W.V. Ct. Rules Unfair Debt Collection Practices Act Applies to HOA Efforts to Collect Assessments

West Virginia Supreme Court of Appeals decision (April 23, 2015).

This case involved a dispute between a homeowners association (“HOA”) that was created as a West Virginia Limited Expense Planned Community under West Virginia law, and various homeowners who had failed to pay their share of HOA assessments. The homeowners contended that the HOA, as a “Limited Expense Planned Community,” did not have the ability to assert a common law lien on their property for the unpaid HOA assessments. The homeowners further contended that the HOA’s collection efforts were governed by the provisions of the West Virginia Consumer Credit and Protection Act. The trial court granted summary judgment in favor of the HOA and the homeowners appealed.

The appellate court agreed with the trial court regarding the issue of the HOA lien and found that the applicable West Virginia statutes authorize a “consensual common law lien” against real property, but disagreed with the trial court decision regarding the applicability of the West Virginia Consumer Credit and Protection Act to HOA’s attempts to collect the delinquent assessments from the homeowners.

With regard to the lien issue, the homeowners contended that the liens at issue were not “consensual” because the homeowners had never given their consent to the liens through an authenticated document or a deed that they had signed. The appellate court rejected the homeowners’ argument and found that the homeowners’ acceptance of a deed that containing covenants which provided for a lien amounted to the adoption of the signature of the grantor as that of the grantee. Thus, acceptance of the deed implied consent and a promise to perform the covenants to be performed by the grantee named in the deed.

With regard to the homeowners argument that the HOA’s collection efforts were governed by the West Virginia Consumer Credit and Protection Act, the appellate court found that:(i) the assessments that were the subject of the HOA’s collection efforts qualified as a “claim” under broad definition contained in the Act; (ii) the assessments in question were “primarily for personal, family or household purposes” as required by the Act; (iii) that the homeowners were considered “consumers” under the Act; and (iv) the HOA was considered a “debt collector” under the Act. Accordingly, the appellate court ruled that the unfair debt collection provisions of the West Virginia Consumer Credit and Protection Act applied in the case. The court also ruled that the homeowners’ rights under the Act could be asserted as a defense, setoff or counterclaim to the HOA’s actions without regard for any statute of limitations.

See case decision: Fleet_v._Webber_Springs_Owne