Fort Mill HOA among those named in federal lawsuit over foreclosures

Article and Video Courtesy of Channel 9, South Carolina

By Greg Suskin     

Published January 21, 2018



FORT MILL, S.C. - The Cole Creek Homeowner's Association in Fort Mill is one of five in South Carolina that's now the target of a federal lawsuit.

The HOA is being sued after foreclosing on a home because the homeowner didn't pay dues. Lawyers for the plaintiffs claim in the suit that HOAs don't have that power. The result of the lawsuit could have an impact across the state concerning the legal authority of HOAs.

Brian Gambrell, the lawyer from Columbia who represents the families suing, talked to Channel 9 on Thursday.

"It's only been the law in the state since the founding of it, that you can't do a foreclosure that's not a mortgage," Gambrell said.

The lawsuit, filed in Charleston Tuesday, seeks to show that even though a homeowner agrees to abide by neighborhood covenants when buying a home, state law doesn't give a nonprofit corporation such as an HOA the power to take out a lien over unpaid dues or assessments, and doesn't allow foreclosures either.

However, Gambrell said that's what's happening around the state. The suit also names several law firms as defendants, as well as property management companies. Gambrell said homeowners are being evicted, yet still must pay their mortgage.

"It creates this vicious circle for these homeowners where, now, they've been thrown out of their own homes, but they're still responsible for the mortgage and can't get back into their homes because the HOA won't let them," he said.

Justin Cole lives in Cole Creek, where he pays $175 a month in neighborhood dues. He understands the need to keep a neighborhood clean and attractive, but not evicting someone over unpaid fees.

"They shouldn't take that route, you know, to foreclose on somebody's house," he said.

However, Lloyd Adkins, who's lived here much longer, said if the HOA has no other choice, they have to do something to collect fees owed.

"I know that a lot of people just, they don't pay, they don't care about it. When you buy a home here, you take on the responsibility of an HOA," he said.

Gambrell said homeowner's associations should take residents who don't pay dues to court for breach of contract, not foreclose on them.

Channel 9 tried to contact the Cole Creek HOA for a response to the lawsuit, but was unsuccessful.

Lawyers for the plaintiffs said that roughly one-third of the population the state of South Carolina lives under an HOA contract. They are pushing for a class action status in this federal suit.