Articles Posted in Assessment Collection

By Sandra Gottlieb, SwedelsonGottlieb, Community Association Attorneys

There has been some confusion as to whether a community association’s trustee, after a nonjudicial foreclosure sale (for the collection of delinquent assessments), may record a trustee’s deed upon sale prior to the expiration of the 90-day right of redemption required by California Civil Code Section 1367.4 and California Code of Civil Procedure Section 729.035. A plain reading of California law provides no explicit answer.

Some contend that it would not make sense to record a trustee’s deed upon sale prior to the expiration of the 90-day right of redemption because title to the property cannot transfer until the right of redemption period passes. Others would simply point to the law and ask why the legislature would not explicitly provide for this requirement, like it has with many other nuances pertaining to the right of redemption for nonjudicial foreclosures.

Multani v. Witkin & Neal, Castle Green Condominium Association, etc.

By David Swedelson, Condo Lawyer and HOA Attorney, Partner at SwedelsonGottlieb, Community Association Attorneys

As we have previously reported, when property is sold through non-judicial foreclosure on an assessment lien, buyers (third parties or the association) take ownership subject to a 90-day right of redemption, which allows the foreclosed owner to recover the property if the owner pays the delinquency and any fees and costs (Civil Code §1367.4(c)(4); Code of Civil Proc. §729.035).

This right of redemption is unusual in that it does not apply to non-judicial foreclosure on trust deeds; it was added to the law for community associations several years ago to help owners so they do not lose their homes because they did not pay their associations’ assessments or fees. Owners rarely take advantage of this right. But that does not mean that the foreclosing association and, more specifically, the foreclosure trustee retained by the association do not need to give notice of this right. And this was confirmed in the recent Court of Appeal decision in the case of Multani v. Witkin & Neal.
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By David Swedelson, Condo Lawyer and HOA Attorney at SwedelsonGottlieb, Community Association Attorneys

Florida State Sen. Alan Hays, R-Umatilla, recently filed a bill that would allow community associations to foreclose quickly on homes or condo units in Florida community associations if the owners have not paid their dues/assessments. The proposed legislation provides that if a homeowner does not deposit the unpaid balance in a special registry as directed by a court, the association could foreclose immediately on the property.

An article that appeared in the Orlando Sentinel describes a process whereby owners can contest their associations’ assessments, which can sometimes stretch on for years. “Homeowners behind on their community-association dues would have to make good on the full amount before fighting the charges, under proposed legislation that would also bring state oversight to Florida’s homeowner associations.”
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Clarifications to the 2013 Northern California Law Seminar
By SwedelsonGottlieb, California Community Association Attorneys.

Attorneys from the law firm SwedelsonGottlieb and Association Lien Services (“ALS”) attended California Association of Community Managers’ (“CACM”) 2013 Northern California Law Seminar in January of 2013. One of the programs dealt with assessment collection strategies. We did not like everything that we heard. This post is intended to set out our thoughts and opinions which differ from the attorney speaker’s opinions with regard to assessment collection strategies.

We were motivated to write this post as we are informed that some attendees walked away from the session thinking that perhaps the law is different with regard to assessment collection in Northern California vs. Southern California. That is simply not the case. Assessment collection is mainly governed by California Civil Code Section 1366 et seq. This body of law is applicable to all California community associations. There is no difference between Northern and Southern California when it comes to the applicable law or procedures relating to assessment collection. We ought to know this, as we have been collecting delinquent assessments statewide for more then 20 years.
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By Sandra L. Gottlieb, Esq., HOA and Condo Attorneys

Attorneys from the law firm SwedelsonGottlieb and Association Lien Services (ALS) attended Community Associations Institute Orange County Chapter’s (CAI-OC) Educational Luncheon on January 15, 2013 dealing with a California community associations’ rights and obligations following an HOA’s lien foreclosure sale. We did not like everything that we heard. This post is intended to set out our thoughts and opinions which differ from the speakers’ opinions with regard to improvements to the property during the statutory redemption period and the yet to be determined application of rent skimming to community associations and management companies.

