UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 13-1884

KINGSTON AT WAKEFIELD HOMEOWNERS ASSOCIATION, INC.,

Plaintiff - Appellant,

v.

KIM DEHAVION CASTELL,

Defendant - Appellee,

and

JOHN F. LOGAN,

Trustee.

Appeal from the United States District Court for the Eastern 

District of North Carolina, at Raleigh. Terrence W. Boyle, 

District Judge. (5:13-cv-00001-BO)

Argued: September 17, 2014 Decided: November 21, 2014

Before KING and FLOYD, Circuit Judges, and HAMILTON, Senior 

Circuit Judge.

Affirmed by unpublished per curiam opinion.

ARGUED: Nelson Glenn Harris, HARRIS & HILTON, PA, Raleigh, North 

Carolina, for Appellant. Robert Lee Roland, IV, Raleigh, North 

Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:

The sole dispute on appeal is whether the bankruptcy court 

erred in treating a particular creditor’s claim in this 

bankruptcy action as unsecured as opposed to secured. As the 

second layer of appellate review, we affirm the district court’s 

affirmance of the bankruptcy court’s treatment of the claim as 

unsecured.

I.

This action began when Kim Castell (Debtor) filed a 

voluntary petition for relief under Chapter 13 of the Bankruptcy 

Code on June 20, 2012. At the time, Debtor was delinquent in 

dues she owed the Kingston at Wakefield Homeowners Association, 

Inc. (the HOA) in the amount of $678.75. The debt arose from 

Debtor’s ownership of real property in the Kingston at Wakefield 

Plantation subdivision (the Subdivision), which real property is 

subject to the recorded Declaration of Covenants, Conditions, 

and Restrictions for Kingston at Wakefield Plantation (the 

Declaration).

The HOA filed a proof of secured claim in Debtor’s 

bankruptcy action in the amount of $678.75, asserting that the 

debt is secured by a lien on Debtor’s real property in the 

Subdivision. Debtor objected to the HOA’s assertion that the 

claim is secured. According to Debtor, the delinquent dues are 
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only entitled to treatment as a general unsecured claim because 

the HOA never obtained a lien on Debtor’s real property in 

accordance with the North Carolina Planned Community Act (the 

Planned Community Act), which provides, in relevant part:

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 of the county in which the lot is located

. . . . Once filed, a claim of lien secures all sums 

due the association through the date filed and any 

sums due to the association thereafter.

N.C. Gen. Stat. § 47F-3-116(a).

In response, the HOA did not dispute that it failed to 

comply with the Planned Community Act. Rather, the HOA took the 

position that “[i]t is not necessary for a homeowners 

association to file a lien in accordance with the provisions of 

the Planned Community Act to have a valid security interest in 

the Property.” (J.A. 15). The HOA attached a copy of the

Declaration to its response.

Of relevance on appeal, Article V, Section 1, Subsection 

(a) of the Declaration provides that annual assessments of the 

HOA “shall be a charge and continuing lien on the Lot against 

which such assessment is made.” (J.A. 25). Also of relevance 

on appeal, Article V, Section 12 of the Declaration, entitled 

“Assessment Lien and Foreclosure,” provides, in relevant part:

All sums assessed in the manner provided in this 

Article but unpaid, shall . . . become a continuing 
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lien and charge on the Lot owned by the defaulting 

Owner and improvements thereon covered by such 

assessment, as of the assessment due date . . . . To 

evidence the aforesaid assessment lien, which remains 

unpaid for a period of 30 days or longer the Board 

shall prepare a written notice of assessment lien 

setting forth the amount of the unpaid indebtedness, 

the name of the Owner of the Lot and improvements 

thereon covered by such lien and a description of the 

Lot. Such notice shall be signed by an officer or 

authorized agent of the Association and shall be 

recorded in the Office of the Clerk of Superior Court 

of Wake County, North Carolina. Such lien for payment 

of assessments shall attach with the priority above 

set forth from the date that such payment becomes 

delinquent and may be enforced by the foreclosure of 

the defaulting Owner’s Lot and improvements thereon by 

the Association in like manner as a mortgage or deed 

of trust with power of sale on real property under 

Article 2A of Chapter 45 of the North Carolina General 

Statutes subsequent to the recording of a notice of 

assessment lien as provided above and/or the 

Association may institute suit against the Owner 

personally obligated to pay the assessments and/or 

foreclosure of the aforesaid lien judicially or may 

seek other available remedy or relief. . . . The 

provisions of this Article V shall be in addition to 

the provisions of applicable laws relating to liens 

established as herein provided.

