Assessments and Assessment CollectionAssessment Collection

Section § 5700

Explanation

Once a lien is recorded and 30 days have passed, it can be enforced by selling the property through various means like a court sale or a trustee sale. Also, nothing stops taking legal action against the property owner to get the money owed or accepting the property in place of foreclosure.

(a)CA Civil Law Code § 5700(a) Except as otherwise provided in this article, after the expiration of 30 days following the recording of a lien created pursuant to Section 5675, the lien may be enforced in any manner permitted by law, including sale by the court, sale by the trustee designated in the notice of delinquent assessment, or sale by a trustee substituted pursuant to Section 2934a.
(b)CA Civil Law Code § 5700(b) Nothing in Article 2 (commencing with Section 5650) or in subdivision (a) of Section 726 of the Code of Civil Procedure prohibits actions against the owner of a separate interest to recover sums for which a lien is created pursuant to Article 2 (commencing with Section 5650) or prohibits an association from taking a deed in lieu of foreclosure.
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Section § 5705

Explanation

This law says that if a homeowner owes assessment debts starting from January 1, 2006, their homeowners' association (HOA) must follow certain rules before foreclosing on their property. First, the HOA has to offer a chance to resolve the dispute through a 'meet and confer' process or another type of legal mediation that the homeowner chooses, but not through binding arbitration if the HOA plans to go to court. Second, only the HOA board, not an outside agent, can decide to start foreclosure, and they must vote on it confidentially. The decision must be recorded and made known at least 30 days before any public sale, without disclosing the owner's identity. Lastly, the board must inform the homeowner about foreclosure by delivering the notice personally or mailing it to the address on file, unless they have a different mailing address provided by the owner.

(a)CA Civil Law Code § 5705(a) Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2006.
(b)CA Civil Law Code § 5705(b) Prior to initiating a foreclosure on an owner’s separate interest, the association shall offer the owner and, if so requested by the owner, participate in dispute resolution pursuant to the association’s “meet and confer” program required in Article 2 (commencing with Section 5900) of Chapter 10 or alternative dispute resolution as set forth in Article 3 (commencing with Section 5925) of Chapter 10. The decision to pursue dispute resolution or a particular type of alternative dispute resolution shall be the choice of the owner, except that binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.
(c)CA Civil Law Code § 5705(c) The decision to initiate foreclosure of a lien for delinquent assessments that has been validly recorded shall be made only by the board and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors in an executive session. The board shall record the vote in the minutes of the next meeting of the board open to all members. The board shall maintain the confidentiality of the owner or owners of the separate interest by identifying the matter in the minutes by the parcel number of the property, rather than the name of the owner or owners. A board vote to approve foreclosure of a lien shall take place at least 30 days prior to any public sale.
(d)CA Civil Law Code § 5705(d) The board shall provide notice by personal service in accordance with the manner of service of summons in Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure to an owner of a separate interest who occupies the separate interest or to the owner’s legal representative, if the board votes to foreclose upon the separate interest. The board shall provide written notice to an owner of a separate interest who does not occupy the separate interest by first-class mail, postage prepaid, at the most current address shown on the books of the association. In the absence of written notification by the owner to the association, the address of the owner’s separate interest may be treated as the owner’s mailing address.
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Section § 5710

Explanation

This California civil code section outlines the procedures a trustee must follow when selling a property due to foreclosure, aligning it with existing rules for mortgages and deeds of trust. It mandates that an association must notify the property owner or their legal representative of a default in the same manner as serving legal summons. Lastly, it limits the trustee's fees to specific amounts for handling default notices and decisions to foreclose.

