Following Statutory Guidelines in Collection Matters
The Davis-Stirling Act gives homeowners associations some powerful tools to deal with delinquent homeowners, including the ability to foreclose on a delinquent owner’s home if necessary. However, associations and managers should be extremely cognizant of the statutory guidelines throughout the collections process in order to avoid successful challenges by delinquent owners. The first step is properly notifying the owner of the Association’s intent to record a lien and recording that lien in accordance with the statutory requirements.
In particular, Civil Code Section 5660 sets forth very strict language which must be included in any pre-lien letter sent to the delinquent owner at least 30 days prior to the recording of a lien. Furthermore, there are stringent statutory guidelines regarding the memorialization of the board’s decision to record the lien in CC 5673 and important requirements regarding the form of the lien itself in CC 5675. These must be followed to the letter to avoid any possible challenge by a delinquent homeowner under CC 5690 which, if sustained, could lead to a forced lien release even if the delinquency remains unpaid.
We recommend that management and the board of directors consult legal counsel prior to initiating collections attempts against any unit owner. Legal counsel can offer advice regarding required language, dates, and forms of notice required to properly record an assessment lien, and can often handle the entire process upon request.
Garrett Wait, Esq.