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Legislation
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Senator Ducheny Asks California Homeowners To Review And Support SB 1682
Bill Will Be Heard By The Senate Judiciary Committee on Tuesday, May 4, 2004
April 29, 2004
By
AHRC News Services
Copyright AHRC News Services
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Joel Radcliff has been invited back to speak at the State Capital, May 4 2004; at 1:30 pm, Room 4203 in Sacramento, Ca.
It will be open to the public, and we would really appreciate all the support we can get. He will be commenting on Bill SB1682, and also talking about his parents situation. Thank you
Carolyn Radcliff
4/29/2004
____________________________________________________
IncrediMail - Email has finally evolved - Click Here
Posted May 5 2004 4:15AM CEST
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San Juan Capistrano, California |
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Dear Senator Ducheny,
Thanks for the opportunity to provide input.
Notwithstanding and pursuant to: may, shall, will, heretofore, theretofore, CCR's, By Laws, Rules, Regulations, Business and Professions Code, Code of Civil Procedure, Federal Fair Debt Collection Practices Act, California Code of Regulations, Criminal Codes, Municipal Codes, and Corporate Codes aside.
We just have several questions we would like to have answered in everyday, plain, English language only please:
1. DOES THIS BILL ABOLISH NON-JUDICIAL FORECLOSURE BY NEIGHBOR? Yes or No? If no, then trash it. If that isn't going to happen then:
2. DOES THIS BILL HAVE ANY REASONABLE MEANS OF ENFORCEMENT IN IT?
1365.1(b) ends with the following line - "you may wish to consult a lawyer if you dispute an assessment". Here we go again - sending homeowners into a potential HOA litigation vortex. This would not be reasonable.
3. 1365.1 under Assessments and NON-JUDICIAL (bad language) Foreclosure, the last line in the last paragraph includes the following : "Penalties can be imposed for debt collection practices that violate these laws."
a) WHAT ARE THOSE PENALTIES AND HOW ARE THEY IMPOSED AND THROUGH WHAT AGENT? THROUGH THE COURTS?
b) DO HOMEOWNERS CALL THE POLICE, THE SHERIFF, THE D.A. or THE HOA POLICE TO ISSUE VIOLATOR BOARD MEMBERS OR PROPERTY MANAGERS A TICKET?
d) WHAT ABOUT REPEAT VIOLATORS? DOES THE - THREE STRIKES YOUR OUT - LAW APPLY?????
e) WHAT HAPPENS WHEN THE VIOLATOR BOARD MEMBERS OR PROPERTY MANAGERS DON'T PAY THE IMPOSED PENALTY? DOES THE VICTIMIZED HOMEOWNER HAVE THE RIGHT TO NON-JUDICIALLY FORECLOSE ON THE VIOLATOR'S HOME?
4. IS THERE A PROVISION THAT REQUIRES THAT A COPY OF THIS LAW AND ALL RELATED CID GOVERNING LAWS and CROSSOVER LAWS BE GIVEN TO ANY PERSON CONSIDERING A PURCHASE IN SUCH HOUSING WITH THE CAVEAT THAT THESE PROVISIONS CAN CHANGE AT ANY TIME, WITH OR WITHOUT THEIR APPROVAL, AND BEFORE THEY EVEN MOVE INTO THEIR 'HOME'?
If not, there should be, otherwise, full and complete disclosure is a myth and any type of "contractual" agreement between homeowner and the HOA corporate entity should be a fraud perpetrated on the homeowner.
5. IF THE LAWMAKERS MUST INSIST ON SOME 'AX-WIELDING PUNISHMENT' IMPOSED UPON HOMEOWNERS WHO COMMIT THE 'CRIME' OF FAILURE TO PAY THEIR HOA 'CLUB' DUES, WOULD AN INTEREST ACCRUING LIEN PLACED ON THE HOME WITH COLLECTION ACCOMPLISHED WHEN THE HOME IS EVENTUALLY SOLD BY THE OWNER, (much like a mechanics lien) BE ENOUGH? And if not, WHY not?
Thanks for your time. We look forward to your answers.