The speakers at the January 15th program suggested that a California community association association that takes title to a property following foreclosure should not make improvements, including repairs necessary to rent the unit or home. We do not agree. California Code of Civil Procedure Section 729.060 contemplates that such improvements may be made to the property and that the redemption price shall include, in addition to and among other things, the “reasonable amounts for fire insurance, maintenance, upkeep, and repair of improvements on the property.” In fact, this very issue was litigated and the subject of an unpublished Court of Appeal opinion. In that case, the trial court found, and on appeal the appellate court determined, that money spent on improvements could be included in the redemption amount. In addition, the court found that there was no error in finding that the amount due in order to redeem the property previously foreclosed properly included over $17,900.00 in expenses the third party paid for maintenance and repair work on the unit after the foreclosure sale but prior to the expiration of the redemption period, an electric bill and interest on the foreclosure sale purchase price.
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Blog post by David Swedelson, Condo Attorney and HOA lawyer; Senior Partner at SwedelsonGottlieb, Community Association Attorneys

Under California law, a condo or homeowners association has the right to foreclose on an owner’s interest in their condominium or property if they fail to pay the assessments or fees that are levied on them. It never ceases to amaze me that homeowners are surprised when their association forecloses.

And it never ceases to amaze me when these stories end up in the news. Follow this link to an article out of Florida where a homeowner was surprised when he was evicted after not paying his association for two years.

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Blog Post By David Swedelson, SwedelsonGottlieb Community Association Attorneys

I recently posted a blog article regarding the Fair Debt Collection Practices Act or commonly referred to as the “FDCPA”. Follow this link for my blog post entitled Neither a Community Association Nor its Management Have Liability Under the Federal Fair Debt Collections Practices Act.

I received several questions and comments regarding the FDCPA. Some readers reminded me that Community Associations Institute (CAI) has a policy statement regarding the FDCPA. Follow this link to CAI’s Overview of the Fair Debt Collection Practices Act and follow this link to CAI’s policy.

By David C. Swedelson, Senior Partner at SwedelsonGottlieb; Condo lawyer and HOA attorney

We have had to extricate several of our community association clients (and often their management as well) from claims or lawsuits relating to the federal Fair Debt Collections Practices Act (FDCPA). It is well settled law that the FDCPA applies to the collection of delinquent and unpaid assessments for condominium and homeowner associations. However, the FDCPA does not apply to collection efforts which a community association, the creditor, undertakes on its own to collect on a debt, nor does it apply to its agents whose collection activities are “incidental to a bona fide fiduciary obligation” or which concern a “debt which was not in default at the time it was obtained by such person.”

As it relates to the collection of delinquent community association assessments, courts have held that an association management company is not a “debt collector” under the FDCPA. Courts have held that an association’s management company falls under the exceptions found in the FDCPA. This determination was based on the fact that the management company has a fiduciary obligation to collect assessments on behalf of the association. But this exemption only applies if the management company was obligated to collect the delinquent assessment debts prior to them being delinquent. A management company may be responsible to comply with the FDCPA if an owner/property was already in collection at the time the management company started managing the association.

By David Swedelson, Partner, SwedelsonGottlieb, Condo Lawyer and HOA Attorney

California community associations have been filing a lot of lawsuits the last three or so years attempting to collect delinquent assessments. Usually, these lawsuits are filed against owners that have lost their homes to their lender in foreclosure, wiping out their condominium development’s or planned development’s assessment lien. These associations are left with only a judicial remedy to collect what is owed their association.

In California, if a defendant in a lawsuit does not file a timely responsive pleading to that lawsuit after they have been served (e.g., answer or demurrer), a default can be entered by filing what is called an Application to Enter Default. In assessment collection lawsuits, many delinquent owners (most are former association owners) fail to respond to the complaint, allowing these claims to go by default. After entry of default, the defendant loses the right and ability to defend the lawsuit, and the plaintiff community association can then seek a default judgment.
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