(a)CA Civil Law Code § 5710(a) Any sale by the trustee shall be conducted in accordance with Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trust.
(b)CA Civil Law Code § 5710(b) In addition to the requirements of Section 2924, the association shall serve a notice of default on the person named as the owner of the separate interest in the association’s records or, if that person has designated a legal representative pursuant to this subdivision, on that legal representative. Service shall be in accordance with the manner of service of summons in Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure. An owner may designate a legal representative in a writing that is mailed to the association in a manner that indicates that the association has received it.
(c)CA Civil Law Code § 5710(c) The fees of a trustee may not exceed the amounts prescribed in Sections 2924c and 2924d, plus the cost of service for either of the following:
(1)CA Civil Law Code § 5710(c)(1) The notice of default pursuant to subdivision (b).
(2)CA Civil Law Code § 5710(c)(2) The decision of the board to foreclose upon the separate interest of an owner as described in subdivision (d) of Section 5705.
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Section § 5715

Explanation

This law applies to debts for assessments starting January 1, 2006, and must be followed even if other laws or governing documents say otherwise. If an association forecloses on a property due to unpaid assessments, the person who lost the property has a 90-day period to reclaim it. This is known as a 'right of redemption.' The notice of sale must state that the property can be redeemed within this period.

(a)CA Civil Law Code § 5715(a) Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2006.
(b)CA Civil Law Code § 5715(b) A nonjudicial foreclosure by an association to collect upon a debt for delinquent assessments shall be subject to a right of redemption. The redemption period within which the separate interest may be redeemed from a foreclosure sale under this paragraph ends 90 days after the sale. In addition to the requirements of Section 2924f, a notice of sale in connection with an association’s foreclosure of a separate interest in a common interest development shall include a statement that the property is being sold subject to the right of redemption created in this section.
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Section § 5720

Explanation

If a homeowner's association (HOA) wants to collect overdue assessment money that is less than $1,800 (excluding extra charges), it can't use foreclosure to do so. Instead, the HOA can take the owner to small claims court or place a lien on the property. However, they can't foreclose on that lien unless the overdue amount is $1,800 or more, or the assessments have been overdue for more than 12 months. Exceptions to this rule include assessments that are more than 12 months overdue, time-share ownership fees, and those owed by the developer.

(a)CA Civil Law Code § 5720(a) Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2006.
(b)CA Civil Law Code § 5720(b) An association that seeks to collect delinquent regular or special assessments of an amount less than one thousand eight hundred dollars ($1,800), not including any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest, may not collect that debt through judicial or nonjudicial foreclosure, but may attempt to collect or secure that debt in any of the following ways:
(1)CA Civil Law Code § 5720(b)(1) By a civil action in small claims court, pursuant to Chapter 5.5 (commencing with Section 116.110) of Title 1 of Part 1 of the Code of Civil Procedure. An association that chooses to proceed by an action in small claims court, and prevails, may enforce the judgment as permitted under Article 8 (commencing with Section 116.810) of Chapter 5.5 of Title 1 of Part 1 of the Code of Civil Procedure. The amount that may be recovered in small claims court to collect upon a debt for delinquent assessments may not exceed the jurisdictional limits of the small claims court and shall be the sum of the following:
(A)CA Civil Law Code § 5720(b)(1)(A) The amount owed as of the date of filing the complaint in the small claims court proceeding.
(B)CA Civil Law Code § 5720(b)(1)(B) In the discretion of the court, an additional amount to that described in subparagraph (A) equal to the amount owed for the period from the date the complaint is filed until satisfaction of the judgment, which total amount may include accruing unpaid assessments and any reasonable late charges, fees and costs of collection, attorney’s fees, and interest, up to the jurisdictional limits of the small claims court.
(2)CA Civil Law Code § 5720(b)(2) By recording a lien on the owner’s separate interest upon which the association may not foreclose until the amount of the delinquent assessments secured by the lien, exclusive of any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest, equals or exceeds one thousand eight hundred dollars ($1,800) or the assessments secured by the lien are more than 12 months delinquent. An association that chooses to record a lien under these provisions, prior to recording the lien, shall offer the owner and, if so requested by the owner, participate in dispute resolution as set forth in Article 2 (commencing with Section 5900) of Chapter 10.
(3)CA Civil Law Code § 5720(b)(3) Any other manner provided by law, except for judicial or nonjudicial foreclosure.
(c)CA Civil Law Code § 5720(c) The limitation on foreclosure of assessment liens for amounts under the stated minimum in this section does not apply to any of the following:
(1)CA Civil Law Code § 5720(c)(1) Assessments secured by a lien that are more than 12 months delinquent.
(2)CA Civil Law Code § 5720(c)(2) Assessments owed by owners of separate interests in time-share estates, as defined in subdivision (x) of Section 11212 of the Business and Professions Code.
(3)CA Civil Law Code § 5720(c)(3) Assessments owed by the developer.
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Section § 5725

