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New California Law Protects Against HOA Foreclosure

Written by on Tuesday, 03 January 2006 6:00 pm
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A key new California law, similar to legislation passed but vetoed by Gov. Arnold Schwarzenegger in 2004, gives home owners greater protection from foreclosure proceedings initiated by their homeowners association.

Effective Jan. 1, 2006, SB 137, sponsored by Denise Moreno Ducheny (D-San Diego) places limits on when and how homeowner associations (HOAs) can foreclose upon home owners for delinquent assessments and provides some related protections for those living in common interest developments (CIDs), housing developments governed by HOAs.

Previously, and unique to homeowner associations in California and elsewhere, a tough debt-collection tool called a non-judicial foreclosure has been used to take homes from owners who only owed a few hundred dollars in delinquent HOA dues.

In one case, a Calaveras County couple's $285,000 home was auctioned off over $120 in disputed dues. In Northern California, a disabled man, lost his home for $123, according to the American Homeowners Resource Center, a San Juan Capistrano, CA public interest information network for HOA-governed home owners.

Under the new law, before an HOA can foreclose -- either judicially or non-judicially -- for delinquent assessments, one of two thresholds must be met

  • The assessment debt must be $1,800 or more (2004's vetoed legislation and the original SB 137 called for $2,500), exclusive of assessment charges; or

  • The debt -- at any level -- must be more than 12 months delinquent.

"It is very important to note that these are alternative provisions," says Consumers Union in a synopsis of the new law. "For example, a homeowner association would be permitted to initiate foreclosure for a debt of only $120 if that debt is more than 12 months delinquent," the consumer advocacy group explained.

If neither of the thresholds are met, the HOA seeking to collect delinquent assessments can either --

  • File a civil action in Small Claims Court; or

  • Record a lien upon which it can foreclose later after the $1,800 or 12 month delinquency thresholds are met.

Once the threshold has been met, the HOA can initiate foreclosure to recover both the assessment debt and all collection charges and fees.

When the thresholds are met to allow foreclosure, the HOA can proceed, but only subject to further provisions of the new law.

The HOA board of directors must make a formal decision to foreclose upon a lien --

  • at an executive meeting of the board;

  • by a majority vote;

  • at least 30 days prior to any foreclosure auction to sell the property.

The board must also record the results of the vote in the association's minutes.

The HOA must disclose its foreclosure activities to the home owner by sending all debt collection correspondence and legal notification to both a primary and secondary address, if a secondary address is available.

The association must record with any notice of delinquent assessments an itemized list of charges owed by the home owner.

The new law also allows the home owner, in writing, to seek a meeting with the HOA's board of directors to resolve the dispute over assessment debt. The board must respond to the home owner's request within 15 days of the postmark on the request.

If dispute resolution finds that an HOA has filed a lien in error, the HOA must reverse the lien and assume all costs.

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  About the author, Broderick Perkins


  • Comment Link tara Wednesday, 14 January 2015 3:45 pm posted by tara

    I am looking at forclosure in two weeks. I am in the process of applying for a loan modification via Keep Your Home California program. PROBLEM: Hoa filed in 2010 lien against my house..which makes me inelegible for loan mod. I do not know what was stated in lien.....if there are other fees besides assessments on the lien. We were sued in small claims court for past due assessment, and have made ALL current pmnts PLUS a monthly back assessment payment , each month since Oct 2013. I believe the lien is still on the account and may be erroneous. How can i find out what is on it, and have it taken off in time for a loan modification ? THey are gonna forclose in 2 weeks!! Can you help/advise me? Thank you.

  • Comment Link steve b Tuesday, 16 December 2014 5:43 pm posted by steve b

    what about unpaid fines and such othwer than assessments? Are these personal responsibility like assessment are, which can be collected after foreclosure, or just through a lien must be paid to transfer title?

  • Comment Link Cammy Gonzalez Wednesday, 10 December 2014 4:42 pm posted by Cammy Gonzalez

    So question did any of you resolve this matter with the HOA I am having similar problem with my HOA just got notice to pay or they will Foreclose on my property if any have any advice please share am desperate for help thank you in advance.


  • Comment Link Kwame Akeem Monday, 06 October 2014 4:39 pm posted by Kwame Akeem

    Hi Aggie,

    I stumbled upon this article and read your comment. I am a homeowner going through a similar situation with HOA. They've (HOA) served me with a notice of eviction whiles a modification is in the works with my lender. I'd like to know if you were able to resolve your situation and if so, what measures did you take? You earliest response will be much appreciated. Thank you.

  • Comment Link Jay Abey Thursday, 02 October 2014 6:23 pm posted by Jay Abey

    After the sale date is served how much time do I have to cure the debt?

  • Comment Link mk Monday, 15 September 2014 7:37 pm posted by mk

    the more i read about hoa's, the scarier they become. all sounding very *organized crimey/extortiony*:\. i was thinking about doing a 'homestead declaration' for possibly a modicum of protection if ever needed. then came upon sec 11.09 of our hoa by-laws, stating any homestead or exemption laws of california in effect now or in future have been waived....aarrrgh! is all of this legal!?! (& by the by, i reside in a neighborhood where pretty much all is taken care of by the owners or the city of los angeles...not a whole lot of "common-area" shared by the 400+ homes??)

  • Comment Link paul Thursday, 19 June 2014 12:31 am posted by paul

    what can i do when I started out missing one assessment and now the collection agency they hired are racking up massive fees trying to foreclose and turned down two settlement offers?

  • Comment Link Jenny Chung Friday, 06 June 2014 8:03 pm posted by Jenny Chung

    Hi Aggie,
    Please give us a call 714-366-8887 America Home Relief. We may have a program for you that will help you stay in your home and deal with the HOA. Thanks!

  • Comment Link Aggie Wednesday, 21 May 2014 8:46 pm posted by Aggie

    I'm dealing with a loan modifitaction at the present time, can hoa evicted me while my case is being reviewed? I tried to work out a payment plan but hoa want's the whole amount. what can I do? I want to stay in my home .can anyone help me PLEASE!!!!!!!!!!!!!!!!!!!!!!!

  • Comment Link Linda Tuesday, 22 April 2014 2:12 pm posted by Linda

    I use to live in a HOA community and because of going through a divorce we were unable to pay the monthly HOA fees as well as our mortgage payment which later put our home into foreclosure. The house a few months later after we foreclosed and a year later we get a letter from the HOA with a court date on there requesting that we pay 5k in delinquent HOA fees. It was my understanding that Once the property goes through foreclosure, and HOA dues are owed, the dues are usually brought current through the sale and paid for by the proceeds of the sale. The selling agent through escrow will calculate the outstanding balance into the final settlement statement through escrow, that is if the bank has not paid the dues current prior. Is this not the case?

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