N.C. Court of Appeals: In re Ackah- Remedy for Statutorily Defective Notice of Foreclosure Does Not Include Overturning Sale


Reserve Homeowners Association commenced a foreclosure against residential rental property owned by Ms. Ackah for unpaid homeowner’s association dues. Notice of the sale was left at the property and notices sent (and returned unclaimed) to other family members. Ultimately, the property was purchased by the Jones Family Holdings a the sale. Finding that Ms. Ackah did not receive actual notice of the foreclosure , the superior court accordingly set aside the sale.

The majority of opinion of the Court of Appeals held that N.C.G.S. § 1A-1, Rule 4 did require the HOA to use “due diligence” in effectuating service. Since the HOA knew or had reason to know that Ms. Ackah was not residing at the property, the HOA was obliged to attempt to contact Ms. Ackah through all modes available, specifically in this case through the email address it had in its records for her.

This lack of due diligence, however, did not allow, pursuant to N.C.G.S. § 1-108, for the sale to a “good faith purchaser” to be set aside as the notice provided was constitutionally sufficient as “it was reasonably calculated to reach the intended recipient when sent[.]” Jones v. Flowers, 547 U.S. 220, 220 (2006). The majority held that it was a rational decision for the legislature to favor the interests of good faith purchasers ahead of property owners. Accordingly, Ms. Ackah is entitled to other remedies from the HOA for the improper sale, but not return of the property.

The dissent relied on Cary v. Stallings, 97 N.C. App. 484, 487, 389 S.E.2d 143, 145 (1990), which had been followed in unpublished opinions by  County of Jackson v. Moor, 236 N.C. App. 247, 765 S.E.2d 122 (2014) (unpublished) and Zheng v. Charlotte Prop., 226 N.C. App. 200, 739 S.E.2d 627 (2013) (unpublished), which held that “title to such property may in fact be affected if the court deems it necessary in the interest of justice.”


With a split opinion, where the majority seems to reject a long line of its own cases, this seems like an appropriate case for appeal to the Supreme Court and perhaps a legislative change that would protect against this.

It is also worth noting that the Jones Family Holdings are not naifs when it comes to purchasing property at foreclosure sales, particularly related to tax and homeowners’ associations. The Bennett case from the M.D.N.C. bankruptcy court, involved the Jones Family Holdings and also points towards how this case could have had a different result in a bankruptcy, as 11 U.S.C. § 548 can be used to avoid a transfer where there was a “material irregularity in the sale.”

For a copy of the opinion, please see:

Ackah- Remedy for Statutorily Defective Notice of Foreclosure Does Not Include Overturning Sale


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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