Sincerely,
Concerned HOA Homeowners
Posted May 4 2004 6:09PM CEST
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I couldn't get the link to work. If someone else has that problem, here is the web address
http://info.sen.ca.gov/cgi-bin/postquery?bill_number=sb_1682&sess=CUR&house=B&site=sen
BILL NUMBER: SB 1682 AMENDED BILL TEXT
AMENDED IN SENATE APRIL 29, 2004
AMENDED IN SENATE APRIL 26, 2004
INTRODUCED BY Senators Ducheny and Speier
(Coauthors: Senators Dunn and Sher)
(Coauthor: Assembly Member Kehoe)
FEBRUARY 20, 2004
An act to amend Section 1365.1 and 1367.1, and to add Section 1367.4 to, the Civil Code, and to amend Section 703.010 of, and to add Sections 704.725 and 729.035 to, the Code of Civil Procedure, relating to common interest developments.
LEGISLATIVE COUNSEL'S DIGEST
SB 1682, as amended, Ducheny. Common interest developments: nonjudicial foreclosure.
Existing law defines and regulates common interest developments and authorizes the association that manages the development to levy assessments to fulfill its obligations. Existing law provides that a regular or special assessment of the association, late charges, reasonable costs of collection, and interest, as specified, are a debt of the owner of the separate interest at the time the assessment or other sums are levied, and are a lien on the owner's separate interest when the association records a specified document and follows a specified process. Existing law permits the association to enforce the lien in any manner permitted by law including a sale by a trustee, also known as nonjudicial foreclosure.
Existing law creates a homestead exemption, and provides that a specified portion of equity in a homestead, as defined, is exempt from execution to satisfy a money judgment, with limited exceptions. Existing law, the right of redemption, permits a judgment debtor, as defined, to redeem his or her real property, as specified, after judicial foreclosure only if the decree of foreclosure finds that a deficiency judgment may be ordered against the debtor.
This bill would revise and recast the procedures for collecting delinquent assessments for certain debts that arise on and after January 1, 2005. The bill would provide that when an association of a common interest development , except an association of a common interest development with less than 25 separate interests, seeks to collect a delinquent assessment of less than $2,500, not including specified late charges and fees, the association must either file a civil action in small claims court or record a lien upon which it would be prohibited from foreclosing. The bill would require an association that chooses to record a lien under these circumstances , if requested by the owner of the separate interest, to enter into binding arbitration with the owner of the separate interest to establish the amount, if any, that the association is owed and will be permitted to record.
The bill would permit an association of a common interest development seeking to collect a delinquent regular or special assessment of $2,500 or more, not including specified late charges and fees, to use foreclosure subject to specified conditions. Among these conditions, the bill would require the board of directors of an association to make the decision to record a lien against a separate interest or to foreclose upon a lien at an open meeting of the board, by a majority vote, and to record the results of the vote, and
would require the board to provide personal notice of the decision to foreclose, as specified.
The bill would require , if the owner so requests, that the association enter into binding arbitration with the owner of the separate interest to establish the amount, if any, that the association is owed and will be permitted to record as a lien. The bill would further provide that, notwithstanding any law to the contrary, a nonjudicial foreclosure by an association to collect upon a debt for a delinquent assessment, as specified, is subject to the homestead exemption and to a right of redemption, as described above.
The bill would exempt from its provisions developers and separate interest owners in timeshare projects, as specified.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1365.1 of the Civil Code is amended to read:
1365.1. (a) The association shall distribute the written notice described in subdivision (b) to each member of the association during the 60-day period immediately preceding the beginning of the association's fiscal year. The notice shall be printed in at least 12-point type. An association distributing the notice to an owner of an interest that is described in Section 11003.5 of the Business and Professions Code may delete from the notice described in subdivision (b) the portion regarding meetings and payment plans.
(b) The notice required by this section shall read as follows:
"NOTICE ASSESSMENTS AND FORECLOSURE
This notice outlines some of the rights and responsibilities of owners of property in common interest developments and the associations that manage them. Please refer to the sections of the Civil Code indicated for further information. A portion of the information in this notice applies only to liens recorded on or after January 1, 2003. You may wish to consult a lawyer if you dispute an assessment.
ASSESSMENTS AND NONJUDICIAL FORECLOSURE
The failure to pay association assessments may result in the loss of an owner's property without court action, often referred to as nonjudicial foreclosure. While the association is limited in its use of nonjudicial foreclosure for liens perfected and recorded on and after January 1, 2005, if the underlying debt is for the failure to pay association assessments or dues, when using nonjudicial foreclosure, the association records a lien on the owner's property.
