New Law Affects HOAs

The NC General Assembly passed House Bill 806, October 1, 2009 requires increased Home Owner Association responsibility. What this means to you:

This new law requires that the homeowners associations make reasonable and diligent effort to locate and notify a lot owner prior to filing a claim of lien for assessments, as well as written notice including a statement of the assessment amount due sent by first-class mail to the owner. These must be sent to the owner's address of record with the Association, (and if different), the physical address of the property, the address for the owner shown on the county tax records, the address for the owner shown on the county real property records for the lot or unit, and, if the owner is a corporation, the address of the registered agent listed with the Secretary of State.

The new law also states that the lien paperwork from the attorney's office must be sent by certified mail, and the attorney's office must also provide proof that it made a reasonable effort to contact the homeowner, and an affidavit affirming this fact.

The first page of the lien must also include this verbiage:
THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY, AND IF THE LIEN IS NOT PAID, THE HOMEOWNERS ASSOCIATION MAY PROCEED WITH FORECLOSURE AGAINST YOUR PROPERTY IN LIKE MANNER AS A MORTGAGE UNDER NORTH CAROLINA LAW.

This new HOA law means that governing the collections and filing of liens by homeowner associations will become more complicated and labor intensive from now on. HOAs will be required to take additional steps before and during the collection process in order to file claims of lien properly and to collect on them through the foreclosure process.

As a result, homeowner associations should review and update their collection policies and procedures, including routine updating of owner information, to ensure that they can navigate effectively through the new statutory framework.

If you are on the board of an HOA in NC, you should work with your property management company to ensure that these new proceedures are being followed.