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.
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.
Q. We live in a small neighborhood in Union County with a volunteer board of directors. A few families are interested in adding a amendment to our covenants, conditions and restrictions (CCRs) prohibiting sex offenders from residing in our neighborhood. The board went to our attorney last year and was informed that we could spend the money to try to do this, but he doubted it would hold up in the courts if the sex offender is registered and living by the law. Your advice?
Dealing with residents who are convicted felons or sex offenders is a growing concern. It is possible to ban such persons from renting a home by amending the CCRs to adopt specific leasing restrictions that give the HOA board the authority to approve or reject all proposed leases.But attempting to ban such persons from purchasing a home likely would be found unenforceable by the courts. While felons and sex offenders are not considered a “protected class” under anti-discrimination laws, it is possible that a restriction that prohibits sex offenders from purchasing a home in your community would not be upheld by the courts, or worse, expose the HOA to a potential civil rights claim.
Q: Can the board of an HOA handle any items via e-mail and have those acceptable as legal actions? I am wondering if the approval of meeting minutes can be handled via e-mail rather than waiting for the next meeting. If so, they could then be posted on our Web site and not be held up for the next meeting’s action.
If your HOA is organized as a nonprofit corporation as most are, it is governed by the N.C. Non-Profit Corporations Act (Chapter 55A of the N.C. General Statutes). The laws authorize a board to take action by majority vote at a board meeting.There is no substitute for the open exchange of ideas that occurs at a face-to-face board meeting. However, in recognition of the fact that decisions sometimes need to be made between regular board meetings, the laws also authorize the board to take action without a meeting, provided there is unanimous written consent of the directors.
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