Bill restricts foreclosures on small fees
A state Senate bill to ban California’s homeowner associations from foreclosing on homes for unpaid assessments of less than $2,500 passed a critical test Tuesday in the Assembly.
The Assembly Judiciary Committee voted 7-3 to make associations use Small Claims Court to recover small amounts instead of a nonjudicial foreclosure process that critics say is abused by attorneys and collection agencies and can lead to owners losing their homes.
The bill also lets associations continue posting a lien on properties -- a legal right to collect when they are sold.
The bill would still allow associations to foreclose nonjudicially or judicially on late assessments greater than $2,500, but would set new rules to make the process tougher.
Among those rules, minimum bids for foreclosed homes must be 90% of their appraised value, and owners would have 90 days after the foreclosures to get their houses back.
The bill by Sen. Denise Ducheny (D-San Diego) and a companion bill by Assemblyman Darrell Steinberg (D-Sacramento) passed their respective houses in May and are likely to be combined.
They must clear the Legislature by Aug. 31 and be signed by Gov. Arnold Schwarzenegger by Sept. 30 to become law.
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