North Carolina G.S. 47F-3-116: HOA Assessment Liens, Foreclosure and $1,200 Fee Cap

Quick Answer

G.S. 47F-3-116 is North Carolina's assessment lien and foreclosure section for planned community associations. An assessment unpaid for 30 days can become a lien once a claim of lien is filed with the clerk of superior court, after a statement is mailed at least 15 days before filing. Nonjudicial foreclosure is allowed only if the assessment stays unpaid 90 days or more and the board votes to foreclose on the specific lot. Condominium associations have a parallel section, § 47C-3-116.

The one thing a board most needs to know: the statute is a sequence of notices and votes, and a lien made up only of fines or fees can be enforced only by judicial foreclosure.

At a Glance

What the Law Says

• When a lien arises, (a): "Any assessment attributable to a lot which remains unpaid for a period of 30 days or longer shall constitute a lien on that lot when a claim of lien is filed of record in the office of the clerk of superior court." Once filed it secures all sums due through filing and sums due after. Unless the declaration says otherwise, fees, late charges and other charges under §§ 47F-3-102, 47F-3-107, 47F-3-107.1 and 47F-3-115 are covered.
• Pre-filing statement, (b): "No fewer than 15 days prior to filing the lien, the association shall mail a statement of the assessment amount due by first-class mail" to the lot's physical address, the owner's address of record, and the county-tax-records address if different. A corporate or LLC owner's registered agent also gets a copy. The association "must make reasonable and diligent efforts" to keep the owner's address current. No mailing is required to a known vacant lot with no dwelling or a lot with no U.S. postal address.
• Claim of lien contents, (c): association name and address, record owner, lot description and the amount claimed, and, on the first page, a boldface capital-letter statement beginning "THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY." The signer must attach "a certificate of service attesting to the attempt of service on the record owner," attempted under G.S. 1A-1, Rule 4(j). The statute then sets fallback steps if actual service is not achieved.
• Three-year limit, (c): "A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within three years after the filing of the claim of lien."
• Priority, (d): the lien is prior to all liens except earlier-recorded mortgages and deeds of trust, and real estate tax and governmental assessment liens. It does not affect the priority of mechanics' or materialmen's liens.
• Attorneys' fees notice, (e): an owner "may not be required to pay attorneys' fees and court costs until the lot owner is notified in writing." The notice goes by first-class mail, states the balance, and says the owner has "15 days from the mailing of the notice" to pay "without the attorneys' fees and court costs." It must also tell the owner about the chance to discuss a payment schedule and give a representative's name and telephone number.
• Nonjudicial foreclosure, (f): the board "may foreclose a claim of lien in like manner as a mortgage or deed of trust on real estate under power of sale, as provided in Article 2A of Chapter 45 ... if the assessment remains unpaid for 90 days or more." The association "shall not foreclose the claim of lien unless the executive board votes to commence the proceeding against the specific lot." After filing the claim and before starting foreclosure, the association must give the owner notice of its intention (subdivision (5), with contents under G.S. 45-21.16(c)(5a)).
• Fee cap, (f)(12): if the owner does not contest the debt or the lien "at any time after the expiration of the 15-day period following notice as required in subsection (b)," attorneys' fees and the trustee's commission together "shall not exceed one thousand two hundred dollars ($1,200), not including costs or expenses incurred." Contesting, as defined in the paragraph, means raising "any objection, defense, offset, or counterclaim."
• Judicial foreclosure, (g): subsection (f) does not prevent judicial foreclosure, other collection actions, or a deed in lieu. Judgments in judicial foreclosure or collection actions include costs and reasonable attorneys' fees to the prevailing party, "not ... subject to the limitation" in (f)(12).
• Fines and fees, (h): a lien "consisting solely of fines," interest on fines, or attorneys' fees tied only to fines "may only be enforced by judicial foreclosure," under Article 29A of Chapter 1. An association "shall not levy, charge, or attempt to collect a service, collection, consulting, or administration fee" unless the declaration expressly allows it, and a lien consisting solely of such fees also needs judicial foreclosure.
• Installments, (i): the board "in the board's sole discretion, may agree to allow payment of an outstanding balance in installments." Neither side is obligated to offer or accept a schedule.
• Lender foreclosure, (j): a purchaser who takes title through foreclosure of a first mortgage or first deed of trust "shall not be liable for the assessments against the lot which became due prior to the acquisition of title." The unpaid amounts are deemed common expenses collectible from all owners, including the purchaser.

Validation of older foreclosures, § 47F-3-116.1

Nonjudicial foreclosures begun before October 1, 2013, and the resulting sales, are declared valid "unless an action to set aside the foreclosure is commenced on or before October 1, 2013, or within one year after the date of the sale, whichever occurs last."

