HOA & Condo Collections – Significant October 1 Law Changes

Earlier this summer I posted a blog on some of the more significant changes to the assessment lien statutes in NCGS 47C-3-116 (NC Condominium Act) and 47F-3-116 (NC Planned Community Act) effective October 1 (that blog post can be found at http://www.lawfirmcarolinas.com/blog/revised-lien-for-assessments-law). Most of the substantial changes involve steps that are later in the collections process and mostly of interest to attorneys. However, two of the new requirements that take effect October 1 may fall on the association.

First, the statute has added to the list of places that the 15-day attorneys’ fee letter must be mailed. (This is the letter that is sent to the homeowner that says something to the effect of “you have 15 days from the mailing of this notice to pay the outstanding balance without the attorneys’ fees and court costs.”) The statute currently provides that this notice must be sent by “first-class mail to the property address and, if different, to the mailing address for the unit owner in the association’s records.” However, the NEW statute effective October 1 provides that the notice must be sent by “first-class mail to the physical address of the unit and the unit owner’s address of record with the association and, if different, to the address for the unit owner shown on the county tax records for the unit” (underlining added). In other words, the 15-day attorneys’ fee letter must now involve a search to see if the unit owner has a different address that is shown on the county tax records. If your association is currently responsible for sending the 15-day letter to owners, the attorneys’ fee letter should also be sent to any different address shown on the county tax records (and there are Websites where this information can be found, such as the “Tax” column of http://www.statewidetitle.com/registers.asp). Depending on how a specific association’s collections are done, this change may or may not be a significant change.  So, check with your attorney.

Second, the NEW statute requires that the association formally appoint a trustee to conduct the non-judicial foreclosure proceeding and sale. Even if that trustee is counsel for the association in an uncontested case, the appointment must be in writing and filed. Different collection firms will likely handle the appointment process differently. We have decided the easiest approach is to simply add the appointment to our current Board Resolution that authorizes the commencement of foreclosure proceedings against a lot (as required by statute). As a result, for any clients who need our form, simply login to the collections page on the private side of our law firm Website and click on “Foreclosure Authorization and Appointment of Trustee.” Since this authorization and appointment will be necessary for all foreclosures after October 1, we ask that you start using the form immediately.

If you have any questions, contact any of the community association attorneys at Law Firm Carolinas.

HOA & Condo Associations