Category Archives: Ask the Experts

Articles provided by Charlotte Observer

Can HOA’s Hire bill collectors for dues?

Q. Is it legal for homeowner associations in North Carolina to use collection agencies to collect delinquent dues?

There is nothing to prohibit your HOA from using a collection agency to collect delinquent dues. The better question is whether using a collection agency is the most effective and cost-efficient method.

Collection agencies typically charge a “contingent fee” for their services – their fee is a percentage of whatever sum they collect, usually 25-30 percent.The problem is that HOAs cannot always recover this fee from the delinquent homeowner. State statutes prohibit HOAs from charging a homeowner any collection or administrative fee that is not specifically authorized in their Declaration.

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Condo parking space hog

 

Q. A homeowner in our association has been parking a vehicle with no tag in one of his two parking spaces for over three years. He has two other drivable vehicles taking up parking spaces in the guest parking area. Our rules state that uninspected, unregistered, unlicensed, abandoned or junk vehicles are not permitted on condominium property and further, that no vehicle may be stored on the common or limited common property. What can be done about this?

Part of the answer to your question depends on whether an owner’s assigned parking spaces are deeded to the owner along with his unit, or if they are common elements.If the spaces are deeded, then the association’s board, by itself, cannot impose additional restrictions on the use of those deeded spaces on top of whatever restrictions are already in the declaration. Adding additional restrictions to property owned by the homeowner would require an amendment to your declaration, approved by at least two-thirds of the voting power in the association.

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Are unpaid dues protected in bankruptcy?

Q. Is the debt of an uncollected homeowners association annual dues assessment considered a “secured debt” when filing a Proof of Claim if the owner files for bankruptcy, since it involves real estate (vacant land or land with a home)? Or is it just an unsecured debt?

Creditors of a bankrupt person who has filed for protection are generally lumped into one of two categories by the federal Bankruptcy Code: secured creditors and unsecured creditors. To understand the difference, it is important to understand the difference between a debt and a lien. A debt is a legal obligation to pay money to a creditor. A lien, on the other hand, is a property interest held by the creditor that secures the underlying debt. Thus, secured creditors hold a lien on certain property owned by the debtor (real estate, motor vehicle, equipment, etc.), while unsecured creditors do not have a lien on property owned by the debtor.A Chapter 7 or completed Chapter 13 plan will discharge most or all of a person’s debts, but many liens will survive the bankruptcy discharge, meaning that the creditor may still repossess or foreclose on the collateral even though the debt has been discharged. While this may seem counterintuitive, it makes sense if you think of a mortgage loan. If the lender’s mortgage lien on a home were wiped out by a bankruptcy filing along with the underlying debt, then that would mean any homeowner who filed bankruptcy could keep his house free and clear of the lender’s debt. Certainly that is not the result that Congress intended with the Bankruptcy Code.

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Get advice from expert on reserve fund needs

Q. I am the board secretary for a condo community on Lake Norman. We have 60 units and are about 25 years old. We strive to keep everything in good order but things happen. My question concerns setting amounts for reserve funds.

We have looked into having a professional “reserve study” done but the cost, from $4,000 to $5,500, is expensive for us. Do you have a rule of thumb that might give us some guidance? Is there a Web site that you can suggest for me to search? Are there reserve requirements in North Carolina as there are in some other states that set limits?Most HOAs that have clubhouse/swimming pool, trails, athletic fields, etc. have capital accounts, also known as reserve funds, to pay for upkeep and replacement. Condominium associations are responsible for maintaining the buildings themselves, so capital reserves are absolutely critical for them. Most HOAs allocate a portion of each month’s assessment income to these accounts.

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