NOTE: The case that is the subject of this blog was reversed by the NC Supreme Court in November 2022. See New NC Supreme Court Case: Applicability of Condominium Act Foreclosure Rights to Pre-1986 Condominiums.
Today, Tuesday, May 18, 2021, the NC Court of Appeals issued its decision in Executive Office Park of Durham Association, Inc. v. Rock. The decision may impact collections in older condominiums, and is a “published” decision. That means the decision is controlling legal authority and can be cited in other cases.
In this case, an older condominium association (meaning the association was not fully subject to the NC Condominium Act) was attempting to collect disputed and unpaid assessments, fines, interest, and fees from an owner of several units within the condominium. The association followed the collections provisions of the NC Condominium Act, which are retroactive to older associations, and filed a claim of lien for the unpaid amounts. The association then filed a standard non-judicial foreclosure action before the Clerk of Court (and not a lawsuit seeking judicial foreclosure). The Clerk of Court granted the non-judicial foreclosure, as did a Superior Court Judge on appeal.
However, the NC Court of Appeals found that the association, due to its age, could not utilize the non-judicial procedures of the NC Condominium Act to collect unpaid assessments, because the association was created by the filing of a Declaration in 1982 prior to the enactment of the NC Condominium Act. The Declaration of Condominium stated that the association was governed by the older Unit Ownership Act (NCGS 47A), and neither the Declaration for this association nor the Unit Ownership Act has language authorizing non-judicial foreclosure for assessments. Accordingly, the Court of Appeals found that the association’s non-judicial foreclosure was inappropriate.
The Court of Appeals’ decision suggests that if the Declaration had been worded differently, the case likely would have been decided differently. This decision creates some concern regarding the ability of older condominiums (those created prior to October 1, 1986) to utilize the assessment collection powers granted by the NC Condominium Act in all cases. Older condominium may want to verify with an experienced community association attorney that they are able to purse collections under the NC Condominium Act.
TAKEAWAY: The collection authority of an older condominium association may depend on the specific language of the governing documents.
The full decision can be found at: https://appellate.nccourts.org/opinions/?c=2&pdf=40202
If you have questions about this or any other real estate or community association issue, please contact a Law Firm Carolinas attorney at any of our five offices for assistance.