Bill Text: CA AB2502 | 2009-2010 | Regular Session | Amended
Bill Title: Homeowners' associations: delinquencies.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-05-11 - Re-referred to Com. on JUD. [AB2502 Detail]
Download: California-2009-AB2502-Amended.html
BILL NUMBER: AB 2502 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 10, 2010
AMENDED IN ASSEMBLY APRIL 27, 2010
AMENDED IN ASSEMBLY APRIL 5, 2010
INTRODUCED BY Assembly Member Brownley
FEBRUARY 19, 2010
An act to amend Section 1367.1 of the Civil Code, relating to
homeowners' associations.
LEGISLATIVE COUNSEL'S DIGEST
AB 2502, as amended, Brownley. Homeowners' associations:
delinquencies.
The Davis-Stirling Common Interest Development Act defines and
regulates common interest developments and authorizes a homeowners'
association that manages the development to levy assessments to
fulfill its obligations. The act provides that a regular or special
assessment of the association, fees, reasonable costs of collection,
attorney's fees, late charges, and interest, as specified, are a debt
of the owner of the separate interest at the time the assessment or
other sums are levied. Existing law provides that payments made by a
homeowner to reduce the debt shall first be applied to the
assessments owed, and may only be applied to fees, reasonable costs
of collection, attorney's fees, late charges, and interest only after
the assessments owed are paid in full.
This bill would clarify that the provisions that set forth the
order in which payments are to be allocated apply to any agent of the
homeowners' association and to any 3rd party assigned to collect
payment for purposes of collection of the debt. This bill would
provide that a homeowner may not waive the right to have payments
allocated in the order specified. This bill would also require the
homeowners' association and its agent to accept partial payments of
the debt if the partial payments comply with the terms of a written
agreement.
Existing law requires a homeowners' association, if requested by
a homeowner, to meet with the board in special session, within 45
days of the request, to discuss a payment plan. Existing law provides
that if there is no special session scheduled within the 45-day
period, that the board may designate a committee to meet with the
homeowner to discuss a payment plan within that time period.
This bill would only allow the board to designate a committee to
meet with the homeowner if the homeowner authorizes the designation
of that committee, and, if the homeowner does not authorize the
designation of the committee, would require the meeting to
discuss a payment plan to take place at the next regularly
scheduled board meeting. This bill would authorize either an
owner or the association to have counsel present at the meeting,
subject to the requirement that the other party is notified of the
counsel's presence at least 48 hours prior to the scheduled meeting.
If there are minutes of an executive meeting concerning the payment
plan, this bill would authorize the owner to request a copy of the
portion of those minutes that relate to the payment plan. This
bill would provide that the homeowners' association may not
authorize an agent, representative, or any other 3rd party to discuss
or negotiate a payment plan without the consent of the homeowner and
would require that all payment plans
would be subject to the approval of the board at an open
meeting of the board to be made in writing and would
require that a copy of an executed contract for a payment plan be
sent to the owner within 7 days following the execution of the
contract . This bill would also provide that, in the
event the association assigns or pledges its right to collect
payments or assessments to a financial institution, lender, or other
3rd party, that the 3rd party if the association
contracts with an agent to collect payments made by the owner, that
agent would be subject to the provisions of the act
and, if the owner has entered into a payment plan with the
homeowners' association, would require that 3rd party to conduct any
collection procedures in accordance with the provisions of an
existing payment plan .
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares:
(1) The Davis-Stirling Common Interest Development Act was enacted
to provide protections, in part, to owners in common interest
developments.
(2) The Davis-Stirling Common Interest Development Act establishes
procedures to be followed by homeowners' associations in the
collection of delinquencies of regular and special assessments.
(3) Some homeowners' associations assign the association'
s right to collect these delinquencies to agents that have required
contract with agents to collect these delinquencies,
who, at times, may require the owner to enter into payment
plans that are different than the payment plan by and between the
association and the owner. Some of the contracts have required the
owner to waive his or her rights to the protections provided
by the Davis-Stirling Common Interest Development Act.
as provided in Section 1367.1 of the Civil Code.
(4) By waiving these rights, some owners have been coerced into
payment plans that require the payments to be first applied to the
costs of collection, attorney's fees, late charges, and interest,
rather than to the principal, forcing the homeowner to sink deeper
into debt.
(b) It is the intent of the Legislature, by enacting this act, to
apply the requirements of the Davis-Stirling Common Interest
Development Act, with respect to the collection of delinquencies, to
agents of the homeowners' associations assigned to collect delinquent
assessments.
