In North Carolina when a homeowner dies, his or her real property passes immediately to the heirs under a Will or if there is no Will, under the Intestate Succession Statute. This means that as soon as the homeowner dies there is immediately, by operation of law, a new owner. The real property is not a probate asset and therefore does not pass as such. Except for limited exceptions, this means that typically the “estate” is not the new owner.
The question then arises, who is responsible for paying the community association assessments/dues? Since the heirs inherited the property immediately upon death, the short answer is, the heirs are responsible. This means that they are responsible to pay the mortgage, taxes, HOA or condo assessments and any other fees associated with being the new owners.
There are provisions in the law that allow a personal representative (executor or administrator) to petition the Court to “take back” the property into the estate if there are not enough probate assets to pay the debts of the estate. However, unless the personal representative has done this and received an order from the Court, the personal representative should not be paying any association assessments, as that is not an allowable estate expense. The association or its attorney should check the court records to determine the heirs so that they can notice them directly about future association dues. While the estate itself is not typically responsible for the dues, contacting the personal representative for contact information of the new owners is a good idea.
If a homeowner was deficient in paying assessments at the time of his or her death, the amount owed before death can be claimed against the estate. This would be done by filing a claim against the estate. Such filing must occur within the period allowed for creditors’ claims in an estate. When I represent the personal representatives of an estate, I always recommend that specific notice be given to any community association of its right to make a claim against the estate and the time period in which that can be done. Again, HOA or condo dues that accrue after the date of death cannot be collected in this manner and must be pursued against the heirs as discussed above. Realistically, for a delinquent homeowner that passes away, the association will likely pursue both the pre-death dues against the estate and the newly accruing dues against the heirs.
It is entirely possible that no probate estate will be established if the homeowner died without any probate assets and only owned real estate. This makes it a bit trickier for the community association to determine the heirs and their contact information in order to mail notice of payments due or other relevant information. As an association has the power to lien and foreclose on property in the association, it is often surprising when the new heirs do not make contact themselves, but they may simply be unaware. After a period, if the association determines it must begin foreclosure proceedings because of unpaid assessments, the association can give notice by publication if the heirs or their whereabouts cannot be determined. This takes more time than serving known heirs by personal service, but it is allowable under North Carolina law.
In North Carolina, a HOA or condo can place a lien on property for unpaid dues. This lien has priority over all liens and encumbrances except for liens and encumbrances recorded before the claim of lien is filed (including but not limited to mortgage or deed of trust) and liens for real estate taxes and other governmental charges. If a homeowner defaults on HOA dues, the HOA can foreclose on the property after filing a lien and may do so even if the homeowner is current with the mortgage payments.
If you have questions regarding the pursuit of payment of HOA dues either before or after the death of a homeowner, the attorneys at Black, Slaughter & Black can assist you with these issues. In addition, our attorneys can assist you with all matters related to estate and trust planning and estate and trust administration.