Articles Posted in Assessment Collection

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.

collectionsign.pngAttorneys 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

Screenshot_1_19_13_3_01_PM-2.pngAttorneys 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

eviction.jpgUnder 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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Screenshot%2012%3A4%3A12%203%3A05%20PM.png 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

fdcpa.pngWe 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

default.png 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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By David C. Swedelson, Esq., Senior Partner at SwedelsonGottlieb, Community Association Attorneys

court.jpgThere are certain claims where small claims court may be the appropriate venue, as opposed to superior court. Typically, this includes claims against owners for unpaid assessments, fees and/or fines that do not exceed $5000, which is the limit that a California community association can recover in small claims court. When it comes to assessment collection, we generally only recommend small claims court where the association has already exhausted its other remedies, such as non-judicial foreclosure, and is trying to collect from a former owner who has lost their unit or lot to a senior lienholder/the bank. Starting a small claims court case is relatively easy. Many courts have small claims forms online which can be completed online or downloaded from the internet. However, knowing what to allege in the complaint form and how to present the case is not always that easy.

A small claims complaint (form SC-100 for Los Angeles Small Claims Court) requires the association to provide the name(s) and address of the delinquent owner(s) and to briefly describe the nature of the dispute (which includes (1) why the owner owes the association money, (2) when the obligation to pay became due, and (3) how the amount was calculated).
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A firm client has three open delinquent assessment collection matters with our affiliate Association Lien Services. A new board of directors was elected, and despite the significant success that Association Lien Services has had collecting this condo association’s delinquent assessments in the past, the new board of directors was reluctant to proceed with foreclosure on these three files. They thought the association, by foreclosure, could become the owner of these properties if no one bids on them and then would not only become the landlord, but would also have an obligation to pay the bank on its loan, among other expenses of the property. They asked to meet with me.

I met with them, and we discussed their options. I have had many similar phone conferences and meetings over the last three years. This board agreed that with respect to each of the three homeowners, they did not think there was ever going to be a way to collect money from them as, among other things, they knew these owners were not working people.
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The following was reported by Community Associations Institute (CAI) by Andrew S. Fortin, Esq., CAI’s vice president of government and public affairs.

The Consumer Financial Protection Bureau (CFPB), which officially opened for business in July, was created by Congress to enforce most federal financial consumer protection laws and to protect consumers from harmful financial products.
The CFPB has the authority to set standards that govern almost every aspect of the mortgage lending and closing process. Because CAI members have a keen interest in the development of CFPB’s rules and regulations that could affect community associations, CAI recently added a special section about the CFPB to our Mortgage Matters program. CAI is particularly interested in the CFPB’s actions on transfer fees, association assessments, foreclosure prevention, mortgage servicing standards and the definitions of qualified mortgage and real estate settlement fees.
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