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To Sue or Not to Sue - When a Homeowner Fails to Pay Assessments

Many homeowners choose to live in planned communities to have access to more amenities than they could afford on their own. The extra cost of association dues can get them any number of benefits: a neighborhood pool, playground, landscaping or just assurance their neighbors won’t let their yard grow unkempt. However, amenity maintenance and community oversight is costly and requires all community members to contribute financially. Getting everyone to pay up can be a challenge.

A homeowner’s obligation to pay dues and assessments is generally established in the community’s governing documents, such as the restrictive covenants. If the community is a condominium regime, this obligation is addressed in the master deed. The homeowner becomes bound to these obligations when he takes title to his property.

When a homeowner falls behind on payments, which is a common problem for communities both large and small, the association should be diligent in its collection efforts so that it will have enough funds to operate properly. Associations should establish and follow internal procedures in pursuing collections, such as providing notice and opportunity to cure to defaulting homeowners. However, if such attempts fail, an association should consider legal action.

In addition to other remedies, an owners’ association has the right under South Carolina law to enforce a homeowner’s payment obligations through a lien on the property. Generally, the lien for nonpayment automatically attaches to the property at the time the assessments become due. If payment becomes delinquent, the association may then decide to take the step of filing a notice of lien in the county’s public records. If that doesn’t produce payment, the association can decide to take the further step of foreclosing the lien to seek a judicial sale of the property. While foreclosure can initally seem like a drastic decision, and an association may fear the process due to unfamiliaraity, it is actually a very effective collection tool in many instances. 

If there is any concern regarding collectability due to the homeowner having multiple creditors, or being behind on his mortgage, the association should evaluate all available collection options including foreclosure of the association’s lien. In making collection decisions, the association must balance many factors including the risk it would no longer be able to afford to maintain the amenities due to widespread delinquencies. 

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