Thank you, Your Honours. My name is Nelson Harris and I represent the Kingspin at Wakefield Plantation and Menders Association. I think that my time would at least begin with, would be most usually spent talking a little bit about the history of, you know, her mentors associations in North Carolina. Prior to 1999, there were... Let me issue this before you get to that. I know that the Humors Association had a Declaration of Covenants. Yes, Your Honours. And I know that the Humors Association could have filed its lien with the Office and the Clerk of Court, of Superior Court
. They didn't do that. And I know that the Humors Association did not comply with the Declaration of Covenants for perfecting a lien. Is all of that correct? Your Honour, they could have filed a... One, Your Honour, they could have filed a lien but they did not because they didn't anticipate that this bankruptcy was going to be filed. How did they have a lien? Have they waived that lien? Our argument, Your Honour, is known that there is a lien that came into existence under the terms of the Declaration 30 days after the assessment came due and that it is not exist without filing a claim of lien with the Wake County Clerk of Superior Court. I don't want to pre-empt your argument but that's not what your Declaration says. I think that it is what the Declaration says, Your Honour
. If you look at Section 1 of the Declaration or my apologies, Article 5, Section 1, it provides that the annual assessment shall be a charge and continuing lien on the lot against which such assessment is made. Your Honour, in that section, Subsection 8, it doesn't say anything about filing. In Section 12, it says, all sums assessed in the manner provided in this article but unpaid shall become a continuing lien and charge on the lot and by the defaulting manner as of the assessment due date which shall bind such lot and improvements then in the hands of the enter. I would notice that that doesn't say anything about filing, Your Honour. If you look at what the Plan Community Act says, under the terms of the Plan Community Act, really you're only going to be effective as of filing. So, there were leans and existence prior to the enactment of the Plan Community Act. They generally became effective upon the date that the assessment became pass-dee. And it was a decision to the Plan Community Act. So, under your argument then the requirement of a written notice of assessment and the filing of that notice with the clerk, it was all surplus in that Section 12
. You are in the nor that, and then they've been different, right? Well, yes, Your Honour. It says that it goes and it talks about the creation of the lien and says that it existed 30 days after filing and then what it says is to evidence the aforesaid lien. You have to prepare a written notice of the assessment lien, specify the amount, et cetera, and that that notice shall be signed by the officer or authorized agent of the association and shall be recorded in the office of the clerk of the Superior Court of Wake County. That's the county where this place located, right? That is absolutely correct. That's where it's located. Yes, Your Honour. Aren't you conflating lien creation with lien perfection by your argument? I would say, yes, Your Honour. I think I would agree with that statement that we contend that there is a, well, and no, I'll back off from that, Your Honour. We would contend that the lien always exists under this, let's call it contract basis, that was in effect prior, you know, 1999
. But to go and do something in terms of, you know, enforcing it under the terms of the Plan Community Act of the like that you would need to file the claim of lien so that you could take advantage of all of those provisions. And that is, under North Carolina law, the exclusive remedy for you, isn't it? Well, that is the question, Your Honour. That is the question for decision by this Court. Under, I would say that under the old law, under the pre-1999 law, that you would have these claims of lien that came into existence as it provides for under the terms of the declarations like this one, and they would be in existence, you know, after 30 days. And you couldn't use the power of sale for closures that are provided for under the Plan Community Act, but you could just sort of sue on them. You could go out and you could file a civil action seeking to enforce the lien and, you know, get your judgment and even have the property sold to satisfiability. And then the text of the PCA say that this is the exclusive procedure for perfecting and enforcing a lien. I believe that to be incorrect, Your Honour. Okay
. I'm going to start with under Rule 28J, the Rules of the Pellet Procedure, and gave notice of this provision of the Plan Community Act at the time, and just for your clerks and for your understanding, they've moved it around again, Your Honour. At the time, I believe that this is relevant to this case. Subsection D, 47F3116, provided that this section is not prohibit other actions to recover the sums for which subsection A of this section creates a lien. So we would argue based on that, that that implies that it is not the sole and exclusive remedy. And they've moved it, Your Honour. They've changed it. So if you go to the annotated statutes now, it's in subsection G, and it says the provisions of subsection F, which have to do with these lien foreclosures, of this section do not prohibit or prevent an association from pursuing a judicial foreclosure of a claim of lien from taking other actions to recover the sums to the association, or from accepting a deed in lieu of foreclosure. This provision in where it's talking about subsection, judicial foreclosure in the new subsection G, is in fact exactly the kind of thing that you would do under the prior to the plan community act. I mean, and just for the court's edification, under the pre plan community act, you would have these liens, you could file something with the clerk of superior court, but then you would sue on them
