Is Small Claims Court the right venue for resolving homeowner association disputes?

Question: A California statute states that if a dispute exists between the titleholder and the association regarding any charge or sum levied by the association that does not exceed $10,000, the jurisdictional limits of Small Claims Court, the titleholder may pay what’s owed under protest and file an action in Small Claims Court.

What happens if the amount of a disputed assessment exceeds $10,000? Must a homeowner pay it first to preserve all defenses? And, if so, is there a statute saying that?

Also, corporations can sue in Small Claims Court for damages up to $5,000 in Los Angeles County, so which limit applies in a dispute over an assessment? I thought owners could not go to Small Claims Court because the homeowners association cannot be represented by its attorney. Is that right?

Answer: For disputes that exceed the jurisdictional limits of the Small Claims Court, titleholders can pursue dispute resolution under Civil Code section 5930. An owner or the association may not file an enforcement action in Superior Court unless the parties have first endeavored to submit their dispute to alternative dispute resolution.

Note that section 5930 applies only to an enforcement action that is solely for declaratory, injunctive or writ relief or for that relief in conjunction with a claim for monetary damages not in excess of state law provisions for small claims. Section 5930 does not apply to a small claims action.

Advance payment is not required to preserve the titleholder’s right to challenge the legitimacy of a debt to the association. However, late fees and penalties may continue to be charged, which the titleholder will be responsible for if he or she does not win the challenge.

The jurisdictional limit in a small claims action is based on the party that files suit. A titleholder bringing a claim against the association may seek up to $10,000 in recovery. An association bringing a small claims action against a titleholder is limited in Los Angeles County to suing for not more than $5,000.

Nothing prevents a titleholder from filing a complaint in Small Claims Court against the association, even though the association cannot be represented by counsel in a Small Claims Court hearing. A board director may appear on behalf of the association.

For any appeal from the small claims verdict, both plaintiff and defendant may be represented by an attorney.

Although Small Claims Court is not a typical forum for most homeowner association disputes, it is available when specifically authorized by statute, such as Civil Code section 5658(a).

Zachary Levine, a partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian, JD, P.O. Box 10490, Marina del Rey, CA 90295 or noexit@mindspring.com.