Questions arise from members, usually delinquent members, regarding “what authority does the HOA have” in collecting dues. Basically HOA’s are established in two forms, volunteer HOAs and mandatory HOAs. As both preceding adjectives indicate the nature of the HOA, mandatory HOAs need declaration and in some cases state statute authority to collect assessments.
While volunteer HOAs may have declaration language that allows for the collection of assessments and the establishment of a annual budget, they generally do not have a mechanism to collect. Or more precisely a method to collect if a member elects not to pay. Mandatory HOAs must either have covenant language and/or state statutes to enforce the collection of assessments. For example declaration language such as this:
9.3 – In the administration of the operation and management of the Property, the Association shall have and it is hereby granted the authority and power to enforce the provisions of this Declaration, to levy and collect assessments in the manner provided in Article X below and in the Bylaws, and adopt, promulgate and enforce such rules and regulations governing the use of the Units and Common Elements as the Association may deem to be in the best interest of the Owners in accordance with the Bylaws. Any sum assessed by the Association remaining unpaid for a period of thirty (30) days or longer shall constitute a lien on the Unit with respect to which such sum was assessed upon filing in accordance with N.C. Gen. Stat. § 47C 3 116, and shall be enforceable by the Association in accordance with N.C. Gen. Stat. § 47C 3 116 and Section 8 of the Bylaws.
The most significant language from the example above is: “Any sum assessed by the Association remaining unpaid for a period of thirty (30) days or longer shall constitute a lien on the Unit.” The unpaid assessments constitute a lien giving the HOA the legal authority to file a lien and under this particular state statute proceed with foreclosing on this lien.
While there are misconceptions with the membership and the general population about the harshness of an HOA’s abilities to collect past due assessments, the reality is quite the opposite. A very common retort is “my credit card company can’t foreclose on me for not paying my credit card bill.” While this may be true, a credit card company also does not have to issue this person a credit card in the first place. Unlike an HOA which is required to provide HOA services, e.g. amenities and other common expenses, when a person purchases into an HOA. To make delinquency matters worse, members who are paying their assessments are subsidizing those non-paying members.
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