. You could not use these power of sale foreclosures. You had to use a judicial foreclosure. And the judicial foreclosures involved in filing an action in the district court, the superior court, and seeking to enforce whatever lien it was that was created by the declaration. So the plan community act is largely set up to provide the associations with the filing of claim of lien and then pursuing what's called a power of sale foreclosure. And the power of sale foreclosure or the foreclosures where you just file a notice of hearing, you go in front of the clerk and you foreclose just like you were going to foreclose a node indeed of trust. So I would argue that no, the plan community act does not really limit you to the power of sale foreclosures and the lien foreclosures that are provided for there. I would say that the new subsection G and the old subsection D, in fact, leave open the possibility that you can use the old kind of collection methods. The, and again, that is fundamentally the question here. If there is no preemption, you can just simply look at what this declaration provides for, because the declaration clearly is anticipating that you will do, that you can do collections or you can do lien foreclosures under both the plan community act and under the old judicial foreclosures
. And I would like to point out the language and the declaration that provides for that. In my brief on page 9, I sort of highlighted it to make it a little bit easier to read. But in section 12 of the declaration it says, such lien for payment of assessments shall attach with the priority above set forth from the date that such payment becomes delinquent. And again, as a matter of contract, we would argue that this says that the lien becomes effective as of the date it becomes past due rather than some later date when it is filed. And may be enforced by the foreclosure of the default and enters lot and improvements there on in light manner as a mortgage or deed of trust with power of sale on real property under article 2A of chapter 45. That is a reference, that little phrase is a reference to what you can now do under the terms of the plan community act. You can do a power of sale foreclosure under article under chapter 45 of the North Carolina General Statute just as if the lien were a deed of trust. So I mean in order to do a power of sale foreclosure you have to file the lien so that you can proceed with the foreclosure. But the declaration goes on to say and or the association may institute soon
. So you can just sue for the unpaid assessments and seek to enforce the lien. Well, what do we do with this language and the statute which is troublesome? Section 1-108 says that when North Carolina Common Law Principles quote, are inconsistent or conflict with this chapter, the provisions of this chapter will control. We would argue that this is not an inconsistency that they have simply provided a new remedy. And in that regard I would point out the reedy versus white heart case which unfortunately I was involved in. At the time your honor I contested the retroactive application of the provisions providing for fines of homeowners for violating declarations and it was determined by the North Carolina Court of Appeals that it's just an additional remedy. I would argue that there's something similar here that the Common Law or the contract based ability to collect these unpaid assessments still exists and all that they've done is add an additional remedy. One thing that I want to point out in that case your honor is that not every plan community is covered by the Plan Community Act. There is a numerosity requirement. So there's lots and lots of little communities out there that are still forced to rely upon the old, let's call it Common Law
. Is this kind of like a golf course development or something there? The one you said? Kingsinent Wakefield? Pardon? Yeah. I don't know. I have no idea. Your honor I don't know. I represent three or four hundred of this case. I've never been to this. Is there a slew of these cases waiting for the determination of this one? Your honor. This is it. There's only 600 some dollars involved here
. Absolutely. And you are expensive lawyers up here. I mean it's so pretty hard to send you up here for a 600 dollar. I must be honored. I'm not building my plan. I'm not building my plan for this. Just you know the interest of those. I'm not nosing in. I thought maybe that it impacts whatever we do impacts a lot of things. Whatever Judge Leonard or Judge Boyle did. It does impact a lot of things and it impacts a lot of things because the way virtually every and I'm going to be a little bit facetious here for effect. Your honor I think that there was an original declaration you know before 1999 that you know was recorded in the end that every other attorney went through and you know worked off of. They all pretty much read the same and many of them read like this. Where they provide for leans to be in existence at 30 days after the assessments do you or after they become late or whatever say. And they go by. And they're in their and their and their headlights up. Why don't we save some of this for the rebuttal. Thank you
. Whatever Judge Leonard or Judge Boyle did. It does impact a lot of things and it impacts a lot of things because the way virtually every and I'm going to be a little bit facetious here for effect. Your honor I think that there was an original declaration you know before 1999 that you know was recorded in the end that every other attorney went through and you know worked off of. They all pretty much read the same and many of them read like this. Where they provide for leans to be in existence at 30 days after the assessments do you or after they become late or whatever say. And they go by. And they're in their and their and their headlights up. Why don't we save some of this for the rebuttal. Thank you. Mr. Rowan. Yes sir your honor may it please the court I'm Lee Rowland and I represent Kim Castell. The district court should be affirmed for the following three reasons. First since the North Carolina Plan Community Act applies to Kingston at Wakefield plantation. The failure to file a claim of lean pursuant to the statutory procedure it only entitles Kingston to a general unsecured claim in Miss Castell's bankruptcy case. Second Kingston does not have a perfected continuous lean because the common law is inconsistent and conflicts with the PCA's statutory procedure that requires the filing of a claim of lean. And therefore the PCA statutory procedure controls this issue. Now lastly Kingston's declaration is invalid and unenforceable to the extent it impermissively varies the PCA statutory procedure for obtaining a lean for unpaid assessments
