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HOA can cut off services to delinquent condo

newsQ: We are researching how much leverage is afforded to our HOA board before starting lien and foreclosure proceedings on a condo unit that is in arrears on payment of HOA assessments. Does N.C. law allow an HOA to shut off the water to a unit that is past due on payment of association assessments, and when the owner has not responded to an offer of partial payment?

Condominiums offer a range of privileges and services to the unit owners, such as access to swimming pools and fitness centers, use of parking lots and garages, and the provision of utilities such as water. Those privileges are paid for by the assessments levied by the HOA against unit owners.

N.C. Statute §47C-3-102 says, “Unless the declaration expressly provides to the contrary, the association, even if unincorporated, may…after notice and an opportunity to be heard, suspend privileges or services provided by the association (except rights of access to lots) during any period that assessments or other amounts due and owing to the association remain unpaid for a period of 30 days or longer.”

While some may think that shutting off an owner’s water for nonpayment of assessments is a harsh remedy, especially if children are in the home; others may think that it’s unfair to the other owners (who are paying their assessments) to allow an owner to continue enjoying the privileges and services provided by the HOA while not paying for them.

The condo associations I know that have used this tactic have indicated that it is usually very effective in getting owners to pay.

I once heard of a high-rise condo association that would suspend owners’ use of the building elevators when they became delinquent, requiring the owners to use the stairs to access their unit. While this was probably effective, it could be a violation of the law (by denying an owner access to his unit) if an owner were disabled or physically unable to use the stairs to get to his or her unit.

You also mentioned partial payment. In most cases, I’m not a proponent of HOA boards approving “settlement offers” with delinquent homeowners for less than the full balance.

The reason is that the other owners in the community will likely face an increase in their assessments, sooner or later, to make up for the budget shortfall created by allowing someone to pay less than he or she owes.

I am a staunch proponent, though, of HOAs working with homeowners on reasonable payment plans, especially in this economy.

In 2006, a change was made to North Carolina’s condo and planned community laws that addressed this. That law reads, “The association, acting through its executive board and in the board’s sole discretion, may agree to allow payment of an outstanding balance in installments. Neither the association nor the unit owner is obligated to offer or accept any proposed installment schedule.”

So the law provides your board with a range of options to deal with delinquent homeowners. Be reasonable, fair and consistent.

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Charlotte attorney Michael Hunter focuses on community and condominium association law for the firm of Horack Talley

“Ask The Experts” Articles have been Reprinted with permission from the Charlotte Observer

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