Liens arising from assessment delinquencies are foreclosed in the same manner as mortgages of real property.

    The filing of a lis pendens and complaint will start the process. The community association may, or may not name any other secured parties in the complaint. It is a good practice to at least send notice to other secured parties. Some lenders will pay the assessment delinquencies and will escrow the payment and future assessments for the owner.

    An action for foreclosure will need to take place in the Circuit Court (possibly in Federal Court if owner lives out of state and debt is more than $75,000). Actions brought in Circuit Court and Federal Court will require representation by an attorney as corporate entities must be represented by an attorney. A community association may represent itself in Magistrate Court and need not retain the services of an attorney. However, a foreclosure action may not be taken in Magistrate Court and the community association will be limited to obtaining a judgment in any action to recover unpaid assessments.

    In the event an owner enters bankruptcy, the community association must discontinue its collection efforts for assessments which accrued during the automatic stay period - this includes continuing to deny use of Common Area amenities and other penalties imposed by the community association.

    Liens arising from assessment are subordinate to mortgagee liens filed prior to filing of the community association’s lien (First Federal Savings and Loan Association of Charleston v. Bailey, 316 S.C. 350, 450 S.E.2d 77 (Ct.App. 1994)). Subordination to the mortgagee in this situation does not excuse the owner of the assessment delinquency. The owner is still personally liable, and all assessments subsequent to foreclosure deed apply to the new owner. Mortgages recorded prior to recording of Notice of Lien for a Lot extinguish the community association lien when foreclosed upon. First Federal Savings and Loan Association of Charleston v. Bailey, held that community association’s lien did not relate back to filing of the Covenants, Conditions, and Restrictions, but rather it arose when the assessments became past due.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.