. Mr. Rowan. Yes sir your honor may it please the court I'm Lee Rowland and I represent Kim Castell. The district court should be affirmed for the following three reasons. First since the North Carolina Plan Community Act applies to Kingston at Wakefield plantation. The failure to file a claim of lean pursuant to the statutory procedure it only entitles Kingston to a general unsecured claim in Miss Castell's bankruptcy case. Second Kingston does not have a perfected continuous lean because the common law is inconsistent and conflicts with the PCA's statutory procedure that requires the filing of a claim of lean. And therefore the PCA statutory procedure controls this issue. Now lastly Kingston's declaration is invalid and unenforceable to the extent it impermissively varies the PCA statutory procedure for obtaining a lean for unpaid assessments. Now it's undisputed that Kingston at Wakefield plantation is subject to the Plan Community Act. Miss Castell by virtue of her ownership is required to pay assessments for maintaining common areas that brings it within the statute as well as then upon filing bankruptcy. You know Miss Castell enters the bankruptcy estate and the trustee chapter 13 trustee has the rights and powers of a bona fide purchaser of real property as if he had purchased it from Miss Castell and that's where the perfection issue comes into play. Now the substance of property rights and security interests in bankruptcy and that's governed by North Carolina law and therefore pursuant to the Plan Community Act you know they were required to file a claim of lean with the clerk of Superior Court for Wake County North Carolina. And as a result you know they since they did not file that claim of lean they're only entitled to an unsecured claim. Now as to the common law theory as far as the fact that you know they have this continuous lean that's you know based on the common law that doesn't really work with the Plan Community Act because it's both inconsistent and it conflicts with the procedure requiring the filing of a claim of lean. You know Kingston cannot obtain this perfected security interest against Miss Castell's home for you know for unpaid assessments without anything on the public record. You know the whole purpose of this claim of lean procedure was to clear up the issues with the public record otherwise the bankruptcy trustee who stands in the position of a bona fide purchaser after the filing he has no record that there is a lean existing out there. Here it's just this common law lean that you know if the homeowners dues were you know unpaid after 30 days it's a lean and that's exactly what the Plan Community Act and this provision sought to do away with to make a more accurate public record for bona fide purchasers as well as for real estate professionals that were out there
. Now it's undisputed that Kingston at Wakefield plantation is subject to the Plan Community Act. Miss Castell by virtue of her ownership is required to pay assessments for maintaining common areas that brings it within the statute as well as then upon filing bankruptcy. You know Miss Castell enters the bankruptcy estate and the trustee chapter 13 trustee has the rights and powers of a bona fide purchaser of real property as if he had purchased it from Miss Castell and that's where the perfection issue comes into play. Now the substance of property rights and security interests in bankruptcy and that's governed by North Carolina law and therefore pursuant to the Plan Community Act you know they were required to file a claim of lean with the clerk of Superior Court for Wake County North Carolina. And as a result you know they since they did not file that claim of lean they're only entitled to an unsecured claim. Now as to the common law theory as far as the fact that you know they have this continuous lean that's you know based on the common law that doesn't really work with the Plan Community Act because it's both inconsistent and it conflicts with the procedure requiring the filing of a claim of lean. You know Kingston cannot obtain this perfected security interest against Miss Castell's home for you know for unpaid assessments without anything on the public record. You know the whole purpose of this claim of lean procedure was to clear up the issues with the public record otherwise the bankruptcy trustee who stands in the position of a bona fide purchaser after the filing he has no record that there is a lean existing out there. Here it's just this common law lean that you know if the homeowners dues were you know unpaid after 30 days it's a lean and that's exactly what the Plan Community Act and this provision sought to do away with to make a more accurate public record for bona fide purchasers as well as for real estate professionals that were out there. Now here in the district court as a result I mean they correctly held that the PCA's procedure to obtain a perfected lean controls and that the common law theory it clearly conflicts with the PCA's requirements and therefore the PCA controls. Now to address Kingston's citation of supplemental authority after the briefs were submitted. The old subsection D it does refer to the opportunity that other actions to recover sums for which subsection A which creates the lean are not prohibited. Well what that means is that the homeowners association you know may sue a miscastel in her personal capacity which of course didn't happen in this case they may pursue the homeowner in their personal capacity in order to at that point obtain a judgment and then possibly at that eventually thereafter go through the judicial foreclosure. You know that is the reason why that subsection exists and in I would like to draw the court's attention on the Joint Appendix page 28 to the section 12 that is titled assessment lean and foreclosure. Further down in the paragraph it states that the association may institute a suit against the owner personally obligated to pay the assessments and or foreclosure of the aforesaid judicial lean. Now I mean to the extent that that is clearly a remedy that is contemplated but that's the in person in remedy. The issue before the court is what is the in rim rim that the HOA has against the property in order to you know collect on those assessments and based on that in rim rim and what the plan community act requires a claim of lean was not filed and that's not available and that is why the district court and the bankruptcy court held that Kingston is only entitled to an unsecure claim in this case. Now to also address some of the issues with
