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Does a homeowners association have the power to foreclose on a home like a bank does?

Matt Tomsic

North Carolina state law allows homeowners associations to foreclose on a home if the resident owes money to the association.

The North Carolina Planned Community Act governs homeowners associations. According to the act, homeowners associations can file liens on residents if they don’t pay assessments, fines or other costs associated with both. The association can enforce that lien with a judicial foreclosure, unless the lien consists of fines alone.

A judge or clerk can order a judicial foreclosure in an action or proceeding in superior or district court.

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Do homeowner regulations go too far?

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2 Responses to “ Does a homeowners association have the power to foreclose on a home like a bank does?”

  1. On November 28, 2010 at 8:50 pm James Rimes wrote:


    HOA’S , The Management, Law (Statute) Enforcement, and the Prosecution are all at BEST QUESTIONABLE..Someone Has been Coloring the LAW…

  2. On December 7, 2010 at 1:20 pm J Buck wrote:

    While it is true that the NC Planned Community Act (and the NC Condominium Act) grants the HOA the power to foreclose in the same manner as a bank, the lien of the HOA is subordinate to any mortgage lien on the property. Simply put, even if a judge or clerk authorizes the HOA to foreclose it’s lien, the mortgage lender has first priority. Therefore, the HOA has two choices… be willing to buy the property at the foreclosure auction (which extinguishes the first mortgage and protects the HOA’s ability to collect when they resell the property) OR hope the foreclosure auction produces enough revenue to satisfy the first mortgage AND the HOA’s lien.

    So as you see, unless there is little or no mortgage on the property, the HOA is limited in its ability to collect through the foreclosure process. However, some HOA’s have used the process to “stop the bleeding” by ridding themselves of an owner who will never pay, in hopes of getting a new owner who will.

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