CAI (Community Associations Institute) and CLAC (California Legislative Action Committee) has declared an all out war on two bills in the California Legislature. The first bill, AB 2598 (Steinberg), would ban non-judicial foreclosure completely in homeowner associations. The second bill, SB 1682 (Ducheny) would limit non-judicial foreclosure to amounts of $2,500 and over.

CAI lawyers are furious because these bills would turn off one of their most lucrative financial spigots. Even if a home is never foreclosed on, these attorneys are estimated to make at least $2,000 per transaction. To give you an idea of how much is involved, CAI lawyers, Peters and Freedman, filed 75 Notices of Trustee Sale in San Diego County alone in the years 2000, 2001, 2002. At $2,000 a shot, this would be worth at least $150,000.

Multiply that around the state, and you begin to get into real money.

CAI/CLAC's solution is to "improve the Notice-to-Owner provisions of Civil Code Sections 1350, et seq., and provide for an equitable 'period of redemption' that already may be utilized in judicial foreclosures". (AHRC received this information from a source that stated that "CAI does not understand that we are not all in support of CAI").

This "solution" simply defies logic. An "improved Notice" for something that is inherently unjust is no improvement at all. Giving the Jews at Auschwitz an "improved Notice" of their fate hardly comports with justice. Homeowners do not want to go to a financial Auschwitz.

Skip Daum trots out the usual mantra that eliminating or restricting the use of non-judicial foreclosure "will cause community degredation". Very unlikely.Most associations have hundreds of thousands in reserves that can be used to fund any temporary shortfalls.

Yes, everybody should pay their dues in full and on time. However, many people often hit a bump in the road in life - an accident, illness, loss of a job etc. This could happen to anybody - even CAI members. It should be the public policy of any society to try to keep people in their homes as long as possible. A home is a necessity, not a luxury. Counties wait 5 years before they start to take somebody's home for unpaid taxes. Why should homeowner associations be the exception and have the right to take somebody's home in a hundred days - often for scandalously low amounts? Tom Radcliff lost his $280,000 home for $120. A single lady was homeless for weeks and had to sleep in the back seat of her car because she fell behind $200.

Skip Daum says that the new legislation "will have to go through the expensive court system, and will greatly delay resolution." Amazing! SB 1682 requires Small Claims Court, not the expensive Superior Court! To file in Small Claims is about $20 - in Superior Court, hundreds of dollars. And there are no lawyers allowed in Small Claims Court - and that is where the rub is! All those CAI lawyers will be kept away. And that, of course, is what is driving this CAI/CLAC petition!

CAI/CLAC are like magicians. They try to get you focused on the wrong ball so that they can distract from what is happening with the real ball. They beat their breasts about the alleged calamitous financial woes that these bills will cause to homeowners and homeowner associations. But the real ball is the CAI lawyer fees.

The signatures on their petition will also be a marvellous con job if past petitions are any guide. Nobody will sign as CAI lawyer, but as homeowner. Board presidents will sign as if they have the entire association behind them. AHRC in the past has determined that no association ever voted on a petition, and in most cases, no board of directors authorized the president to sign a CAI/CLAC petition.

So CAI/CLAC will try to use smoke and mirrors to fool the legislature, and maybe try to use a little bit of economic muscle as well. Lobbyists are there to lob money!

AHRC will keep you abreast of all developments, because this is a watershed issue in homeowner associations. CAI lawyers secretly inserted the provision in the Davis Stirling Act in 1985 that gave homeowner associations the right to non-judicial foreclosure. It has been almost 20 years of undiluted financial bliss for CAI lawyers - and financial disaster for homeowners. Homeowners need to stand firm on this one and do everything possible to ensure that CAI does not prevail.

Click here to write Senator Denise Ducheny

Click here for information on SB 1682

Click here to write Assemblymember Darrell Steinberg

Click here for information on AB2598


Here is the petition that is being circulated by CAI/CLAC

Petition to Amend Foreclosure Legislation