Legal Blog

How to Collect Delinquent HOA Dues

Q. I am the treasurer of an HOA and need advice. We are a small community of 85 homes.  We had an attorney when we took over from the developer. We also had a management company.  Since neither one was responding to us in a way that we felt was appropriate, we have taken over both duties. We have handled our own filing of liens because we could do it for $6 and not $266. Our dues are only $198 a year. This covers electricity, water, lawn-mowing, etc. We have a few homeowners who have not paid their dues. There are currently liens on their properties. They ignore our statements and letters. We charge $20 a month late fees so some of the charges have accumulated to a large amount. A couple of these residents are two or more years behind. What can we do to collect this money? Also, how do we remove a lien from a property once the back dues are paid? There may be language in your governing documents that affects the method that you use to collect unpaid assessments. However, N.C. law provides a specific process for collecting delinquent HOA assessments – filing a claim of lien against the owner’s property, followed by the foreclosure of that lien if the owner does not pay. Filing liens requires knowledge of real estate law and title searches. Even if you know how to search a title, I don’t recommend that you prepare and file your own liens. There are too many pitfalls. I strongly suggest that you hire an attorney experienced in HOA matters to handle your collections. In the vast majority of cases, they can recoup all attorneys’ fees and court costs in addition to the underlying debt. We (attorneys) begin by performing a limited title search to confirm the true legal owners of the property, and we check for pending mortgage foreclosures. We then prepare and file a claim of lien for the balance owed (including the initial attorneys’ fees and court costs), and serve it on the owner along with a demand letter. Often this will elicit a response from the homeowner – either payment in full, or a proposal for a payment plan. The HOA isn’t obligated to accept payment plans, but we strongly encourage our HOA clients to do so, especially in this economy. File foreclosure proceeding If the owner does not respond, we file a foreclosure proceeding, nearly identical to mortgage foreclosures. At a hearing, the clerk of court is required to sign an order allowing the foreclosure sale to proceed if there is evidence to prove only four factors: (1) a valid debt; (2) default in payment of the debt; (3) a legal right to foreclose (which is given in the statutes and also in the governing documents); and (4) all persons with an ownership interest in the property have been served with the notice of hearing. Occasionally a homeowner will appear at the hearing, claiming that the HOA board has failed to enforce the covenants or bylaws or not communicated effectively.  Such arguments are not a defense to nonpayment of HOA assessments. If the owner wants to address these issues in court, he/she will have to file a separate lawsuit against the HOA, but the foreclosure will proceed unless the owner appeals and posts a bond, or a judge issues a “stay” order in a separate lawsuit. A foreclosure sale is typically held a few weeks after the hearing, which are public sales conducted in the lobby of the county courthouse. Sometimes investors bid on the properties, but often there are no bidders and the HOA ends up being the sole bidder, taking title to the home. Very few cases get to that point, as most homeowners pay the debt or propose an acceptable payment plan. Of those that do go to sale, we find that in most cases the homeowners are also several months behind on their mortgage, and a mortgage foreclosure soon follows. Typically, a mortgage foreclosure “trumps” the HOA’s foreclosure, and when the owner abandons the home to the mortgage holder, it is rare for the HOA to recover its debt. When a lien is paid off by the homeowner, the lien is canceled by the filing of a certificate of cancellation with the court. As alternative to the lien/foreclosure process, the HOA can file a lawsuit against the owner personally. You absolutely will have to retain an attorney to do that. However, even if your attorney obtains a judgment in the HOA’s favor, collecting on a judgment is a complex and time-consuming process, and litigation also exposes the HOA to counterclaims from the owner. There are no counterclaims in a foreclosure proceeding. I strongly recommend to every HOA board that they adopt a written policy setting forth howdelinquent accounts will be handled, distribute the policy to all owners, and enforce it consistently and uniformly. Originally published in the Charlotte Observer, January 26, 2010.    


  1. DH on April 15, 2013 at 10:16 am

    Is it true in the Carolinas even if an HOA obtains a judgment in the HOA’s favor that collecting on the judgement cannot include wage or bank garnishments? If so what means are left for the HOA to collect? Could a lien be placed on other property if the owner has any?

  2. Mike Hunter on June 3, 2013 at 8:37 pm

    Yes, it is true that NC has no wage garnishment, and no effective bank account garnishment. This is one reason why small claims court lawsuits aren’t a very effective method of collecting unpaid assessments. Look for a blog post soon on this topic.

