HOA Law Blog

We are very pleased to advise you that all of our efforts were successful and the Governor vetoed AB 2598, the assessment collection bill. We agree with the Governor’s reasons for the veto. His letter to the legislators is presented below. His reasons for his veto show he listened to what we had to say. We are willing to work on compromise legislation that may help eliminate some of the problems the proponents of this legislation expressed as their motivations for this legislation while at the same time preserving the non-judicial foreclosure process. We thank all of those who worked to defeat this bill and took the time to express their opposition to the legislature and the Governor.

Letter Sent By Schwarzenegger To California State Assembly

To the Members of the California State Assembly:

I am returning Assembly Bill 2598 without my signature.

This bill makes sweeping changes to the laws that govern Common Interest Developments (CID)
and the foreclosure process for failure to pay delinquent homeowners’ assessments.

While the intent of this legislation is laudable and intended to protect homeowners from being
foreclosed upon for small sums of delinquent assessments, this bill is overly broad and could
negatively impact all homeowners living in CIDs.

This bill could unfairly result in increased assessments for other homeowners who pay their
assessments in a timely manner and may delay the transfer of real property in CIDs due to the
lien procedures set forth in the bill.

Foreclosure should be the last course of action taken against a homeowner. If there were more
open discussion between homeowners and their associations, many conflicts could be resolved.
That is why I recently signed into law AB 1836 (Chapter 754, 2004) and AB 2718 (Chapter 766,
2004). These bills establish methods to encourage more disclosure and better communication
between homeowners and their associations.

I recognize that additional clarification in the foreclosure statutes is necessary. However, this
change should be made incrementally working together with all impacted parties. Therefore, I
am directing the State and Consumer Services and the Business, Transportation and Housing
Agencies to work with all of the interested stakeholders to develop and ensure that the process
for collecting CID homeowners’ assessments is refined so that all homeowners are treated
equitably and foreclosure only occurs after every reasonable alternative is exhausted.

Sincerely,

Arnold Schwarzenegger