Lien threat has no legal ground

Question: I live in a deed-restricted home in Torrance. I have written, called and had an attorney write the board regarding faulty common areas, but they refuse to fix the problems.

I pay my monthly fees by money order, sent by certified mail, return receipt requested, and have never been late or missed a payment in 31 years. My attorney advised me to write this on the money order: “Notice: I reserve the right to withhold my next monthly homeowner association fee for failure of board to fix existing problems affecting my unit.” I have done this consistently for two years. The board and management company cashed all my money orders without question.

A new management company has changed the due date and returned my money order stating, “We do not accept payments of any kind with a disclaimer on them. Either white out what was typed on the money order or send us a different check.... [Y]ou must pay your dues or you will be subject to interest, penalties and collection fees, and we will place a lien on your unit for failure to pay.”

I returned it without altering a single word, then received a bill from the company charging me late fees, interest and threat of lien notice. Can the management company do this to me?

Answer: Some colorful language has surfaced on association dues checks, but we know of only one other that was returned to the homeowner.

Your complex is governed by the Covenants, Conditions and Restrictions (CC&Rs;), the bylaws of your association and those rules and regulations legally created by the board of directors.

The Davis-Stirling Act does not state that “management companies” decide when to return a homeowner’s timely paid monthly dues checks. They cannot override association documents or return your payment because you wrote something they didn’t like on the check or money order. If you want to continue writing messages on your money orders, the 1st Amendment gives you that freedom.

The Davis-Stirling Act does not allow homeowners to withhold dues to offset the board’s failure to maintain the common property. However, management cannot place a lien on your unit without the board instructing them to do so, and the procedural steps outlined in the law must be followed to the letter.

The timely payment of monthly dues, proved by your certified mail and signed return receipt, should be sufficient evidence to withstand any challenge of a late payment and threat of lien, but we have seen cases in which the company claimed not to recognize the signature on the postal receipt.

Write two letters to your board. Advise them that you believe their lien threat is a mistake because you paid on time. Demand removal of all late charges. Documenting your position creates a “paper trail” that may be useful should a lawsuit result from this dispute.

Next, detail your complaint and identify problems that need to be corrected and give the board a deadline to comply. If your unit is damaged as the result of their failure to correct the problems, you may be able to recover damages from the homeowners association. Contact your association’s insurance agent and obtain original copies of the association’s master insurance policy and claim forms.

If your board does not respond to your letter within 10 days, and the time to file a claim has not passed, file a claim with the association’s insurance company. Document all your telephone calls with anyone regarding this problem and keep any response you get from the board, management company and insurance agent-broker in your files.

If you are dissatisfied with the insurance agent’s response, call the Department of Insurance Consumer help hotline, (800) 927-HELP (4357) for assistance in filing a complaint against the agent.

The consequences of misapplied, lost, stolen or embezzled homeowner association monthly payments are grave and costly to homeowners. Homeowners have lost their homes to foreclosure because of discrepancies with monthly dues.

Common-interest development owners can use these guidelines to protect themselves when paying association fees:

* Confirm the actual due date and deadline for association monthly payments by reading your CC&Rs.; If they conflict with the present payment schedule, document the discrepancy in a letter to your board. The payment is due when the CC&Rs; say it is due, not when the management company says it is due.

* Send all payments by certified mail, return receipt requested. Keep the post office proof-of-purchase receipt for the money order and postage.

* Do not risk paying by automatic bank wire or bank Internet service. Make association payments only by money order or cashier’s check.

* Do not lump association payments together. Write separate checks for different payments.

* Never automatically pay a bill from the management company. Scrutinize it thoroughly. If you dispute the charges on an invoice you must pay, preserve your rights by writing the word “dispute” on the invoice and return it, paying only the portion of the bill you do not disagree with.

* Enclose a separate explanatory letter with each association payment referencing: Serial number of the money order or cashier’s check, date, amount, property address the payment should be applied to and reason for the payment.

* Assure your monthly fee payment is not misapplied by writing on the check’s face: “This payment is to be applied only to the monthly dues assessment for [due date] and not applied to any outstanding bills, special assessments or third parties.”

* If you personally deliver your payments to an office, make a copy of the check or money order. Insist the recipient of your payment sign and date the copy. Most important, insist the signatory print his/her name next to the signature. If the signature is illegible, you have proof of nothing.

* If the management company or its employees continue to interfere with any of your association payments, take names, dates and times, then mail the board a letter instructing them to advise the management company of the consequences of refusing to accept monthly association payments.

Stephen Glassman and Donie Vanitzian are the coauthors of “Villa Appalling! Destroying the Myth of Affordable Community Living” (Villa Appalling Publishing Inc., 2002). Please send questions to: P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to: NoExit@mindspring.com.