Beware Of Procedural Pitfalls In HOA Foreclosures

Most community associations already know the Planned Community Act allows them to place a lien on a delinquent homeowner's property and foreclose on that interest.

But to do so, associations must comply strictly with the statute governing that process. In a case highlighting the perils of non-compliance, the North Carolina Court of Appeals recently awarded a homeowner damages and attorneys' fees because the association failed to properly conduct a foreclosure.

The Georges owned a home in the Crossings Community subdivision, a planned community in Charlotte, North Carolina. They were past due $204.75 on their account, so the association placed a claim of lien against their property. Shortly after filing the lien, the association initiated a foreclosure and eventually sold the property at auction to an investor. The investor then sold the property to another entity for $150,000. That entity undertook to demolish and remodel the home. The entire foreclosure process