Vacationing Owners Lose Their Condo
Question: We bought a condo in California because we did not want the bother of having to hire gardeners and other responsibilities that come with owning a home. We paid for it in full so we would not have a mortgage.
We bought the largest unit in a prime location and installed state-of-the-art fixtures and appliances, wood floors and copper plumbing. But we learned quickly the other homeowners didn’t like us because we did not partake in association activities.
We decided to retire and take a vacation sailing for nearly two years. We paid our homeowner association dues, utilities and property taxes upfront. We notified the board and neighbors of the sailing trip and how long we would be gone.
Upon return, a stranger was living in our condo. Apparently in our absence, homeowners rallied their friends on the board to fine us for a collection of contrived violations. Then they made sure the association raised the amount of regular monthly dues and voted to specially assess for new garage doors, something the board assured us they would not do.
We were unaware that outstanding fees and fines existed, so we obviously couldn’t pay them.
In our absence, the board wasted no time placing a lien on our home, then nonjudicially foreclosed.
The association put our personal belongings in storage, and when we “failed to retrieve them in a timely manner,” they sold them at a garage sale and sent us the storage bill.
They now threaten court action for storage fees.
Our attorneys explained that because of the time lapse between foreclosure and our objection to it, we have no recourse against the association. Even the homestead on our home did not prevent the foreclosure.
Must we pay the storage fees and can we get back our personal belongings? Can we sue the board and our neighbors for foreclosing?
Answer: California legislators apparently did not anticipate that people living in common interest developments sometimes take extended vacations, and that merely following the law, as your board presumptively did, would expose the homeowner to the devastating loss of such a large asset.
The law protects boards and their actions, and there are no penalties for a board that uses the law against homeowners. California Code section 703.010 lists property exempt from attachment by a judgment creditor.
However, in section (b) the law says that the exemptions do not apply if the judgment is for the foreclosure involving a lien encumbrance on the property.
Your homeowner association placed a lien on your home, which began the road to foreclosure. A homestead only protects a portion of the equity you have in your home from judgment creditors. Whether the actions of your board constituted some form of embezzlement or fraud, those acts did not serve to make the board judgment creditors.
This loophole allowing foreclosures in common interest developments for failure to pay regular, or in your case, special assessments without providing actual notice to the homeowner is an issue the Legislature has not addressed.
The difference between the regular monthly fees you paid in advance, and the new amount voted in by your board, can also become a lien against your property.
The board’s legal duty is to repair, replace and maintain the common property. The board’s fiduciary duty is to treat all homeowners fairly and assure that their homes will not be taken from them as was yours.
An honorable attorney knows the board owes this fiduciary duty to all the homeowners and would not advise a board to foreclose under circumstances like these without ensuring that the homeowner received actual notice. Constructive notice, permitted by law, is insufficient when your home and lifetime possessions are at risk.
While legally it may be enough for a board to follow the minimum requirements permitted by law regarding notice of assessments and possible foreclosure, in a case like yours, where your board knew you were going to be away, the duty owed to you, it seems to us, rose to a higher level.
A qualified lawyer can determine if you have a cause of action against your board for their acts in foreclosing on your home. You also need a second, even a third, legal opinion in hopes of uncovering a misstep in the prior court proceedings to overturn the results of the board’s actions.
Recovering storage fees or the value of your possessions will depend on the board’s following all the required procedural steps before the taking of your property.
If the storage company’s sale of your belongings also failed to follow the required procedure, it could be liable to you for the value of those possessions.
*
Stephen Glassman is a writer and an attorney in private practice specializing in corporate and business law. Donie Vanitzian, J.D., is a writer and arbitrator and manages commercial property. Both live in common interest developments. Send questions to: Common Interest Living, P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to: CIDCommonSense@aol.com.
