Foreclosure is harshest way to collect delinquent homeowner’s dues

Question: I am in charge of our homeowners association that consists of only four residences. Each homeowner pays monthly dues of less than $80.

One owner has been delinquent for about nine months. If this owner is facing hardship, what can be done in fairness to everyone in our association? Is foreclosure an option? How can I resolve this situation in a timely and peaceful manner?

Answer: The business of collecting association assessments is often clinical and devoid of compassion. But the association is obligated to collect assessments.

Although boards may disclose that there are assessment delinquencies, it may not be advisable to announce or make public the names of titleholders who are delinquent.

Take pains to reach out to the delinquent titleholder. Offer to “meet and confer” to discuss how the delinquent fees are going to be paid. If you are unable to communicate with the delinquent titleholder, ask one of the other directors or owners if they are able to assist.

If a titleholder is unable to pay association assessments, there is a variety of collection remedies it may consider. If the association’s governing documents allow for it, try to initiate a payment plan. California law does not allow a lien to be filed against the owner’s property until the delinquency reaches $1,800 or has been in arrears for more than a year.

If the amount owed is less than $7,500, the association may file an action in Small Claims Court against the titleholder. If still unpaid after being awarded a judgment in its favor, the association can look into placing a judgment lien against that owner’s property. But if the owner doesn’t have the money, the association can’t collect it and would probably have to wait until the unit is sold or look for other personal assets, such as salary, furniture or cars, to attach in enforcing that judgment.

Not recommended and always the last resort, the association may choose to foreclose on the titleholder’s property.

The Davis-Stirling Act mandates that board directors sign an authorization to foreclose before beginning the foreclosure process. The titleholder would then be subject to myriad collection fees in addition to the amount owed the association and, if unable to pay, would probably lose his home.

Boards should keep in mind that when they authorize foreclosure, they are permanently on record as having taken the harshest course of action available. All directors have a duty to first investigate alternatives.

Send questions care of P.O. Box 10490, Marina del Rey, CA 90295 or e-mail noexit@mindspring.com.