(J.A. 28).

The bankruptcy court held a hearing on Debtor’s objection

and the HOA’s response. The HOA argued that it held a common 

law lien on Debtor’s real property in the Subdivision in the 

amount of $678.75 based upon the language in the Declaration 

providing that the annual assessments of the HOA “shall be a 

charge and continuing lien on the Lot against which such 

assessment is made.” (J.A. 25). The bankruptcy court sustained 
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Debtor’s objection to treatment of the HOA’s claim as secured as 

opposed to unsecured, reasoning as follows:

Because [the HOA] never filed a notice of lien with 

the Clerk of the Superior Court of Wake County, its 

prepetition claim for delinquent homeowners dues and 

assessments was never perfected under N.C. Gen. Stat. 

§ 47F-3-116 or Article V, Section 12 of its own 

declaration, both requiring written notice of the 

assessment lien to be recorded with the Clerk of the 

Superior Court of Wake County.

(J.A. 77).

The HOA appealed the ruling to the district court, which 

affirmed on the reasoning of the bankruptcy court. This timely 

appeal followed.

II.

On appeal, the HOA continues to maintain that its claim is 

secured and asks us to reverse the district court’s affirmance 

of the bankruptcy court on that basis. With respect to the 

Planned Community Act, the HOA concedes that it did not file a 

claim of lien with the Office of the Clerk of Superior Court of 

Wake County, North Carolina on Debtor’s real property in the 

Subdivision, and therefore, cannot avail itself of the lien

foreclosure remedy of North Carolina General Statute § 47F-3-

116. The HOA contends, however, that such noncompliance is 

irrelevant to its ability to assert a secured claim on Debtor’s 

real property in the Subdivision under common law based upon the 
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Declaration. This is because, the HOA argues, the Planned 

Community Act is not the exclusive vehicle by which a 

homeowners’ association in North Carolina can enforce a lien for 

unpaid assessments on a homeowner’s property. In support of 

this argument, the HOA points to North Carolina General Statute 

§ 47F-3-116(d), which provided during the time period relevant 

to this case:

(d) This section does not prohibit other actions to 

recover the sums for which subsection (a) of this 

section creates a lien or prohibit an association 

taking a deed in lieu of foreclosure.

N.C. Gen. Stat. § 47F-3-116(d) (2011).

With respect to the language of Article V, Section 12 of 

the Declaration, the HOA argues that such language “provides for 

a continuing lien and charge as of the assessment due date, 

which may be evidenced by filing with the Wake County Clerk of

Superior Court, but which, in any event, exists and binds the 

Owners and its heirs, successors and assigns, without any 

filing.” Appellant’s Br. at 23. Based upon this argument, the 

HOA urges us to conclude that it has a lien on Debtor’s real 

property in the Subdivision that is enforceable under common law 

regardless of whether the HOA filed written notice of such lien 

with the Office of the Clerk of Superior Court of Wake County.

We affirm the district court’s affirmance of the bankruptcy 

court’s treatment of the HOA’s claim as unsecured. Even 
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assuming arguendo that the Planned Community Act is not the 

exclusive vehicle by which a homeowners’ association in North 

Carolina can enforce a lien for unpaid assessments on a 

homeowner’s property, the HOA’s common law lien theory is 

inconsistent with the detailed procedure for obtaining an

assessment lien against a homeowner’s property in the 

Subdivision. The HOA’s position ignores the mandatory nature of 

the plain language of Article V, Section 12 of the Declaration 

detailing the steps the HOA must take to obtain an assessment 

lien. (J.A. 28) (“To evidence the aforesaid assessment lien . . 

. the Board shall prepare a written notice of assessment lien . 

. ., . . . [s]uch notice shall be signed by an officer or 

authorized agent of the Association and shall be recorded in the 

Office of the Clerk of Superior Court of Wake County, North 

Carolina). The record is undisputed that the HOA did not comply 

with these lien procedures. Accordingly, assuming arguendo the 

validity of the HOA’s argument regarding the Planned Community 

Act not providing an exclusive remedy, we affirm the district 

court’s affirmance of the bankruptcy court’s treatment of the 

HOA claim as unsecured.

AFFIRMED