Explanation

This section of the law explains that if a property owner's actions or those of their guests or tenants cause damage to shared areas in a community managed by an association, the association can charge the owner to cover repair costs. If allowed by the community's rules, this charge can become a lien on the owner's property, meaning they might have to sell their property to pay it off. However, fines given out for not following community rules, other than late payments, can't be turned into such liens.

(a)CA Civil Law Code § 5725(a) A monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common area and facilities caused by a member or the member’s guest or tenant may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c, provided the authority to impose a lien is set forth in the governing documents. It is the intent of the Legislature not to contravene Section 2792.26 of Title 10 of the California Code of Regulations, as that section appeared on January 1, 1996, for associations of subdivisions that are being sold under authority of a subdivision public report, pursuant to Part 2 (commencing with Section 11000) of Division 4 of the Business and Professions Code.
(b)CA Civil Law Code § 5725(b) A monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing documents, except for the late payments, may not be characterized nor treated in the governing documents as an assessment that may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.
monetary charge repair costs common area damage ...

Section § 5730

Explanation

This law requires that a notice about assessments and foreclosure be included in the annual policy statement for common interest developments. The notice explains that unpaid assessments can lead to foreclosure, and it details the conditions under which foreclosure can occur, such as the debt amount being over $1,800 or overdue for more than 12 months. It outlines that both court (judicial) and non-court (nonjudicial) foreclosures are possible, but limits exist. It mandates associations to follow rules when collecting debts and to provide specific documents before recording a lien. Owners have rights to dispute debts, request records, and propose payment plans for overdue assessments. The notice also covers the requirement for associations to engage in dispute resolution before foreclosing and provides details on meeting and payment plan requests. Some details about these processes can be modified or excluded under certain circumstances.