. Now here in the district court as a result I mean they correctly held that the PCA's procedure to obtain a perfected lean controls and that the common law theory it clearly conflicts with the PCA's requirements and therefore the PCA controls. Now to address Kingston's citation of supplemental authority after the briefs were submitted. The old subsection D it does refer to the opportunity that other actions to recover sums for which subsection A which creates the lean are not prohibited. Well what that means is that the homeowners association you know may sue a miscastel in her personal capacity which of course didn't happen in this case they may pursue the homeowner in their personal capacity in order to at that point obtain a judgment and then possibly at that eventually thereafter go through the judicial foreclosure. You know that is the reason why that subsection exists and in I would like to draw the court's attention on the Joint Appendix page 28 to the section 12 that is titled assessment lean and foreclosure. Further down in the paragraph it states that the association may institute a suit against the owner personally obligated to pay the assessments and or foreclosure of the aforesaid judicial lean. Now I mean to the extent that that is clearly a remedy that is contemplated but that's the in person in remedy. The issue before the court is what is the in rim rim that the HOA has against the property in order to you know collect on those assessments and based on that in rim rim and what the plan community act requires a claim of lean was not filed and that's not available and that is why the district court and the bankruptcy court held that Kingston is only entitled to an unsecure claim in this case. Now to also address some of the issues with... Well they had they had filed a suit against her personally and they prevailed obviously at the end of the day there'd be a judgment that would be recorded. Correct. And that was one of the things the PCAs tried to make sure happens. Correct. And that was the point of you know having a documented in rim remedy that you know bonafide purchasers and the real property records they reflect. Now in this case if you know if Kingston is allowed to prevail on their argument you know there is no record if you were able to just have a common law lean the real property record or any record public record would reflect that. And that's the issue and that's why the PCA came into play and they brought in this procedure
... Well they had they had filed a suit against her personally and they prevailed obviously at the end of the day there'd be a judgment that would be recorded. Correct. And that was one of the things the PCAs tried to make sure happens. Correct. And that was the point of you know having a documented in rim remedy that you know bonafide purchasers and the real property records they reflect. Now in this case if you know if Kingston is allowed to prevail on their argument you know there is no record if you were able to just have a common law lean the real property record or any record public record would reflect that. And that's the issue and that's why the PCA came into play and they brought in this procedure. Regarding Kingston's declaration it cannot alter the PCAs statutory procedure for obtaining an assessment lean in order to create this common law continuing lean because under its section 47F-1-104 it says that the PCA may not be varied by declaration except as specifically provided in specific sections of the PCA. Now the declaration does as Kingston pointed out you know it does have this language as far as well this is just you know the filing of the claim of lean is to evidence you know the foresubling that we already have as well as you know it doesn't go into it goes into effect 30 days after the assessment. Well that language is you know effectively invalid and it's unenforceable because the PCA determines what a declaration can vary and what a declaration cannot. In order to be able to vary that the PCA has to specifically provide for and there are situations throughout the PCA that permit this. For instance the declaration it may require the association to carry other insurance besides that what is required by the statute as well as the declaration they can alter a number of statutory rules with regarding to you know voting in proxies but the first sentence of subsection A of the assessment for lean statutes that cannot be altered that is the requirement and that is what Kingston was required to comply with in order to have a secured claim in Miss Castell's bankruptcy case. And you're on it unless there's any further questions that's all I have. Thank you very much. Thank you. Mr
. Regarding Kingston's declaration it cannot alter the PCAs statutory procedure for obtaining an assessment lean in order to create this common law continuing lean because under its section 47F-1-104 it says that the PCA may not be varied by declaration except as specifically provided in specific sections of the PCA. Now the declaration does as Kingston pointed out you know it does have this language as far as well this is just you know the filing of the claim of lean is to evidence you know the foresubling that we already have as well as you know it doesn't go into it goes into effect 30 days after the assessment. Well that language is you know effectively invalid and it's unenforceable because the PCA determines what a declaration can vary and what a declaration cannot. In order to be able to vary that the PCA has to specifically provide for and there are situations throughout the PCA that permit this. For instance the declaration it may require the association to carry other insurance besides that what is required by the statute as well as the declaration they can alter a number of statutory rules with regarding to you know voting in proxies but the first sentence of subsection A of the assessment for lean statutes that cannot be altered that is the requirement and that is what Kingston was required to comply with in order to have a secured claim in Miss Castell's bankruptcy case. And you're on it unless there's any further questions that's all I have. Thank you very much. Thank you. Mr. Harris. Thank you. I'd like to focus on two things. One in my original time I didn't finish the point I wanted to make about the terms of the declaration. In this section 12 of Article 5 it provides for three potential remedies with respect to the lean. The first is the power of sale for closure. The second is it says and or the association may institute suit and the third is and or for closure of the aforesaid lean judicially or may seek other available remedy or relief. So this declaration contemplates that you can do something other than the power of sale for closure that's set forth under the act and when they're talking about the aforesaid lean we would respectfully assert it means that the lean that it describes as being in existence from 30 days. Your honor and at the bottom of that section it says the provisions of this article 5 shall be in addition to the provisions the apical laws relating to lean