The owner's property may be sold to satisfy the lien if the lien is not paid. Assessments become delinquent 15 days after they are due, unless the governing documents of the association provide for a longer time. (Sections 1366 and 1367.1 of the Civil Code)
In a nonjudicial foreclosure, the association may recover assessments, reasonable costs of collection, reasonable attorney's fees, late charges, and interest. The association may not use nonjudicial foreclosure to collect fines or penalties, except for costs to repair common areas damaged by a member or a member's guests, if the governing documents provide for this, nor may the association use nonjudicial foreclosure to collect debts for delinquent assessments under $2,500, not including late charges and certain fees. (Sections 1366 and 1367.1 of the Civil Code)
The association must comply with the requirements of Section 1367.1 of the Civil Code when collecting delinquent assessments. If the association fails to follow these requirements, it may not record a lien on the owner's property until it has satisfied those requirements. Any additional costs that result from satisfying the requirements are the responsibility of the association. (Section 1367.1 of the Civil Code)
At least 30 days prior to recording a lien on an owner's separate interest, the association must provide the owner of record with certain documents by certified mail. Among these documents, the association must send a description of its collection and lien enforcement procedures and the method of calculating the amount. It must also provide an itemized statement of the charges owed by the owner. An owner has a right to review the association's records to verify the debt. (Section 1367.1 of the Civil Code)
If a lien is recorded against an owner's property in error, the person who recorded the lien is required to record a lien release within 21 days, and to provide an owner certain documents in this regard. (Section 1367.1 of the Civil Code)
The collection practices of the association may be governed by state and federal laws regarding fair debt collection. Penalties can be imposed for debt collection practices that violate these laws.
PAYMENTS
When an owner makes a payment, he or she may request a receipt, and the association is required to provide it. On the receipt, the association must indicate the date of payment and the person who received it. The association must inform owners of a mailing address for overnight payments. (Sections 1367.1 and 1367.1 of the Civil Code)
An owner may dispute an assessment debt by giving the board of the association a written explanation, and the board must respond within 15 days if certain conditions are met. An owner may pay assessments that are in dispute in full under protest, and then request alternative dispute resolution. (Sections 1366.3 and 1367.1 of the Civil Code)
An owner is not liable for charges, interest, and costs of collection, if it is established that the assessment was paid properly on time. (Section 1367.1 of the Civil Code)
MEETINGS AND PAYMENT PLANS
An owner of a separate interest that is not a time-share may request the association to consider a payment plan to satisfy a delinquent assessment. The association must inform owners of the standards for payment plans, if any exist. (Section 1367.1 of the Civil Code)
The board of the directors must meet with an owner who makes a proper written request for a meeting to discuss a payment plan when the owner has received a notice of a delinquent assessment. These payment plans must conform with the payment plan standards of the association, if they exist. (Section 1367.1 of the Civil Code)"
SEC. 2. Section 1367.1 of the Civil Code is amended to read:
1367.1. (a) A regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorney's fees, if any, and interest, if any, as determined in accordance with Section 1366, shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied. At least 30 days prior to recording a lien upon the separate interest of the owner of record to collect a debt that is past due under this subdivision, the association shall notify the owner of record in writing by certified mail of the following:
(1) A general description of the collection and lien enforcement procedures of the association and the method of calculation of the amount, a statement that the owner of the separate interest has the right to inspect the association records, pursuant to Section 8333 of the Corporations Code, and the following statement in 14-point boldface type, if printed, or in capital letters, if typed:
"IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION".
(2) An itemized statement of the charges owed by the owner, including items on the statement which indicate the amount of any delinquent assessments, the fees and reasonable costs of collection, reasonable attorney's fees, any late charges, and interest, if any.
(3) A statement that the owner shall not be liable to pay the charges, interest, and costs of collection, if it is determined the assessment was paid on time to the association.
(4) The right to request a meeting with the board as provided by subdivision (c).
(b) Any payments made by the owner of a separate interest toward the debt set forth, as required in subdivision (a), shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney's fees, late charges, or interest. When an owner makes a payment, the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it. The association shall provide a mailing address for overnight payment of assessments.
