[Durham INC] Homeowners Associations

[Mike Brooks]

Another good place to look for more information about what HOAs can and 
cannot do is the NC HOA Association, especially their FAQ page:

http://www.hoa-nc.com/faqs.aspx      (You can also read the applicable 
laws in Chapter 47F of the NC General Statutes.)

I read the article on the Texas HOAs, and it's definitely still the wild 
west.As Parkwood is concerned we have yet to see a house with 
uncooperative owners and seriously delinquent dues (which is what it 
takes for us, at least, to proceed with foreclosure) that didn't have a 
larger senior lien from a bank. That makes resale after foreclosure a 
real can of worms.

Even on the rare occasions when we go forward with foreclosure, the 
process takes a lot longer than the 27 days in Texas. In practice, we 
are far more likely to file a lien on a property, which would prevent 
its sale unless the lein is satisfied, and would show up on the owner's 
credit report. The 1% or so of properties who get to that point don't 
pose a major financial disaster, and we'll collect the money eventually.

As far as foreclosure for non-payment of fines & collection costs only 
(not for unpaid dues), NC law only allows judicial foreclosure -- no 
Texas loophole. In fact it sounds like the Texas laws have more 
loopholes than laws. The NC statutes were updated a few years ago to 
close some similar loopholes, although pre-existing HOAs, like Parkwood, 
are grandfathered in to many of the newer provisions.

The bottom line for us is that we have no interest in becoming property 
owners by foreclosing on our neighbors, even if that is sometimes the 
only possible way to collect past-due assessments.

Mike Brooks
Parkwood

Barry Ragin wrote:

> Mike - nobody made the claim that all, or even any, HOAs were bad.
>
> I was pointing out the distinction between HOAs, which are generally 
> covenanted, require membership among the homeowners who live in the 
> community, own property in common, and have certain legal rights and 
> obligations, and neighborhood associations, which are voluntary, do 
> not have, nor can they enforce any covenants, generally speaking do 
> not own community property (i can think of one exception in Durham), 
> and do not under any circumstances have legal claim to anyone's property.
>
> Many people do not understand those distinctions, and are afraid to 
> join a neighborhood association out of fear that they are giving up 
> certain rights as homeowners.
>
> It should go without saying that there are good and bad examples of 
> either, but that's not the point. A "bad" neighborhood association 
> board of directors is not going to have the right to foreclose on your 
> house because your annual dues are unpaid, nor levy a fine because 
> your shutters are the wrong color. Hopefully, the neighbors we both 
> have who are reluctant to get involved in our neighborhood 
> associations because they have that fear will understand that there is 
> no basis for it.
>
> Barry Ragin