. Harris. Thank you. I'd like to focus on two things. One in my original time I didn't finish the point I wanted to make about the terms of the declaration. In this section 12 of Article 5 it provides for three potential remedies with respect to the lean. The first is the power of sale for closure. The second is it says and or the association may institute suit and the third is and or for closure of the aforesaid lean judicially or may seek other available remedy or relief. So this declaration contemplates that you can do something other than the power of sale for closure that's set forth under the act and when they're talking about the aforesaid lean we would respectfully assert it means that the lean that it describes as being in existence from 30 days. Your honor and at the bottom of that section it says the provisions of this article 5 shall be in addition to the provisions the apical laws relating to lean. I presume that's a reference to the plan community act. In terms of how this might affect things when a real estate attorney is doing a closing in North Carolina these days and there is a piece of property that is in a planned community they contact the property manager for the plan community and they get an assessment amount owing from the property manager or from the board of the association if there's not one and they pay those they pay that amount off at the real estate closing and they pay it off at the real estate closing because virtually all declarations contain language like this where it provides that there is a lean for unpaid assessments so that's in existence without recording so the primary impact of a upholding the district courts and the well if there's no lean out there we don't have to worry about it so the reason we're here is because that we'll call. So lean out there by that you mean if there's no lean recorded at the court house? If it's not recorded at the court house your honor under the district court decision under the bankruptcy court decision why do you have to go and contact the homeowners association to find out what is owing and you do it now and they've done it since before the plan community act. Exactly. The evidence of that in this record I might not I never heard you're up here testifying about how property lawyers do it that's not how the property lawyers did it in my state when I did this kind of stuff. To the bed to my house. To the court house. To the court house. To the court house
. I presume that's a reference to the plan community act. In terms of how this might affect things when a real estate attorney is doing a closing in North Carolina these days and there is a piece of property that is in a planned community they contact the property manager for the plan community and they get an assessment amount owing from the property manager or from the board of the association if there's not one and they pay those they pay that amount off at the real estate closing and they pay it off at the real estate closing because virtually all declarations contain language like this where it provides that there is a lean for unpaid assessments so that's in existence without recording so the primary impact of a upholding the district courts and the well if there's no lean out there we don't have to worry about it so the reason we're here is because that we'll call. So lean out there by that you mean if there's no lean recorded at the court house? If it's not recorded at the court house your honor under the district court decision under the bankruptcy court decision why do you have to go and contact the homeowners association to find out what is owing and you do it now and they've done it since before the plan community act. Exactly. The evidence of that in this record I might not I never heard you're up here testifying about how property lawyers do it that's not how the property lawyers did it in my state when I did this kind of stuff. To the bed to my house. To the court house. To the court house. To the court house. To the court house. Yeah to the yeah this record is very thin and says nothing about that and and I think that you know there's only two states maybe three now that even have the plan community act based on the uniform plan community act. I want to say it's Pennsylvania and North Carolina. What we're talking about is whether your lean is your secured creditor or an unsecured creditor. So under your theory you'd be an unsecured creditor wouldn't you? Under under my theory we'd be a secured creditor after the 30 days because that's what the declaration says we are and that is that is our argument argument is that the plan community act is not the sole and exclusive remedy that these leans that are created by contract are valid in any existence and perhaps you can enforce amusing the provisions of the plan community act unless you record a claim of lean with the clerk but they're they're still out there and uh in to finally with respect to this argument that you uh you need to have a claim of lean in the records know that there's this obligation out there well you know declarations are in the chain of title and uh people can look at the declaration and find out how much is owing in the same way that they can contact a you know a first or a second mortgage holder and find out how much is owing on the deed of trust. Declarations are in the chain of title but people can see and they can find out the amount that's owing by asking. Thank you very much sir.