SEC. 2. Section 1367.1 of the Civil Code is amended to read:
1367.1. (a) A regular or special assessment and any late charges,
reasonable fees and costs of collection, reasonable attorney's fees,
if any, and interest, if any, as determined in accordance with
Section 1366, shall be a debt of the owner of the separate interest
at the time the assessment or other sums are levied. At least 30 days
prior to recording a lien upon the separate interest of the owner of
record to collect a debt that is past due under this subdivision,
the association shall notify the owner of record in writing by
certified mail of the following:
(1) A general description of the collection and lien enforcement
procedures of the association and the method of calculation of the
amount, a statement that the owner of the separate interest has the
right to inspect the association records, pursuant to Section 8333 of
the Corporations Code, and the following statement in 14-point
boldface type, if printed, or in capital letters, if typed:
"IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE
BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT
COURT ACTION."
(2) An itemized statement of the charges owed by the owner,
including items on the statement which indicate the amount of any
delinquent assessments, the fees and reasonable costs of collection,
reasonable attorney's fees, any late charges, and interest, if any.
(3) A statement that the owner shall not be liable to pay the
charges, interest, and costs of collection, if it is determined the
assessment was paid on time to the association.
(4) The right to request a meeting with the board as provided by
paragraph (3) of subdivision (c). If a meeting is scheduled, and
if either the owner or the association is to be represented by
counsel, the party to be represented shall disclose that fact to the
other party at least 48 hours prior to the commencement of the
meeting.
(5) The right to dispute the assessment debt by submitting a
written request for dispute resolution to the association pursuant to
the association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4.
(6) The right to request alternative dispute resolution with a
neutral third party pursuant to Article 2 (commencing with Section
1369.510) of Chapter 7 before the association may initiate
foreclosure against the owner's separate interest, except that
binding arbitration shall not be available if the association intends
to initiate a judicial foreclosure.
(7) The right to enter into a payment plan and the right to
receive a copy of the payment and any amendments made to the payment
plan.
(b) (1) Any payments made by the owner of a separate interest
toward the debt set forth, as required in subdivision (a), whether
made to the association or an agent of the association
assigned to collect the debt made to the association
or its agent , shall first be applied to the assessments owed,
and, only after the assessments owed are paid in full shall the
payments be applied to the fees and costs of collection, attorney's
fees, late charges, or interest. When an owner makes a payment, the
owner may request a receipt and the association or its agent assigned
to accept payment for purposes of collection of the debt shall
provide it. The receipt shall indicate the date of payment and the
person who received it. The association shall provide a mailing
address for overnight payment of assessments.
(2) The association or agent of the association assigned to
collect
(2) The association or its agent that
collects the payment of the debt shall not refuse to accept
partial payment of the debt should the partial payment comply with
the terms of the written agreement by and between the
association and the owner.
(3) The provisions set forth in paragraph (1), regarding the order
in which the payments made are to be allocated, shall apply to an
agent of the association that accepts payment for purposes of
collection of the debt. An owner shall not waive the provisions of
paragraph (1) that set forth the order of the allocation of payments
made toward the debt.
(4) An owner and the association may mutually agree to amend a
payment plan so long as the amended payment plan is in writing
and in compliance with paragraph (1).
(c) (1) (A) Prior to recording a lien for delinquent assessments,
an 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 5 (commencing with
Section 1363.810) of Chapter 4.
(B) Prior to initiating a foreclosure for delinquent assessments,
an association shall offer the owner and, if so requested by the
owner, shall participate in dispute resolution pursuant to the
association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution with a neutral third party pursuant to Article 2
(commencing with Section 1369.510) of Chapter 7. 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.
(2) For liens recorded on or after January 1, 2006, the decision
to record a lien for delinquent assessments shall be made only by the
board of directors of the association and may not be delegated to an
agent of the association. The board shall approve the decision by a
majority vote of the board members in an open meeting. The board
shall record the vote in the minutes of that meeting.
(3) (A) An owner, other than an owner of any 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, may submit a written request to meet with the
board to discuss a payment plan for the debt noticed pursuant to
subdivision (a). The association shall provide the owners
disclose, in writing, to the owner the standards
for payment plans, if any exist. The board shall meet with the owner
in executive session, within 45 days of the postmark of the request,
if the request is mailed within 15 days of the date of the postmark
of the notice, unless there is no regularly scheduled board meeting
within that period, in which case the board, if authorized by the
owner, may designate a committee of one or more members to meet with
the owner. If the owner does not authorize the board to designate a
committee to meet with the owner, the board shall meet with the owner
at the next regularly scheduled board meeting. The board
shall not, without the consent of the owner, authorize an agent or
representative of the association or any other third party to discuss
or negotiate a payment plan. All payment plans are subject to the
approval of the board at an open meeting of the board.
scheduled board meeting. If there are minutes of the executive
session concerning a payment plan, an owner who is a party to the
payment plan may, upon written request, receive a copy of the
pertinent section of those minutes relating to the payment plan.
(B) An owner or the association has a right to counsel at the
executive session or committee meeting subject to disclosure, by the
party that retains counsel, to the other party at least 48 hours
prior to the commencement of that meeting.
