Owners in default or foreclosure still owe assessment fees

Question: I live in a homeowners association that has several delinquencies. There are REOs (bank-owned properties), foreclosures and units with notices of default. Owners don’t know how many units are paying monthly assessments or the large special assessment imposed last year.

Owners are not privy to the association’s financial situation. The chairman of our board keeps saying everything’s OK. The chairman controls everything -- the decisions, noncompetitive bids and committee appointments. Because he has great communication skills, no one questions these actions.

We are all paying for the delinquent owners, REOs and foreclosed properties. I think the chairman should tell us what the situation is and pursue these property owners to obtain their portion of unpaid fees. Can I obtain a list of the notices of default, REOs and foreclosures and distribute it to all the owners? Does the board have a right to withhold this information from the owners?

Answer: The board acts as a body, and no board director can act alone, including the chairman or president. If there are a number of delinquent owners, REOs and foreclosures in your development, the chairman’s statement that “everything’s OK” is not credible.

The board does not have a right to withhold any information from the owners except for limited discussions held in executive session. It does not appear as if any of the circumstances you have described qualify as matters requiring that an executive session be held. Therefore the information must be made available to the titleholders.

A simple written request to examine the books and records of the association should be made. If the records are not provided within the time limits set forth in Civil Code section 1365.2(j), the titleholder may file an action in Small Claims Court for an order requiring the association to provide such records and to pay the titleholder $500 if the failure to provide the records was unreasonable.

Titleholders have no claim of exception for failing to pay association assessments, and the board has a duty to pursue collection of these fees from all titleholders -- even if the property is owned by a bank.

Whether the association can place a lien on a bank-owned property is open to debate, but any liens filed by the association after foreclosure for those fees may be able to be collected once the unit is resold. Any liens filed before foreclosure are likely to be eliminated by that process.

However, unless the titleholder of the foreclosed property has filed for bankruptcy protection, the association would be able to bring an action in Small Claims Court for the unpaid assessments if the amount did not exceed the jurisdictional limit of the court, currently $7,500.

Foreclosures and other actions against property require the publication of notice. That means the notices are part of the public record, available for inspection at the local county recorder’s office. Those notices may be republished by anyone.

Send questions to P.O. Box 11843, Marina del Rey, CA 90295 or e-mail noexit@mindspring.com.