Thank you, Your Honours. My name is Nelson Harris and I represent the Kingspin at Wakefield Plantation and Menders Association. I think that my time would at least begin with, would be most usually spent talking a little bit about the history of, you know, her mentors associations in North Carolina. Prior to 1999, there were... Let me issue this before you get to that. I know that the Humors Association had a Declaration of Covenants. Yes, Your Honours. And I know that the Humors Association could have filed its lien with the Office and the Clerk of Court, of Superior Court. They didn't do that. And I know that the Humors Association did not comply with the Declaration of Covenants for perfecting a lien. Is all of that correct? Your Honour, they could have filed a... One, Your Honour, they could have filed a lien but they did not because they didn't anticipate that this bankruptcy was going to be filed. How did they have a lien? Have they waived that lien? Our argument, Your Honour, is known that there is a lien that came into existence under the terms of the Declaration 30 days after the assessment came due and that it is not exist without filing a claim of lien with the Wake County Clerk of Superior Court. I don't want to pre-empt your argument but that's not what your Declaration says. I think that it is what the Declaration says, Your Honour. If you look at Section 1 of the Declaration or my apologies, Article 5, Section 1, it provides that the annual assessment shall be a charge and continuing lien on the lot against which such assessment is made. Your Honour, in that section, Subsection 8, it doesn't say anything about filing. In Section 12, it says, all sums assessed in the manner provided in this article but unpaid shall become a continuing lien and charge on the lot and by the defaulting manner as of the assessment due date which shall bind such lot and improvements then in the hands of the enter. I would notice that that doesn't say anything about filing, Your Honour. If you look at what the Plan Community Act says, under the terms of the Plan Community Act, really you're only going to be effective as of filing. So, there were leans and existence prior to the enactment of the Plan Community Act. They generally became effective upon the date that the assessment became pass-dee. And it was a decision to the Plan Community Act. So, under your argument then the requirement of a written notice of assessment and the filing of that notice with the clerk, it was all surplus in that Section 12. You are in the nor that, and then they've been different, right? Well, yes, Your Honour. It says that it goes and it talks about the creation of the lien and says that it existed 30 days after filing and then what it says is to evidence the aforesaid lien. You have to prepare a written notice of the assessment lien, specify the amount, et cetera, and that that notice shall be signed by the officer or authorized agent of the association and shall be recorded in the office of the clerk of the Superior Court of Wake County. That's the county where this place located, right? That is absolutely correct. That's where it's located. Yes, Your Honour. Aren't you conflating lien creation with lien perfection by your argument? I would say, yes, Your Honour. I think I would agree with that statement that we contend that there is a, well, and no, I'll back off from that, Your Honour. We would contend that the lien always exists under this, let's call it contract basis, that was in effect prior, you know, 1999. But to go and do something in terms of, you know, enforcing it under the terms of the Plan Community Act of the like that you would need to file the claim of lien so that you could take advantage of all of those provisions. And that is, under North Carolina law, the exclusive remedy for you, isn't it? Well, that is the question, Your Honour. That is the question for decision by this Court. Under, I would say that under the old law, under the pre-1999 law, that you would have these claims of lien that came into existence as it provides for under the terms of the declarations like this one, and they would be in existence, you know, after 30 days. And you couldn't use the power of sale for closures that are provided for under the Plan Community Act, but you could just sort of sue on them. You could go out and you could file a civil action seeking to enforce the lien and, you know, get your judgment and even have the property sold to satisfiability. And then the text of the PCA say that this is the exclusive procedure for perfecting and enforcing a lien. I believe that to be incorrect, Your Honour. Okay. I'm going to start with under Rule 28J, the Rules of the Pellet Procedure, and gave notice of this provision of the Plan Community Act at the time, and just for your clerks and for your understanding, they've moved it around again, Your Honour. At the time, I believe that this is relevant to this case. Subsection D, 47F3116, provided that this section is not prohibit other actions to recover the sums for which subsection A of this section creates a lien. So we would argue based on that, that that implies that it is not the sole and exclusive remedy. And they've moved it, Your Honour. They've changed it. So if you go to the annotated statutes now, it's in subsection G, and it says the provisions of subsection F, which have to do with these lien foreclosures, of this section do not prohibit or prevent an association from pursuing a judicial foreclosure of a claim of lien from taking other actions to recover the sums to the association, or from accepting a deed in lieu of foreclosure. This provision in where it's talking about subsection, judicial foreclosure in the new subsection G, is in fact exactly the kind of thing that you would do under the prior to the plan community act. I mean, and just for the court's edification, under the pre plan community act, you would have these liens, you could file something with the clerk of superior court, but then you would sue on them. You could not use these power of sale foreclosures. You had to use a judicial foreclosure. And the judicial foreclosures involved in filing an action in the district court, the superior court, and seeking to enforce whatever lien it was that was created by the declaration. So the plan community act is largely set up to provide the associations with the filing of claim of lien and then pursuing what's called a power of sale foreclosure. And the power of sale foreclosure or the foreclosures where you just file a notice of hearing, you go in front of the clerk and you foreclose just like you were going to foreclose a node indeed of trust. So I would argue that no, the plan community act does not really limit you to the power of sale foreclosures and the lien foreclosures that are provided for there. I would say that the new subsection G and the old subsection D, in fact, leave open the possibility that you can use the old kind of collection methods. The, and again, that is fundamentally the question here. If there is no preemption, you can just simply look at what this declaration provides for, because the declaration clearly is anticipating that you will do, that you can do collections or you can do lien foreclosures under both the plan community act and under the old judicial