(c) (1) An owner may dispute the debt noticed pursuant to subdivision (a) by submitting to the board a written explanation of the reasons for his or her dispute. The board shall respond in writing to the owner within 15 days of the date of the postmark of the explanation, if the explanation is mailed within 15 days of the postmark of the notice.
(2) An owner, other than an owner of any interest that is described in Section 11003.5 of the Business and Professions Code, may submit a written request to meet with the board to discuss a payment plan for the debt noticed pursuant to subdivision (a). The association shall provide the owners the standards for payment plans, if any exist. The board shall meet with the owner in executive session within 45 days of the postmark of the request, if the request is mailed within 15 days of the date of the postmark of the notice, unless there is no regularly scheduled board meeting within that period, in which case the board may designate a committee of one or more members to meet with the owner.
(d) The amount of the assessment, plus any costs of collection, late charges, and interest assessed in accordance with Section 1366, shall be a lien on the owner's interest in the common interest development from and after the time the association causes to be recorded with the county recorder of the county in which the separate interest is located, a notice of delinquent assessment, which shall state the amount of the assessment and other sums imposed in accordance with Section 1366, a legal description of the owner's interest in the common interest development against which the assessment and other sums are levied, the name of the record owner of the owner's interest in the common interest development against which the lien is imposed. In order for the lien to be enforced by nonjudicial foreclosure as provided in subdivision (g), the notice of delinquent assessment shall state the name and address of the trustee authorized by the association to enforce the lien by sale.
The notice of delinquent assessment shall be signed by the person designated in the declaration or by the association for that purpose, or if no one is designated, by the president of the association, and mailed in the manner set forth in Section 2924b, to all record owners of the owner's interest in the common interest development no later than 10 calendar days after recordation. Within 21 days of the payment of the sums specified in the notice of delinquent assessment, the association shall record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest a copy of the lien release or notice that the delinquent assessment has been satisfied. A monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities for which the member or the member's guests or tenants were responsible may become a lien against the member's separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c, provided the authority to impose a lien is set forth in the governing documents.
It is the intent of the Legislature not to contravene Section 2792.26 of Title 10 of the California Code of Regulations, as that section appeared on January 1, 1996, for associations of subdivisions that are being sold under authority of a subdivision public report, pursuant to Part 2 (commencing with Section 11000) of Division 4 of the Business and Professions Code.
(e) Except as indicated in subdivision (d), a monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing instruments, except for the late payments, may not be characterized nor treated in the governing instruments as an assessment that may become a lien against the member's subdivision separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.
(f) A lien created pursuant to subdivision (d) shall be prior to all other liens recorded subsequent to the notice of assessment, except that the declaration may provide for the subordination thereof
to any other liens and encumbrances.
(g) An association may not voluntarily assign or pledge the association's right to collect payments or assessments, or to enforce or foreclose a lien to a third party, except when the assignment or pledge is made to a financial institution or lender chartered or licensed under federal or state law, when acting within the scope of that charter or license, as security for a loan obtained by the association; however, the foregoing provision may not restrict the right or ability of an association to assign any unpaid obligations of a former member to a third party for purposes of collection. Subject to the limitations of this subdivision, after the expiration of 30 days following the recording of a lien created pursuant to subdivision (d), the lien may be enforced in any manner permitted by law, including sale by the court, sale by the trustee designated in the notice of delinquent assessment, or sale by a trustee substituted pursuant to Section 2934a. Any sale by the trustee shall be conducted in accordance with Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trusts. The fees of a trustee may not exceed the amounts prescribed in Sections 2924c and 2924d.
(h) Nothing in this section or in subdivision (a) of Section 726 of the Code of Civil Procedure prohibits actions against the owner of a separate interest to recover sums for which a lien is created pursuant to this section or prohibits an association from taking a deed in lieu of foreclosure.
(i) If it is determined that a lien previously recorded against the separate interest was recorded in error, the party who recorded the lien shall, within 21 calendar days, record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest with a declaration that the lien filing or recording was in error and a copy of the lien release or notice of rescission.
(j) (1) An association that fails to comply with the procedures set forth in this section shall, prior to recording a lien, recommence the required notice process.
(2) Any costs associated with recommencing the notice process shall be borne by the association and not by the owner of a separate interest.
(k) This section only applies to liens recorded on or after January 1, 2003.
(l) This section is subordinate to, and shall be interpreted in conformity with, Section 1367.4. SEC. 3. Section 1367.4 is added to the Civil Code, to read: 1367.4. (a) Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2005.
