Kim Dehavion Castell

1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
KIM DEHAVION CASTELL,
DEBTOR.
CASE NO. 12-04562-8-JRL
CHAPTER 13
ORDER
This matter is before the court on debtor’s objection to the proof of claim filed by Kingston
at Wakefield Plantation Homeowners Association, Inc. (“Kingston”) in the amount of $678.75. A
hearing on the matter was held in Raleigh, North Carolina on November 7, 2012.
BACKGROUND
Kim Dehavion Castell ( “debtor”) filed a voluntary petition for relief under chapter 13 of the
Bankruptcy Code on June 20, 2012. In September 2008, the debtor purchased real property located
in the Kingston at Wakefield Plantation subdivision at 11945 Field Towne Lane, Raleigh, North
Carolina (“real property”). The debtor’s chapter 13 plan, filed along with her petition, provides for
fifteen (15) monthly payments of $1,919.00 and monthly payments of $1,721.00 for forty (40)
months. As of November 5, 2012, the debtor’s chapter 13 had not been confirmed, but she had made
SO ORDERED.
SIGNED this 20 day of November, 2012.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
Case 12-04562-8-DMW Doc 26 Filed 11/20/12 Entered 11/20/12 12:38:18 Page 1 of 5

2
plan payments totaling approximately $7,677.00.
On July 3, 2012, Kingston filed a proof of secured claim in the debtor’s case in the amount
of $678.75, which is purportedly secured by a lien on the debtor’s real property for delinquent
homeowners association dues. Kingston is a homeowners association formed on November 9, 2004,
pursuant to the Declaration of Covenants, Conditions and Restrictions for Kingston at Wakefield
Plantation, recorded in Book 11098 at Page 338 of the Wake County Registry of Deeds on
November 12, 2004 (“declaration”). Article V, Section 12 of the declaration governs assessment
liens and outlines the procedure by which they are foreclosed. It provides in pertinent part:
To evidence the aforesaid assessment lien, which remains unpaid for a period of 30
days or longer the Board [of Directors] 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 or 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 a 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 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.
On August 21, 2012, the debtor filed the objection presently before the court alleging that
Kingston does not have a valid claim of lien against the debtor’s real property because pursuant to
N.C. Gen. Stat. § 47F-3-116, outstanding and unpaid homeowners association assessments past due
for more than thirty days “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 . . . .” Relying
on In re Guillebeaux, 361 B.R. 87 (Bankr. M.D.N.C. 2007), the debtor contends that Kingston’s
Case 12-04562-8-DMW Doc 26 Filed 11/20/12 Entered 11/20/12 12:38:18 Page 2 of 5

1Additionally, the debtor argues that the proof of claim submitted by Kingston does not
include an original or duplicate of the writing upon which its claim is based and, therefore, does
not comply with Fed. R. Bankr. P. 3001(c).
3
claim is not entitled to secured status because it failed to file a claim of lien for the delinquent
assessments required by N.C. Gen. Stat. § 47F-3-116. 1
Kingston filed a response in opposition to the debtor’s objection on August 28, 2012. It
contends its proof of claim, as filed, complies with Fed. R. Bankr. P. 3001 and constitutes prima
facie evidence of the validity and amount of its claim. 	Alternatively, Kingston argues that it is
subject to the North Carolina Planned Community Act; however, it does not require the filing of
claim of lien to have a valid security interest. To support its contentions, Kingston draws the court’s
attention to Wise v. Harrington Grove Community Association, Inc., 584 S.E.2d 731 (N.C. 2003),
Reidy v. Whitehart Association, Inc., 648 S.E.2d 265 (N.C. Ct. App. 2007) and excerpts from
Webster’s Real Estate Law in North Carolina.
DISCUSSION
Chapter 47F of the North Carolina General Statutes, entitled the North Carolina Planned
Community Act (“PCA”), applies only to homeowners associations created on or after January 1,
1999; however, some provisions apply regardless of the date of inception. See N.C. Gen. Stat. §
47F-1-102(c); Wise, 584 S.E.2d at 735, 740 (“Automatic application of PCA provisions to
homeowners associations created on or after 1 January 1999 may therefore be viewed as consistent
with the reasonable legal expectations of buyers purchasing homes in planned communities created
after that date.”). 	Legal instruments, such as declarations and covenants, creating homeowners
associations may expressly withhold any of the statutory powers granted in N.C. Gen. Stat. §
47F-3-102. Wise, 584 S.E.2d at 740.
Case 12-04562-8-DMW Doc 26 Filed 11/20/12 Entered 11/20/12 12:38:18 Page 3 of 5

2Countryhouse was owned by Tallis Management Group, which owned Countryhouse
and other homeowners associations. Guillebeaux, 361 B.R. at 90.
4
N.C. Gen. Stat. § 47F-3-116 (a), governing perfection of a lien against property owners for
delinquent assessments, provides that "[a]ny assessment levied against a lot remaining 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." See id. (granting
homeowners associations holding a claim of lien authority to "foreclose the claim of lien in like
manner as a mortgage on real estate under power of sale under Article 2A of Chapter 45 of the
General Statutes.").
To be secured, any claim arising out an assessment lien held by a homeowners association
must be perfected. Guillebeaux, 361 B.R. at 93. A creditor’s failure to adhere to the proper method
of perfecting its prepetition assessment lien (i.e., filing a claim of lien in the superior court of the
county where the real property subject to the lien is located) was addressed in Guillebeaux and the
court concluded that such a failure renders the status of any claim for delinquent assessments
unsecured. Id. 	(disallowing secured status to prepetition arrearage claim because it was never
perfected under the PCA). In Guillebeaux, the debtor owed Countryhouse Service Group, V, Inc.
(“Countryhouse”) 2 $3,246.05 in prepetition assessments and fees; however, Countryhouse never
filed a claim of lien with the Chatham County Registry of Deeds. Id. at 90. In reaching its decision,
the court rejected the argument that the homeowners association held a lien arising automatically
following the debtor’s failure to pay the $3,246.00 in delinquent assessments because the perfection
and status of any purported lien was governed by the PCA. Id. at 93.
After taking the matter under advisement and reviewing the record, the court finds that the
Case 12-04562-8-DMW Doc 26 Filed 11/20/12 Entered 11/20/12 12:38:18 Page 4 of 5

5
claim filed by Kingston will not be allowed as a secured claim in the debtor’s case because the
purported lien for homeowners association dues held by Kingston was never perfected. Because
Kingston 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. See,
e.g., N.C. Gen. Stat.§ 47F-3-116; Guillebeaux, 361 B.R. at 93. Although not allowed as a secured
claim, Kingston’s claim for delinquent homeowners association dues will be allowed as a general
unsecured claim in the amount of $678.75.
CONCLUSION
Based on the foregoing, the debtor’s objection to Kingston’s proof of claim is ALLOWED.
Kingston’s $678.75 claim for unpaid and outstanding homeowners association dues will be entitled
to be treated as a general unsecured claim.
END OF DOCUMENT
Case 12-04562-8-DMW Doc 26 Filed 11/20/12 Entered 11/20/12 12:38:18 Page 5 of 5