to just pay it off rather than fight. Have your lawyer threaten them with a lawsuit and see what happens.

In the meantime, be sure to record a lien on the property so that any future buyer has notice that he will need to pay off the assessments.

BeckyH2 (North Carolina)

1- Good adviceS above.

Site specific governance documents frequently contain outlandish voodoo gibberish and do not trump state laws, particularly specific condo nor HOA provisions in state law.

As above, your Board should be reviewing this with competent legal counsel.

3 What you quoted does not seem to even purport to trump first mortgagees/chargees whose priority is granted to escape pre-foreclosure arrears. It correctly platforms the fees as not merely personal but running with title.

Sorting out priority with first mortgagees as to pre-foreclosure arrears, see an apparently identical set of relevant provisions (d) and (j) respectively in

Chapter 47F: North Carolina Planned Community Act. http://www.ncga.state.nc.us/gascripts/Statutes/StatutesTOC.pl?Chapter=0047F
specifically in
"§ 47F-3-116. Lien for sums due the association; enforcement."

or Chapter 47C: North Carolina Condominium Act.
http://www.ncga.state.nc.us/gascripts/Statutes/StatutesTOC.pl?Chapter=0047C

specifically in "§ 47C-3-116. Lien for sums due the association; enforcement"

4 - In some super-priority condo lien jurisdictions like mine, lenders upon statutory prior notice rush to make good the condo borrower's condo arrears and may accelerate the balance / threaten power of sale without risking to foreclose.

Your board would be well advised asap to get this perfectly straight with competent legal counsel.

Thank you for all of the input! In the end, we prorated the amount due since the date of lienholder's transfer of title. The attorney fee to respond would be more than the amount owed. However, it would be great to have that clarified and we will include next time we contact the HOA attorney on other matters. Thank you everyone.