As discussed in our post “‘Lien’ on Me”, we are frequently asked for advice on how to collect unpaid assessments and fines. While the answer for your specific association depends on the particular facts of each situation, there are some general guidelines that can help your board make decisions regarding collections. The first option, discuss in our earlier post, is to record a lien against the lot and demand payment from the lot owner. The second option is a civil action against the lot owner(s) to recover the unpaid account. This option can be especially attractive where one member owns several delinquent lots and each lot would have to be foreclosed separately or where the lot is secured by a mortgage or encumbered by another lien.
A civil suit can result in a judgment against the lot owner that constitutes a lien on all of the lot owner’s property located in the county where the judgment is obtained. The judgment can be transcribed to other counties in North Carolina and applied to the lot owner’s property in those counties. Judgments can also be domesticated in other states which would enable the association to reach both personal and real property held by the lot owner in other jurisdictions.
If a delinquent owner does not defend the suit, a simple and inexpensive default judgment can be obtained, resulting in a judgment lien against the lot owner’s property. However, it is difficult to predict whether the delinquent lot owner will contest the lawsuit in advance of filing suit.
If you have unpaid assessments, contact Bill Cannon or Martha Bradley to discuss the best option available for your situation.