Posted:
Timothy:
The NC Planned Community Act states you must give the Owner a 15 day Fianl Notice, however it conflicts with the NC Collection law which states HOA's must give a 30 day Final notice, therefore we follow the 30 day final notice. NC is one of those states have have many laws governing HOA's within the state.
Do you have an MC? If so they should be sending the proper notices to the Owner e.g., late notices, the the Final notice, then lien.
The HOA always has the option to utilize a collection agency, attorney and utilize the lien, foreclosure or judgment avenue.
With liens, the Association has the potential to collect all of its attorney’s fees. When seeking a judgment, the Association is limited to attorney’s fees that are equal to 15% of the amount due.
With a lien, if a homeowner wants to contest the Association's position, the Clerk will make a decision at the hearing as the Clerk's inquiry is limited to determining whether the debtor has an obligation to the Association and if there is a default (the Clerk does not even make a determination as to the amount of the default). If the owner is unhappy with the Clerk's decision, the owner has to go to the bother and expense of filing an appeal to the Superior Court Judge whose inquiry is supposed to be limited to the same issues as the Clerk).
With an action to obtain a judgment, the homeowner can raise any issue that he deems appropriate. Even if we argue that any such issues are irrelevant, the judge hearing the matter may decide that the debtor should have a chance to present his case to a jury for resolution. Instead of the four month period that it usually takes to finish a foreclosure, obtaining a judgment could take over a year. In addition, as is the case with any litigation, the Association could have to answer discovery and participate in depositions. A contested lawsuit is generally more costly than a foreclosure (if there is a trial, the costs would likely approximate $2,000 or more per day) and as stated above, the Association could expect to recover only a small portion of the fees that are incurred.
Before the Planned Community Act took effect in 1999, we had to file actions to obtain judgments and we know that process very well. It is generally much more burdensome and costly and less effective than the lien and foreclosure process. If the Association obtained a judgment against an owner and decided to execute on the judgment, the Association would have to issue a notice to the debtor of his right to claim exempt property and then send the Sheriff to execute on the property if it is not exempt and has much value above the mortgage balance. With the lien and foreclosure process, the debtor does not get an opportunity to claim any exemptions for the home and we do not have to deal with the Sheriff and his schedule and interest in the matter (or lack thereof).
I cannot emphasize enough that seeking a money judgment when the lien/foreclosure process is available would be a terrible mistake as the Association would end up with a more cumbersome, more unreliable or predictable situation that would cost it more money.