foreclosures. And I would like to point out the language and the declaration that provides for that. In my brief on page 9, I sort of highlighted it to make it a little bit easier to read. But in section 12 of the declaration it says, such lien for payment of assessments shall attach with the priority above set forth from the date that such payment becomes delinquent. And again, as a matter of contract, we would argue that this says that the lien becomes effective as of the date it becomes past due rather than some later date when it is filed. And may be enforced by the foreclosure of the default and enters lot and improvements there on in light manner as a mortgage or deed of trust with power of sale on real property under article 2A of chapter 45. That is a reference, that little phrase is a reference to what you can now do under the terms of the plan community act. You can do a power of sale foreclosure under article under chapter 45 of the North Carolina General Statute just as if the lien were a deed of trust. So I mean in order to do a power of sale foreclosure you have to file the lien so that you can proceed with the foreclosure. But the declaration goes on to say and or the association may institute soon. So you can just sue for the unpaid assessments and seek to enforce the lien. Well, what do we do with this language and the statute which is troublesome? Section 1-108 says that when North Carolina Common Law Principles quote, are inconsistent or conflict with this chapter, the provisions of this chapter will control. We would argue that this is not an inconsistency that they have simply provided a new remedy. And in that regard I would point out the reedy versus white heart case which unfortunately I was involved in. At the time your honor I contested the retroactive application of the provisions providing for fines of homeowners for violating declarations and it was determined by the North Carolina Court of Appeals that it's just an additional remedy. I would argue that there's something similar here that the Common Law or the contract based ability to collect these unpaid assessments still exists and all that they've done is add an additional remedy. One thing that I want to point out in that case your honor is that not every plan community is covered by the Plan Community Act. There is a numerosity requirement. So there's lots and lots of little communities out there that are still forced to rely upon the old, let's call it Common Law. Is this kind of like a golf course development or something there? The one you said? Kingsinent Wakefield? Pardon? Yeah. I don't know. I have no idea. Your honor I don't know. I represent three or four hundred of this case. I've never been to this. Is there a slew of these cases waiting for the determination of this one? Your honor. This is it. There's only 600 some dollars involved here. Absolutely. And you are expensive lawyers up here. I mean it's so pretty hard to send you up here for a 600 dollar. I must be honored. I'm not building my plan. I'm not building my plan for this. Just you know the interest of those. I'm not nosing in. I thought maybe that it impacts whatever we do impacts a lot of things. Whatever Judge Leonard or Judge Boyle did. It does impact a lot of things and it impacts a lot of things because the way virtually every and I'm going to be a little bit facetious here for effect. Your honor I think that there was an original declaration you know before 1999 that you know was recorded in the end that every other attorney went through and you know worked off of. They all pretty much read the same and many of them read like this. Where they provide for leans to be in existence at 30 days after the assessments do you or after they become late or whatever say. And they go by. And they're in their and their and their headlights up. Why don't we save some of this for the rebuttal. Thank you. Mr. Rowan. Yes sir your honor may it please the court I'm Lee Rowland and I represent Kim Castell. The district court should be affirmed for the following three reasons. First since the North Carolina Plan Community Act applies to Kingston at Wakefield plantation. The failure to file a claim of lean pursuant to the statutory procedure it only entitles Kingston to a general unsecured claim in Miss Castell's bankruptcy case. Second Kingston does not have a perfected continuous lean because the common law is inconsistent and conflicts with the PCA's statutory procedure that requires the filing of a claim of lean. And therefore the PCA statutory procedure controls this issue. Now lastly Kingston's declaration is invalid and unenforceable to the extent it impermissively varies the PCA statutory procedure for obtaining a lean for unpaid assessments. Now it's undisputed that Kingston at Wakefield plantation is subject to the Plan Community Act. Miss Castell by virtue of her ownership is required to pay assessments for maintaining common areas that brings it within the statute as well as then upon filing bankruptcy. You know Miss Castell enters the bankruptcy estate and the trustee chapter 13 trustee has the rights and powers of a bona fide purchaser of real property as if he had purchased it from Miss Castell and that's where the perfection issue comes into play. Now the substance of property rights and security interests in bankruptcy and that's governed by North Carolina law and therefore pursuant to the Plan Community Act you know they were required to file a claim of lean with the clerk of Superior Court for Wake County North Carolina. And as a result you know they since they did not file that claim of lean they're only entitled to an unsecured claim. Now as to the common law theory as far as the fact that you know they have this continuous lean that's you know based on the common law that doesn't really work with the Plan Community Act because it's both inconsistent and it conflicts with the procedure requiring the filing of a claim of lean. You know Kingston cannot obtain this perfected security interest against Miss Castell's home for you know for unpaid assessments without anything on the public record. You know the whole purpose of this claim of lean procedure was to clear up the issues with the public record otherwise the bankruptcy trustee who stands in the position of a bona fide purchaser after the filing he has no record that there is a lean existing out there. Here it's just this common law lean that you know if the homeowners dues were you know unpaid after 30 days it's a lean and that's exactly what the Plan Community Act and this provision sought to do away with to make a more accurate public record for bona fide purchasers as well as for real estate professionals that were out there. Now here in the district court as a result I mean they correctly held that the PCA's procedure to obtain a perfected lean controls and that the common law theory it clearly conflicts with the PCA's requirements and therefore the PCA controls. Now to address Kingston's citation of supplemental authority after the briefs were submitted. The old subsection D it does refer to the opportunity that other actions to recover sums for which subsection A which creates the lean are not prohibited. Well what that means is that the homeowners association you know may sue a miscastel in her personal