California Senator Denise Moreno Ducheny (who represents parts of San Diego and Riverside Counties and all of Imperial County) recently unveiled a proposal, similar to one she offered last year, the veru same one that was vetoed by the Governor as being overly broad, claiming that it is “aimed at protecting homeowners in common interest developments from unfair foreclosures by their homeowners association”. Unfortunately, what she has proposed is almost identical to her prior bill. While Senator Ducheny may believe that the bill protects homeowners, it actually will hurt the very owners the bill seeks to protect. What she apparently does not recognize is the fact that the vast majority of homeowners in community associations timely pay their assessments and they will end up having to pay the deficit created by those owners that do not pay timely their assessments and will be protected by her proposed legislation.
SB 137 seeks to prohibit a homeowners association from using judicial or non-judicial foreclosure for the collection of delinquent assessments of less than $2,500. It provides that homeowners‚ associations may collect such debts only through a judgment in small claims courts or by placing a lien without foreclosing on the property until the amount owed is $2,500. What SB 137 will really do is delay associations from being able to collect delinquent assessments. The reason that community associations were given the ability to lien and foreclose on the property of those that do not timely pay their assessments is the historical recognition by the legislature and the courts that community associations have no other source of income. How are associations supposed to pay for insurance, utilities, and other costs if they are delayed in collection by going through the small claims court and then trying to collect on the judgment (assuming that they get such an award)?
Senator Ducheny claims that her proposed legislation responds to complaints from homeowners who have had their homes foreclosed upon for a small amount of delinquent dues. What complaints? Unfortunately, she has not provided anyone with that information, the number of complaints, or if she has even investigated to see if the complaints are justified. She relies on one case that involved the Radcliffs of Copperopolis who lost their home when their community association foreclosed the lein placed on their home when they failed to pay over $120 in assessments and fees. What she fails to mention is the extraordinary efforts the association went through in an effort to collect the assessments before they actually foreclosed.
