Bill would limit foreclosures in homeowner associations

August 21, 2005

By Tom Beasley
Copyright AHRC News Services

CAI lawyers have been battling restrictions on foreclosures in homeowner associations in California for years. Last year, they were able to twist the ear of the governor, Arnold Schwarzenegger, to veto a bill that had sailed almost unanimously through the legislature. Now, these same CAI lawyers are about to suffer a crushing defeat.

AHRC has learned that the governor has reached a compromise with Senator Denise Ducheny and will sign SB 137 as amended. While a compromise means that homeowners will not get everything they want, the bill represents a significant breakthrough for homeowners living in homeowner associations.

If signed, the bill will contain three key conditions.

1. That a homeowner association cannot use non-judicial foreclosure when unpaid assessments are less than $1,500 and

2. When the unpaid assessments under $1,500 are less than 2 years old.

3. The Department of Consumer Affairs and the Department of Real Estate will set up an online educational program for boards of directors regarding:
(a) the members' roles, duties, and responsibilities
(b) laws pertaining to board members, and
(c) the nonjudicial foreclosure process

As SB 137 will be financed out of the existing budget of that department, the amendments had to be approvied by the Assembly Appropriations Committee. The Appropriations Committee approved Ducheny''s amendments on August 18th, and sent to the Assembly Floor for it's final vote..

Last year, Representative Steinberg introduced a bill that would have banned the use of non-judicial foreclosure in homeowner associations for unpaid assessments. This was modified to conform to a $5000 minimum in a bill by Senator Ducheny. This was further modified to $2,500, and passed the California legislature almost unanimously. The governor - under intense pressure by CAI lobbyists - vetoed it in 2004.

This year, Senator Ducheny, undaunted by the veto, introduced a virtually identical bill, SB 137. It once again sailed through the legislature with near unanimous support from both parties. The governor, feeling the political heat from even his own party, offered to sign the bill if the amount was reduced to $1,000.

In a negotiations between Senator Ducheny , Moira Topp (the governor's legislative deputy) , and Happy Chastine from the Department of Consumer Affairs, the $1,500 compromise was reached.

Many homeowners across California supported the bill. AHRC and a number of non-profit corporations were listed as sponsors of both bills (AB2598 Steinberg-Ducheny - 2004 and SB 137 -Ducheny - 2005)

Homeowners, of course, will not count the chickens before they hatch. The governor has until September 30 to sign or veto the bill.

If passed, the legislation will give impetus in other states to similar legislation. It would make situations like the Radcliffs impossible. They lost their California home for $120.

The road has been long and hard for homeowners. The good news is that now there is some light at the end of the tunnel.

UPDATE

A PALE HUSK OF A BILL - Lobbyists decimate Homeowner protection bill