Withholding Assessment Can Bring Foreclosure
QUESTION: After several weeks of recurring problems with the malfunctioning automatic gate, the management company decided to leave it open. Even though the gate is still under warranty, the management company has been unable to get the gate repaired.
In desperation, I have decided not to pay my monthly assessment until the management company has the gate fixed. One of my friends tells me that the association can place a lien on my property. What does this mean?
ANSWER: It means that you’d better pay your assessment. There might be a number of reasons for the delay in fixing the gate, but regardless of the management company’s or the board’s lack of action, you are obligated to pay your assessment, much like your obligation for your mortgage payment.
If you don’t make your mortgage payments in a timely manner, the mortgage company can file a lien, foreclose on your property and sell it to recover their costs. The association also has the right to file a lien on your property and foreclose if necessary. Owners should never use non-payment of assessments to gain the attention of the management company or the board of directors. It could result in the loss of your home.
Assessment Fees Must Be Collected From All
Q: I live in a 16-unit townhouse complex. One of the association board members has not paid her assessment in several months. Two of the board members are her friends, and the rest don’t seem to know what should be done. Don’t we need a procedure for collecting unpaid assessments?
A: Consult the governing documents of your association. The obligation of all owners to pay assessments is usually stated in the declaration of the covenants, conditions and restrictions (CC&Rs;). The board has a fiduciary responsibility to enforce the CC&Rs; and to establish a delinquency procedure.
The association’s budget should accurately reflect its expense without any padding to compensate for those who do not pay. Therefore, the board must diligently collect assessments, or the association will have a negative cash flow and will be unable to pay its operating expenses.
California statue (Civil Code 1365) states that the association must disclose its practices in enforcing lien rights against its members or other legal remedies for default in assessment payment.
After the board has adopted a delinquency policy, it must provide proper notice to all of the owners prior to putting it into effect. When budget information is distributed to all of the owners each year, your delinquency procedures should also be included.
Agent Did Not Disclose Expense for Upkeep
Q: Our real estate agent told us that our new home was not in an association. We believed him because this is a development of single-family homes and there are no amenities or highly visible common elements.
At the time of the closing, we received a copy of the CC&Rs; and bylaws but we did not understand the significance of these documents. We were shocked to find out that we had to pay assessments for private streets, street lighting and some landscaping around the perimeter of the property. We have recently read the CC&Rs; and find several restrictions that we do not like. What can we do about this agent?
A: The real estate agent has a legal obligation to know the pertinent facts about any property that he or she is selling. Full disclosure is the agent’s responsibility.
In my opinion, deed restrictions such as CC&Rs; would definitely be a pertinent fact that you should have been informed about before you even signed an offer to buy the property. Consult the Department of Real Estate and the local Board of Realtors and then you can decide whether to file a complaint with one of these agencies and/or consult with a real estate attorney for further legal advice.
Doesn’t See Need for Having to Use Lawyer
Q: Our association has spent a lot of money on attorney’s fees in attempting to collect past due assessments. Wouldn’t it be cheaper to file a claim in small claims court?
A: California Civil Code 1366 states that the association may charge to the delinquent owner any reasonable costs incurred in collecting delinquent assessments, including reasonable attorney’s fees.
If your attorney has not advised you of this, you need to find an attorney who is knowledgeable in the emerging field of condominium law or, more precisely, common-interest real estate law.
Small claims action is an option, but someone must represent the association in court. If you have a management company it may provide this service.
If a volunteer from your association is knowledgeable and willing to represent the association in court, in my opinion the volunteer is entitled to reimbursement of his/her expenses while appearing in court on behalf of the association.