(b) An association , except an association of a common interest development with less than 25 separate interests, that seeks to collect a delinquent regular or special assessment of an amount less than two thousand five hundred dollars ($2,500), not including any late charges, fees and costs of collection, or interest, may attempt to collect that debt only in either of the following ways:
(1) By a civil action in small claims court, pursuant to Chapter 5.5 (commencing with Section 116.110) of Title 1 of the Code of Civil Procedure. An association that chooses to proceed by an action in small claims court, and prevails, may enforce the judgment as permitted under Article 8 (commencing with Section 116.810) of Title 1 of the Code of Civil Procedure.
(2) By recording a lien on the owner's separate interest upon which the association may not foreclose. An If requested by the owner of a separate interest whom the association asserts is delinquent in paying assessments, an association
that chooses to record a lien under these provisions, prior to
recording the lien, shall enter into binding arbitration with the
owner of the separate interest whom the association asserts
is delinquent in order to establish the amount, if any,
that the association is owed and will be permitted to record.
(c) An association that seeks to collect a delinquent regular or special assessment of an amount of two thousand five hundred dollars ($2,500) or more, not including any late charges, fees and costs of collection, or interest, may use foreclosure subject to the following conditions:
(1) The decision to record a lien for a delinquent assessment shall be made only by the board of directors of the association and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the board members in an open session. The board shall record the vote in the minutes of that meeting.
(2) Prior If requested by the owner of a separate interest whom the association asserts is delinquent in paying assessments, prior to recording any lien on an owner's separate interest, the association shall enter into binding arbitration with the owner whom the association asserts is delinquent in order to establish the amount, if any, that the association is owed and will be permitted to record.
(3) The decision to foreclose upon a lien for a delinquent assessment that has been validly recorded shall be made only by the board of directors of the association and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the board members in an open session. The board shall record the vote in the minutes of that meeting.
(4) The board shall provide personal notice to an owner of a separate interest who occupies the separate interest if the board votes to foreclose upon the separate interest.
(5) A nonjudicial foreclosure by an association to collect upon a debt for delinquent assessments shall be subject to a right of redemption. The redemption period shall be as provided in Section 729.030 of the Code of Civil Procedure.
(6) A nonjudicial foreclosure by an association to collect upon a debt for delinquent assessments shall be subject to the homestead exemption, as provided in Article 4 (commencing with Section 704.710) of Chapter 4 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure.
(d) This section does not apply to the debts of owners of separate interests in timeshare projects, as defined in Section 11003.5 of the Business and Professions Code, or to the debts of developers.
SEC. 4. Section 703.010 of the Code of Civil Procedure is amended to read:703.010. Except as otherwise provided by statute:
(a) The exemptions provided by this chapter or by any other statute apply to all procedures for enforcement of a money judgment.
(b) Except as provided in subdivision (e), the exemptions provided by this chapter or by any other statute do not apply if the judgment to be enforced is for the foreclosure of a mortgage, deed of trust, or other lien or encumbrance on the property other than a lien created pursuant to this division or pursuant to Title 6.5 (commencing with Section 481.010) (attachment).
(c) The exemptions provided by Article 4 (commencing with Section 704.710) apply to foreclosures by the association of a common interest development pursuant to subdivision (g) of Section 1367.1 of the Civil Code, subject to the conditions of Section 1367.4 of the Civil Code. SEC. 5. Section 704.725 is added to the Code of Civil Procedure, to read:
704.725. Notwithstanding any provision of law to the contrary, a homestead is exempt from sale under this article if the sale arises from a foreclosure by the association of a common interest development pursuant to subdivision (g) of Section 1367.1 of the Civil Code, subject to the conditions of Section 1367.4 of the Civil Code.
SEC. 6. Section 729.035 is added to the Code of Civil Procedure, to read:
729.035. Notwithstanding any provision of law to the contrary, the sale of a separate interest in a common interest development is subject to the right of redemption if the sale arises from a foreclosure by the association of a common interest development pursuant to subdivision (g) of Section 1367.1 of the Civil Code, subject to the conditions of Section 1367.4 of the Civil Code.
CAI is going to fight this tooth and nail. Write Ducheny!
Posted Apr 30 2004 4:05PM CEST
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Pittsburg, California |
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