Violations of State Statute Alleged

May 23, 2004

By Dan Ackroyd

The law firm of Peters and Freedman filed more Notices of Trustee Sales in homeowner associations in San Diego County for the years 2000-2003 than any other homeowner association law firm. Furthermore, in all cases, it acted as the trustee conducting the sale - a practice in sharp and troubling contrast with the other law firms. These are the preliminary conclusions of an ongoing investigation.

In the years 2000, 2001, 2002, Peters and Freedman published 75 Notices of Sale. By contrast, its closest rival, Epstein and Grinnell, conducted only 36 - less than half the number of Peters and Freedman.

The average amount of the debt was in the $2000 range. The lowest was $987.08, the highest $10,938.86. These amounts included the unpaid assessments plus the attorney fees of Peters and Freedman. Normally, the attorney fees are the biggest single component of the debt.

SB 1682, the California Senate bill that just passed the Senate in a unanimous 36-0 vote, forbids non-judicial foreclosure for unpaid assessments that are less than $2,500. This amount excludes attorney fees. If the bill had been in effect in the years 2000 - 2002, almost all of the Notices of Trustee Sale would have been forbidden. Furthermore, Peters and Freedman would have not been able to collect hundreds of thousands - in attorney fees.

Furthermore, Peters and Freedman acted as the trustee conducting the sale in each case. A lawyer familiar with the non-judicial foreclosure process stated that there is a conflict of interest for a lawyer to represent the homeowner association while simultaneously acting as trustee of the sale of the home. He said that an independent third party should be used to handle the foreclosure. Epstein and Grinnell, a competitor of Peters and Freedman uses Cal-Western Reconveyance. Only one other law firm acted as trustee conducting the sale while simultaneously representing the homeowner association. This firm filed 5 notices of sale during 2000 - 2002.

Peters and Freedman filed their Notice of Sale in the Uptown Examiner - a newspaper with a circulatiion of about 150. Research by Melissa Colburn shows that Peters and Freedman violated Civil Code Section 2924(f). This requires publication of the Notice of Sale for 3 consecutive weeks. In fact, Ms. Colburn's research shows that Peters and Freedman published the Notice 3 times in 2 weeks - a clear violation of the statute. As the statutes governing foreclosures are strictly interpreted, this violation would render the Notice invalid. As a possible result, all the homeowners involved may be entitled to a refund of hundreds of thousands of dollars.

This information has been forwarded to the San Diego District Attorneys Office, the California State Bar and other relevant government agencies. Homeowners are asked to forward any further information to AHRC. The investigation is ongoing.