(a)CA Civil Law Code § 5730(a) The annual policy statement, prepared pursuant to Section 5310, shall include the following notice, in at least 12-point type:
“NOTICE ASSESSMENTS AND FORECLOSURE
This notice outlines some of the rights and responsibilities of owners of property in common interest developments and the associations that manage them. Please refer to the sections of the Civil Code indicated for further information. A portion of the information in this notice applies only to liens recorded on or after January 1, 2003. You may wish to consult a lawyer if you dispute an assessment.
ASSESSMENTS AND FORECLOSURE
Assessments become delinquent 15 days after they are due, unless the governing documents provide for a longer time. The failure to pay association assessments may result in the loss of an owner’s property through foreclosure. Foreclosure may occur either as a result of a court action, known as judicial foreclosure, or without court action, often referred to as nonjudicial foreclosure. For liens recorded on and after January 1, 2006, an association may not use judicial or nonjudicial foreclosure to enforce that lien if the amount of the delinquent assessments or dues, exclusive of any accelerated assessments, late charges, fees, attorney’s fees, interest, and costs of collection, is less than one thousand eight hundred dollars ($1,800). For delinquent assessments or dues in excess of one thousand eight hundred dollars ($1,800) or more than 12 months delinquent, an association may use judicial or nonjudicial foreclosure subject to the conditions set forth in Article 3 (commencing with Section 5700) of Chapter 8 of Part 5 of Division 4 of the Civil Code. When using judicial or nonjudicial foreclosure, the association records a lien on the owner’s property. The owner’s property may be sold to satisfy the lien if the amounts secured by the lien are not paid. (Sections 5700 through 5720 of the Civil Code, inclusive)
In a judicial or nonjudicial foreclosure, the association may recover assessments, reasonable costs of collection, reasonable attorney’s fees, late charges, and interest. The association may not use nonjudicial foreclosure to collect fines or penalties, except for costs to repair common area damaged by a member or a member’s guests, if the governing documents provide for this. (Section 5725 of the Civil Code)
The association must comply with the requirements of Article 2 (commencing with Section 5650) of Chapter 8 of Part 5 of Division 4 of the Civil Code when collecting delinquent assessments. If the association fails to follow these requirements, it may not record a lien on the owner’s property until it has satisfied those requirements. Any additional costs that result from satisfying the requirements are the responsibility of the association. (Section 5675 of the Civil Code)
At least 30 days prior to recording a lien on an owner’s separate interest, the association must provide the owner of record with certain documents by certified mail, including a description of its collection and lien enforcement procedures and the method of calculating the amount. It must also provide an itemized statement of the charges owed by the owner. An owner has a right to review the association’s records to verify the debt. (Section 5660 of the Civil Code)
If a lien is recorded against an owner’s property in error, the person who recorded the lien is required to record a lien release within 21 days, and to provide an owner certain documents in this regard. (Section 5685 of the Civil Code)
The collection practices of the association may be governed by state and federal laws regarding fair debt collection. Penalties can be imposed for debt collection practices that violate these laws.
PAYMENTS
When an owner makes a payment, the owner may request a receipt, and the association is required to provide it. On the receipt, the association must indicate the date of payment and the person who received it. The association must inform owners of a mailing address for overnight payments. (Section 5655 of the Civil Code)
An owner may, but is not obligated to, pay under protest any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and by so doing, specifically reserve the right to contest the disputed charge or sum in court or otherwise.
An owner may dispute an assessment debt by submitting a written request for dispute resolution to the association as set forth in Article 2 (commencing with Section 5900) of Chapter 10 of Part 5 of Division 4 of the Civil Code. In addition, an association may not initiate a foreclosure without participating in alternative dispute resolution with a neutral third party as set forth in Article 3 (commencing with Section 5925) of Chapter 10 of Part 5 of Division 4 of the Civil Code, if so requested by the owner. Binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.
An owner is not liable for charges, interest, and costs of collection, if it is established that the assessment was paid properly on time. (Section 5685 of the Civil Code)
MEETINGS AND PAYMENT PLANS
An owner of a separate interest that is not a time-share interest may request the association to consider a payment plan to satisfy a delinquent assessment. The association must inform owners of the standards for payment plans, if any exists. (Section 5665 of the Civil Code)
The board must meet with an owner who makes a proper written request for a meeting to discuss a payment plan when the owner has received a notice of a delinquent assessment. These payment plans must conform with the payment plan standards of the association, if they exist. (Section 5665 of the Civil Code)”
(b)CA Civil Law Code § 5730(b) An association distributing the notice required by this section to an owner of an interest that is described in Section 11212 of the Business and Professions Code that is not otherwise exempt from this section pursuant to subdivision (a) of Section 11211.7 of the Business and Professions Code may delete from the notice described in subdivision (a) the portion regarding meetings and payment plans.
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Section § 5735

Explanation

This law states that an association cannot hand over or promise its rights to collect money from members to another party, unless it's to a bank or lender as security for a loan. However, the association can still hand over unpaid debts from former members to a third party for collection purposes.

(a)CA Civil Law Code § 5735(a) An association may not voluntarily assign or pledge the association’s right to collect payments or assessments, or to enforce or foreclose a lien to a third party, except when the assignment or pledge is made to a financial institution or lender chartered or licensed under federal or state law, when acting within the scope of that charter or license, as security for a loan obtained by the association.
(b)CA Civil Law Code § 5735(b) Nothing in subdivision (a) restricts the right or ability of an association to assign any unpaid obligations of a former member to a third party for purposes of collection.
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Section § 5740

Explanation

This section explains that liens created from January 1, 2003, onwards are subject to the rules in this article. However, if a lien was created before January 1, 2003, the laws that were in place at the time it was created will apply to it.

(a)CA Civil Law Code § 5740(a) Except as otherwise provided, this article applies to a lien created on or after January 1, 2003.
(b)CA Civil Law Code § 5740(b) A lien created before January 1, 2003, is governed by the law in existence at the time the lien was created.
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