Collection of Assessments for Community Associations

The collection of assessments from delinquent members is an important yet complex task for community associations. At Ferikes Bleynat & Cannon, our Community Association Lawyers provide legal guidance and assistance to associations seeking to collect past due assessments. The laws surrounding assessment collections can be difficult to navigate, so we strongly recommend contacting our firm with any specific questions or concerns. Below are some general guidelines to help community associations understand the available options for collecting past due assessments.

Collection Lawsuits

Community associations have the option of filing lawsuits to collect unpaid assessments. In some cases, these suits can be filed without an attorney in the Small Claims Division of District Court. However, the rules differ depending on the amount owed and the residency of the member:

• Small Claims Division: Associations can file suits for amounts up to $10,000. The association may choose to represent itself or retain an attorney.
• District or Superior Court: For claims exceeding $10,000 or for suits involving non-residents of North Carolina, the association must file in District or Superior Court, and an attorney is required.

If the member does not respond to the lawsuit, the association can seek a default judgment, and a writ of execution may be issued by the Clerk of Court, allowing the member’s property to be sold at a public sale to satisfy the judgment. If the member contests the suit, the case will proceed to trial, after which a writ of execution can be issued if the association prevails.

Once a judgment is filed, it creates a general lien against all of the member’s property in the county where the judgment is filed. The judgment can also be filed in other counties where the member holds property, and it can be domesticated in other states if the member has property there.

Filing a Lien

Another method for collecting unpaid assessments is to file a lien against the member’s condominium or lot for the specific assessments owed on that property. North Carolina’s Planned Community Act and Condominium Act provide for the filing and foreclosure of such liens.

Liens are particularly effective when a sale of the property is imminent, as they can often be satisfied at closing. However, liens are limited to the specific lot or unit for which assessments are owed, unlike general judgment liens that apply to all of a member’s property.

• Foreclosure: The foreclosure of a lien follows a similar process to foreclosing a deed of trust under a power of sale. The property is sold at a public auction, and the proceeds are used to satisfy the lien and cover associated costs.
• Time Limit: Liens must be foreclosed within three years of filing, or they will become void.

Associations should be cautious when filing liens without legal guidance, as improperly filed liens can be rendered ineffective and may expose the association to liability for slander of title. Consulting with one of our Community Association Lawyers ensures the lien is filed correctly and in accordance with state law.

Attorney Fees

In North Carolina, associations can only recover attorney fees related to the collection of assessments when permitted by law. The Planned Community Act and Condominium Act allow for the collection of attorney fees under certain circumstances. The Community Association Attorneys at Ferikes Bleynat & Cannon can provide detailed information about the conditions under which attorney fees may be collected during the assessment recovery process.

Contact Us for Assistance

If your community association is dealing with delinquent assessments, the attorneys at Ferikes Bleynat & Cannon are here to help. We provide comprehensive legal services to community associations, ensuring compliance with state laws and providing effective solutions for the collection of assessments. Contact us today to learn more about how we can assist your association.