capacity which of course didn't happen in this case they may pursue the homeowner in their personal capacity in order to at that point obtain a judgment and then possibly at that eventually thereafter go through the judicial foreclosure. You know that is the reason why that subsection exists and in I would like to draw the court's attention on the Joint Appendix page 28 to the section 12 that is titled assessment lean and foreclosure. Further down in the paragraph it states that the association may institute a suit against the owner personally obligated to pay the assessments and or foreclosure of the aforesaid judicial lean. Now I mean to the extent that that is clearly a remedy that is contemplated but that's the in person in remedy. The issue before the court is what is the in rim rim that the HOA has against the property in order to you know collect on those assessments and based on that in rim rim and what the plan community act requires a claim of lean was not filed and that's not available and that is why the district court and the bankruptcy court held that Kingston is only entitled to an unsecure claim in this case. Now to also address some of the issues with... Well they had they had filed a suit against her personally and they prevailed obviously at the end of the day there'd be a judgment that would be recorded. Correct. And that was one of the things the PCAs tried to make sure happens. Correct. And that was the point of you know having a documented in rim remedy that you know bonafide purchasers and the real property records they reflect. Now in this case if you know if Kingston is allowed to prevail on their argument you know there is no record if you were able to just have a common law lean the real property record or any record public record would reflect that. And that's the issue and that's why the PCA came into play and they brought in this procedure. Regarding Kingston's declaration it cannot alter the PCAs statutory procedure for obtaining an assessment lean in order to create this common law continuing lean because under its section 47F-1-104 it says that the PCA may not be varied by declaration except as specifically provided in specific sections of the PCA. Now the declaration does as Kingston pointed out you know it does have this language as far as well this is just you know the filing of the claim of lean is to evidence you know the foresubling that we already have as well as you know it doesn't go into it goes into effect 30 days after the assessment. Well that language is you know effectively invalid and it's unenforceable because the PCA determines what a declaration can vary and what a declaration cannot. In order to be able to vary that the PCA has to specifically provide for and there are situations throughout the PCA that permit this. For instance the declaration it may require the association to carry other insurance besides that what is required by the statute as well as the declaration they can alter a number of statutory rules with regarding to you know voting in proxies but the first sentence of subsection A of the assessment for lean statutes that cannot be altered that is the requirement and that is what Kingston was required to comply with in order to have a secured claim in Miss Castell's bankruptcy case. And you're on it unless there's any further questions that's all I have. Thank you very much. Thank you. Mr. Harris. Thank you. I'd like to focus on two things. One in my original time I didn't finish the point I wanted to make about the terms of the declaration. In this section 12 of Article 5 it provides for three potential remedies with respect to the lean. The first is the power of sale for closure. The second is it says and or the association may institute suit and the third is and or for closure of the aforesaid lean judicially or may seek other available remedy or relief. So this declaration contemplates that you can do something other than the power of sale for closure that's set forth under the act and when they're talking about the aforesaid lean we would respectfully assert it means that the lean that it describes as being in existence from 30 days. Your honor and at the bottom of that section it says the provisions of this article 5 shall be in addition to the provisions the apical laws relating to lean. I presume that's a reference to the plan community act. In terms of how this might affect things when a real estate attorney is doing a closing in North Carolina these days and there is a piece of property that is in a planned community they contact the property manager for the plan community and they get an assessment amount owing from the property manager or from the board of the association if there's not one and they pay those they pay that amount off at the real estate closing and they pay it off at the real estate closing because virtually all declarations contain language like this where it provides that there is a lean for unpaid assessments so that's in existence without recording so the primary impact of a upholding the district courts and the well if there's no lean out there we don't have to worry about it so the reason we're here is because that we'll call. So lean out there by that you mean if there's no lean recorded at the court house? If it's not recorded at the court house your honor under the district court decision under the bankruptcy court decision why do you have to go and contact the homeowners association to find out what is owing and you do it now and they've done it since before the plan community act. Exactly. The evidence of that in this record I might not I never heard you're up here testifying about how property lawyers do it that's not how the property lawyers did it in my state when I did this kind of stuff. To the bed to my house. To the court house. To the court house. To the court house. To the court house. Yeah to the yeah this record is very thin and says nothing about that and and I think that you know there's only two states maybe three now that even have the plan community act based on the uniform plan community act. I want to say it's Pennsylvania and North Carolina. What we're talking about is whether your lean is your secured creditor or an unsecured creditor. So under your theory you'd be an unsecured creditor wouldn't you? Under under my theory we'd be a secured creditor after the 30 days because that's what the declaration says we are and that is that is our argument argument is that the plan community act is not the sole and exclusive remedy that these leans that are created by contract are valid in any existence and perhaps you can enforce amusing the provisions of the plan community act unless you record a claim of lean with the clerk but they're they're still out there and uh in to finally with respect to this argument that you uh you need to have a claim of lean in the records know that there's this obligation out there well you know declarations are in the chain of title and uh people can look at the declaration and find out how much is owing in the same way that they can contact a you know a first or a second mortgage holder and find out how much is owing on the deed of trust. Declarations are in the chain of title but people can see and they can find out the amount that's owing by asking. Thank you very much sir