  3. John Brown on December 18, 2013 at 9:45 pm

    What about a residential HOA that is not a cond or horizontal housing HOA in the state of Tennessee? A residential homeowners association? Not condos or horizontal housing.

  4. Mike Hunter on January 27, 2014 at 4:30 pm

    You would need to consult with an HOA attorney in Tennessee. HOA laws vary widely from state to state.

  5. Carolyn Snow on May 15, 2014 at 5:42 pm

    I am the Treasurer of a very small homeowners association in Michigan. Can you direct me to a Lien FORM that I can use to place liens on lots which are past due with dues? I have searched for hours and cannot find a template.
    Carolyn Snow

  6. Mike Hunter on May 16, 2014 at 1:13 pm

    HOA laws vary widely from state to state. You need to consult with an HOA attorney in Michigan. Don’t try to do this yourself.

  7. Jonathan Kleckner on June 24, 2014 at 9:06 pm

    What if an owner isn’t paying his HOA dues however is renting his unit out? 1.Can we prevent the homeowner from renting and or can we collect the rental from the tenat and apply towards his past due account? 2.Can we suspend/ prevent the owner and tenat from using the common areas.(pool,beach access,wt room,etc.etc.)

  8. Mike Hunter on June 28, 2014 at 6:41 am

    No, you cannot restrict an owner’s use of his unit (i.e., leasing) because of his default in payment – unless your governing documents specifically allow the HOA to do so, which is not likely. Under NC law, the HOA does have the right to suspend community services and privileges of a delinquent owner (such as use of amenities and common areas, suspending cable TV service or other HOA-provided utilities). However, the HOA must give the owner written notice and hold a hearing prior to any suspension. See NCGS 47C-3-102(a)(11) and 47C-3-107.1.

  9. Roseann Westlake on February 5, 2015 at 2:42 pm

    Is there a statute for collecting dues?

  10. Mike Hunter on February 12, 2015 at 9:46 am

    In North Carolina, the statutes are 47C-3-116 for condominiums and 47F-3-116 for townhomes and single-family subdivisions (a/k/a “Planned Communities”). However, the language in your declaration of Condominium or CCRs will have an impact on what remedies may be available to you.

  11. Carolyn Snow on February 12, 2015 at 10:16 am

    In our small association, we wrote a clause into our By Laws that stated that if a Lot owner was delinquent in dues by either $xxxxx or 2-3xxx years, then we could authorize a lien plus fees be placed on the Lot with the Register of Deeds. We had a parcel of 4 Lots that just sold and we were able to collect all of the delinquent dues & fees at the time of closing.

  12. Bob Dorsam on February 12, 2015 at 2:02 pm

    In Pennsylvania we have a small HOA of 32 homes with one homeowner not paying a yearly fee of $75. He is going through bankruptcy and potential insurance fraud litigation. We do not have a lawyer and are concerned about keeping cost down but still collecting the fees to avoid others from deciding they will not pay also. Most of our fee goes to pay for insurance associated with any potential liability claim if someone was hurt in any one of our three retention basins. Do you have any suggestions?

  13. Mike Hunter on February 16, 2015 at 2:26 pm

    HOA laws vary greatly from state to state. You need to find an experienced HOA lawyer licensed in Pennsylvania, but I can tell you that it’s going to be a problem getting an attorney involved to collect such small balances. The costs of collection will likely exceed the debt. If you can find a lawyer, ask him/her about the option of suing the owners yourself in magistrate’s or small claims court; or possibly seek out a collection agency.

  14. Mike Hunter on March 27, 2015 at 3:17 pm

    Unless there’s language in your CCRs to the contrary, you probably didn’t need to amend your bylaws to give you the authority to file liens. The authority to lien and foreclose is provided in the NC Planned Community Act.

  15. Mike Hunter on March 27, 2015 at 3:20 pm

    The cost of getting legal assistance is probably not justified for a debt of only $75. But, HOA laws vary widely from state to state, so you need to consult with a PA attorney.

  16. Gloria Dayton on February 25, 2016 at 7:58 pm

    Liens were filed for unpaid hoa dues last year. A few property owners did not respond, and now another year’s dues have gone unpaid. Our small hoa will not consider foreclosure at this time. Do the current liens need to be withdrawn and new ones filed to update the additional amounts now due, or do we have to wait 3 years until the lien expires to file new ones for the correct amount owed?

  17. Mike Hunter on April 1, 2016 at 7:07 am

    In North Carolina, liens remain valid and enforceable for three years, and a recent change to the law states that the lien secures additional amounts as they come due. Thus, there is no need to file new liens until you approach or pass the three-year mark.

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