(C) Payment plans shall be in writing and a copy of the executed
contract setting forth the terms of the payment plan shall be
delivered to the owner within seven days following the execution of
the contract.
(B)
(D) Payment plans may incorporate any assessments that
accrue during the payment plan period. Payment plans shall not impede
an association's ability to record a lien on the owner's separate
interest to secure payment of delinquent assessments. Additional late
fees shall not accrue during the payment plan period if the owner is
in compliance with the terms of the payment plan. In the event of a
default on any payment plan, the association may resume its efforts
to collect the delinquent assessments from the time prior to entering
into the payment plan.
(d) The amount of the assessment, plus any costs of collection,
late charges, and interest assessed in accordance with Section 1366,
shall be a lien on the owner's separate interest in the common
interest development from and after the time the association causes
to be recorded with the county recorder of the county in which the
separate interest is located, a notice of delinquent assessment,
which shall state the amount of the assessment and other sums imposed
in accordance with Section 1366, a legal description of the owner's
separate interest in the common interest development against which
the assessment and other sums are levied, and the name of the record
owner of the separate interest in the common interest development
against which the lien is imposed. The itemized statement of the
charges owed by the owner described in paragraph (2) of subdivision
(a) shall be recorded together with the notice of delinquent
assessment. In order for the lien to be enforced by nonjudicial
foreclosure as provided in subdivision (g), the notice of delinquent
assessment shall state the name and address of the trustee authorized
by the association to enforce the lien by sale. The notice of
delinquent assessment shall be signed by the person designated in the
declaration or by the association for that purpose, or if no one is
designated, by the president of the association. A copy of the
recorded notice of delinquent assessment shall be mailed by certified
mail to every person whose name is shown as an owner of the separate
interest in the association's records, and the notice shall be
mailed no later than 10 calendar days after recordation. Within 21
days of the payment of the sums specified in the notice of delinquent
assessment, the association shall 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 a copy of the lien release
or notice that the delinquent assessment has been satisfied. 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 areas and facilities for which the member or the
member's guests or tenants were responsible 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.
(e) Except as indicated in subdivision (d), a monetary penalty
imposed by the association as a disciplinary measure for failure of a
member to comply with the governing instruments, except for the late
payments, may not be characterized nor treated in the governing
instruments as an assessment that may become a lien against the
member's subdivision separate interest enforceable by the sale of the
interest under Sections 2924, 2924b, and 2924c.
(f) A lien created pursuant to subdivision (d) shall be prior to
all other liens recorded subsequent to the notice of assessment,
except that the declaration may provide for the subordination thereof
to any other liens and encumbrances.
(g) (1) 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; however, the foregoing provision may not restrict the
right or ability of an association to assign any unpaid obligations
of a former member to a third party for purposes of collection. If
the association assigns or pledges its right to collect payments or
assessments to a financial institution, lender, or other
third party, then the third party shall be subject to the provisions
of this section and, if the owner has entered into a payment plan
with the association, then the third party shall also conduct any
collection procedures in accordance with the provisions of that
payment plan. the association contracts with an agent
to collect the payments made by an owner toward the debt, as required
in subdivision (a), the agent shall be subject to the provisions of
this section.
(2) Subject to the limitations of this subdivision, after the
expiration of 30 days following the recording of a lien created
pursuant to subdivision (d), 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. 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. 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:
(A) The notice of default pursuant to subdivision (j) of Section
1367.1.
(B) The decision of the board to foreclose upon the separate
interest of an owner as described in paragraph (3) of subdivision (c)
of Section 1367.4.
(h) Nothing in this section 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 this section or prohibits an association from taking a
deed in lieu of foreclosure.
(i) 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.
(j) In addition to the requirements of Section 2924, a notice of
default shall be served by the association on the owner's legal
representative 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. The owner's legal
representative shall be the person whose name is shown as the owner
of a separate interest in the association's records, unless another
person has been previously designated by the owner as his or her
legal representative in writing and mailed to the association in a
manner that indicates that the association has received it.
(k) Upon receipt of a written request by an owner identifying a
secondary address for purposes of collection notices, the association
shall send additional copies of any notices required by this section
to the secondary address provided. The association shall notify
owners of their right to submit secondary addresses to the
association, at the time the association issues the pro forma
operating budget pursuant to Section 1365. The owner's request shall
be in writing and shall be mailed to the association in a manner that
shall indicate the association has received it. The owner may
identify or change a secondary address at any time, provided that, if
a secondary address is identified or changed during the collection
process, the association shall only be required to send notices to
the indicated secondary address from the point the association
receives the request.
(l) (1) An association that fails to comply with the procedures
set forth in this section shall, prior to recording a lien,
recommence the required notice process.
(2) Any costs associated with recommencing the notice process
shall be borne by the association and not by the owner of a separate
interest.
(m) This section only applies to liens recorded on or after
January 1, 2003.
(n) This section is subordinate to, and shall be interpreted in
conformity with, Section 1367.4.