Condominiums

We read § 47C-3-116 in full. It tracks § 47F-3-116 on each point above, substituting "unit" for "lot," including the 30-day, 15-day, 90-day, three-year and $1,200 provisions.

What This Means in Practice

Notice math

Our reading of the sequence: the assessment must be unpaid 30 days; the statement must be mailed at least 15 days before the lien is filed; the owner then has 15 days after the attorneys' fees notice is mailed to pay without fees; and nonjudicial foreclosure may start only after the assessment has been unpaid 90 days or more, a lien is on file, the owner has received notice of intent to foreclose, and the board has voted on that lot. The statute does not tie the 90 days to the filing date; it counts from when the assessment "remains unpaid." Whether the 90 days and the 15-day pre-filing statement can run at the same time is something the text allows on its face, but confirm timing with counsel before you rely on it.

For boards

• Adopt a collection policy that tracks each step: statement, claim of lien with certificate of service, fee notice, intent-to-foreclose notice, and the lot-specific board vote.
• Keep the owner's mailing address current in the records and document the efforts.
• Record the board vote on foreclosure by lot in the minutes.
• If only fines or fees are unpaid, plan for judicial foreclosure and confirm the declaration expressly allows any collection or administration fee you are charging.
• Offer an installment schedule only if the board chooses to; the statute does not require it.

For owners

• Pay within 15 days of the attorneys' fees notice to avoid owing attorneys' fees and court costs for that notice.
• Contacting the association representative named in the notice is how a payment schedule is discussed.
• Raising a dispute about the amount or validity changes whether the $1,200 cap applies under (f)(12), so get advice before responding.

What the law does not say

• We did not read Chapter 45, Article 2A, so this page does not describe the clerk hearing, notice of sale or upset-bid procedures beyond what § 47F-3-116 references.
• We did not read Chapter 1, Article 29A, so judicial foreclosure steps are not described.
• The statute does not say how a lien works if the owner has filed bankruptcy. Ask counsel.

Timeline

Related North Carolina Law

• § 47F-3-107.1: fines and suspension hearings
• § 47F-3-118: records and unpaid-assessment statements
• Chapter 47F overview
• Chapter 47C overview
• North Carolina HOA laws: complete guide

Board Checklist

• Confirm the assessment has been unpaid at least 30 days before filing.
• Mail the statement by first-class mail to each required address at least 15 days before filing.
• Include the required boldface lien statement and a certificate of service with the claim of lien.
• Send the attorneys' fees notice with the balance, the 15-day window and a representative's contact information.
• Hold and minute a board vote against the specific lot before starting nonjudicial foreclosure.
• Calendar the three-year enforcement deadline from the filing date.
• Separate fines and fee-only balances from assessments before choosing the foreclosure route.
• Have counsel review any foreclosure, since Chapter 45 procedures also apply.

Frequently Asked Questions

How long before a North Carolina HOA can file a lien?

The assessment must remain unpaid for 30 days or longer, and the association must mail a statement of the amount due at least 15 days before filing the claim of lien.

How long before an HOA can foreclose?

Nonjudicial foreclosure is allowed if the assessment remains unpaid for 90 days or more, and only after the board votes to commence the proceeding against the specific lot.

Is there a cap on attorneys' fees in an HOA foreclosure?

Yes, in one situation. If the owner does not contest the debt or the lien after the 15-day period, attorneys' fees and the trustee's commission together are capped at $1,200, not including costs or expenses (§ 47F-3-116(f)(12)).

Can an HOA foreclose over unpaid fines?

A lien consisting solely of fines, interest on fines, or attorneys' fees associated only with fines can be enforced only by judicial foreclosure.

Does a lien survive if the bank forecloses?

A buyer at a first-mortgage or first-deed-of-trust foreclosure is not liable for assessments that came due before it acquired title; the unpaid amounts become common expenses shared by all owners.

What happens if the HOA does not enforce the lien?

The lien "is extinguished unless proceedings to enforce the lien are instituted within three years after the filing of the claim of lien."

Can the board offer a payment plan?

It may, in its sole discretion. The statute says neither the association nor the owner is obligated to offer or accept a schedule.

Where This Comes From

We read the full text of §§ 47F-3-116 and 47F-3-116.1 on the North Carolina General Assembly site, and the text of §§ 47C-3-116 and 47C-3-116.1 on the Chapter 47C page. The official chapter page is ncleg.gov, Chapter 47F. We did not read G.S. Chapter 45 or Chapter 1, Article 29A.

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed North Carolina attorney before acting.