Source: https://www.echo-ca.org/article/collection-rights-duties
Timestamp: 2019-02-19 17:50:35
Document Index: 563170636

Matched Legal Cases: ['§5685', '§5665', '§5675', '§5650', '§5925', '§5965', '§5700', '§5720', '§5725', '§5660', '§5685', '§5690', '§5710']

Collection Rights & Duties | Educational Community for Homeowners (ECHO)
As part of the Annual Policy Statement, every association must include a Notice of Collection Rights and Duties. The following article is meant to provide a brief description of the rights and responsibilities of both the association and individual property owners regarding the payment and collection of assessments. Please refer to Civil Code Chapter 8, Article 3 regarding Assessment Collection for the requirements and exact details of the Notice of Collection Rights and Duties.
Payments & Disputed Charges
When an owner makes a payment, the association is required to provide a receipt that indicates the date of payment and the person who received it, per the owner’s request. An owner is not liable for charges, interest, and costs of collection if it is established that the assessment was paid properly on time (§5685).
No individual interest owner has the right to refuse payment when legally required; however, owners do have the option to pay under protest any disputed charge or sum levied by the association. By submitting a written request for dispute resolution to the association, the owner reserves the right to contest the disputed charge or sum in court or otherwise.
An owner of a separate interest, excluding time-shares, 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 exist. The board is required to meet and discuss a payment plan regarding a notice of a delinquent assessment with an owner who makes a proper written request. The payment plan must conform to association payment plan standards, if they exist (§5665).
Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they are due, unless the declaration provides a longer time period. If an assessment is delinquent, the association may recover all of the following:
A late charge not exceeding 10% of the delinquent assessment or $10, whichever is greater, unless the declaration specifies a late charge in a smaller amount.
Beginning 30 days after the assessment is due, the association may charge interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney's fees. Interest should be based on an annual interest rate of 12%, unless otherwise specified in governing documents.
The association must comply with the requirements of Chapter 8, Article 2 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 (§5675).
Click for details on Delinquent Assessments: §5650
Collection of Delinquent Regular or Special Assessments through Foreclosure
Since most community associations hold lien rights to each owner's lot or a unit, the association has the authority to place a lien upon the owner’s property if he or she refuses to pay. The association may initiate judicial or nonjudicial foreclosure for non-payment after participating in alternative dispute resolution with a neutral third party (§5925 - §5965), if requested by the owner. The owner's property may be sold to satisfy the lien if the amounts secured by the lien are not paid (§5700 - §5720).
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 use nonjudicial foreclosure for costs to repair common area damaged by a member or a member's guests, if governing documents provide for this (§5725). [Note: Binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.]
An association may only use judicial or nonjudicial foreclosure to enforce liens recorded on or after January 1, 2006 if one or both of the following are true:
The amount of delinquent assessments or dues exceeds $1800. This amount cannot include accelerated assessments, late charges, fees, attorney's fees, interest, or costs of collection.
The delinquent assessment is more than 12 months overdue.
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 and a statement of the owner’s right to review the association's records in order to verify the debt.
Click for Collection Notice requirements: §5660
Liens Recorded in Error
If it is determined that a lien previously recorded against the separate interest was recorded in error, the party who recorded the lien shall, within 21 calendar days, record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest with a declaration that the lien filing or recording was in error and a copy of the lien release or notice of rescission. 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.
Click for requirements regarding Liens Recorded in Error: §5685 and §5690
Read about Annual Policy Statement requirements.
§5710 - Trustee Sale