How much power do HOAs have in North Carolina? We help you understand some rules and laws. – N&O

By Mary Helen Moore



In North Carolina, the Planned Community Act governs homeowners associations established since 1999. There’s no oversight agency governing the thousands of HOA boards in the state, but here’s what state law says about common questions. CAN AN HOA FORECLOSE ON MY HOME? Yes, homeowners associations can place a lien on a property when bills are 30 days overdue. They can foreclose on that lien — even if there’s an existing mortgage — and the process can move startlingly quickly. “The problem is that HOAs have this kind of heightened ability to foreclose that’s stronger than a traditional lender has. I mean, they go through fewer hoops to get there,” said Jim White, an attorney based in Chapel Hill. “I’ve had multiple clients who did not get notices in HOA foreclosures. I’ve rarely encountered that in a traditional mortgage foreclosure.”


White said this can leave homeowners vulnerable to scams. He helped represent a group of North Carolina homeowners who together won nearly $1.3 million in federal court in June from a company that was fixing bids ahead of foreclosure sales and attempting to extort cash from homeowners. One of the plaintiffs in that case made a miscalculation that White said is all too common — getting behind with the HOA instead of the bank, when banks are far more likely to work with their clients to avoid foreclosure when possible. “Things got tight and so he wanted to make sure he didn’t miss his mortgage payments because he didn’t want to lose his house. He was thinking the HOA is not that much money. He could always catch it up,” White explained. “He made exactly the wrong calculation.” A bankruptcy claim stops the foreclosure process as long as it’s filed before the sale.


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Jim White
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Jim White helps people and companies facing serious financial injury by bringing and defending lawsuits and representing debtors in bankruptcy. He has successfully taken on banks, large financial institutions and other corporations in “David v. Goliath” cases. You can reach him at 919-246-4676.