By Thomas G. Wolfe, J.D.
The Supreme Court of Appeals for West Virginia recently decided that a homeowners association in a planned community asserted a valid, “consensual” common-law lien against the real property of homeowners for unpaid assessments, attorney’s fees, and costs allegedly owed to the association. At the same time, however, the state’s high court also ruled that, in attempting to enforce the lien to collect the unpaid amounts, the homeowners association was subject to the debt-collection provisions of the West Virginia Consumer Credit and Protection Act.
The decision is noteworthy not only because the court recognized the lien of the homeowners association, but also because the court viewed the underlying debt of unpaid assessments as “consumer” debt.
Before examining the reasons for the court’s decision in Fleet v. Webber Springs Owners Association, Inc., some background may be helpful. According to the court’s opinion, Webber Springs Owners Association, Inc. (Webber Springs) elected to be a “West Virginia Limited Expense Liability Planned Community.” In keeping with West Virginia law concerning such a planned community, Webber Springs’ assessments were capped. Further, Webber Springs properly recorded a declaration that “delinquent unpaid assessments are both liens against the real estate and the personal obligation” of the homeowners in the planned community.
In 2011, after certain homeowners were deemed to be several years delinquent on payment of their assessments to the homeowners association, Webber Springs recorded “notices of liens” with the applicable county recorder’s office. Essentially, the recorded notices purported to “create liens for the unpaid assessments, attorney’s fees, and costs, on the real property” owned by the homeowners.
Later, in 2012, the Webber Springs homeowners association filed separate complaints in state court against three homeowners who were delinquent on paying their assessments. In response, the homeowners asserted counterclaims against Webber Springs for alleged violations of the debt-collection provisions of the West Virginia Consumer Credit and Protection Act.
Eventually, the individual cases were consolidated, and after the state trial court ruled in favor of the homeowners association, the West Virginia Supreme Court granted the homeowners’ petition to hear the appeal of that decision.
In connection with the lien issue, the homeowners argued that the liens asserted by Webber Springs for delinquent assessments, attorney’s fees, and costs were invalid and unenforceable under West Virginia law. The West Virginia high court disagreed. While the court acknowledged that generally a common-law lien against real property is not recognized or enforceable in West Virginia under the state’s applicable statute, the court pointed to another provision of the statute for the proposition that it was not the intention of the West Virginia legislature “to affect consensual common law liens.”
Although the homeowners argued that they never truly “consented” to the lien by Webber Springs, the court dismissed that argument. The court maintained that the homeowners’ association’s lien for delinquent assessments was a valid consensual lien because, among other things, Webber Springs had recorded the pertinent declaration with the county recorder and the language contained in the respective deeds of the homeowners clearly stated that the homeowners consented to be bound by such declarations. With these findings in mind, the court held that “consensual common law liens against real property are valid and enforceable in West Virginia.”
Next, the court addressed the debt collection issue. The homeowners argued that even if Webber Springs held a valid consensual lien for unpaid assessments, it did not have a common-law lien for attorney’s fees and costs. In support of their argument, the homeowners invoked provisions of the West Virginia Consumer Credit and Protection Act (WVCCPA) governing debt collection practices. The homeowners contended that the state trial court had erred in ruling that the West Virginia Act did not apply. On this point, the West Virginia Supreme Court agreed.
Ultimately, the appellate court determined that the state trial court had “erred in granting partial summary judgment in favor of Webber Springs based upon its erroneous conclusion that the WVCCPA was not applicable. Likewise, the … court erred in finding that the Homeowners’ WVCCPA counterclaims are barred by the statute of limitations.” Accordingly, the court ruled that the WVCCPA did apply to the case.
Since the lower court did not make any rulings on the homeowners’ WVCCPA claims that Webber Springs was prohibited from collecting attorney’s fees and costs, the West Virginia high court remanded the matter to the state trial court for a determination of the particular issues.
Notably, Justice Loughry filed a concurring opinion in the case. Loughry emphasized that, given the “broad language” of the WVCCPA’s debt collection provisions, he “begrudgingly” concurred with the majority’s decision that those provisions “apply to a homeowners association’s attempts to collect delinquent assessments.” “However, I urge the Legislature to review the policy considerations behind the applicability of the WVCCPA to such assessments and other similar non-consumer debts,” he added.
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