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.
When confronted with the fact that there is no widespread problem to justify her legislation, her staff stated that not one person should lose their home for unpaid association assessments or fees. She ignores the fact that foreclosure is part of the contract (CC&Rs) the owner agreed to be bound to when they bought their home in the association.
"It is simply wrong for a homeowners‚ association to take someone‘s home over a $120 debt said Senator Ducheny. While we might not disagree with the Senator, her bill seeks to limit foreclosure unless the amount owed is $2,500. This is just too high a threshold and will affect the budgets of many associations.
Senator Ducheny is quoted as saying that despite the 2004 veto, she is confident that the governor will work with her in this new session to “protect California homeowners”. We hope she will work also work with those that work with, manage and serve on the boards of the thousands of community associations throughout California, in an effort to produce legislation that is balanced and fair to all California homeowners.
SB 137 is supported by a variety of consumer groups including the Congress of California Seniors, the California Alliance of Retired Americans, Gray Panthers and the Older Women‘s League (OWL). We hope that these groups will keep informed and that they will likewise work with Senator Ducheny, the Govenor’s office and the California Legislative Action Committee as we all work towards creating a balanced bill that protects the interests of ALL community association homeowners and not just the few that fail to timely pay their assessments.
By: David C. Swedelson