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Assessments Collections: Mastering HOA Collections, A Guide to Assessments & Delinquency Solutions


While often not viewed as an exciting topic, assessment collections are necessary because running a common interest development fails when members do not pay what they are supposed to. This article seeks to provide some high-level understanding of what goes into assessment collections and also informs the reader as to some best practices. Some of the cases will show how the laws concerning collections are strict as it relates to process, but Courts are supportive that members must pay their assessments no matter what. Say it again. Pay assessments no matter what.


We start with a general summary of the life of an assessment levy and how it turns into a collections matter. All associations collect assessments. That’s how they run themselves. The power starts with their CC&Rs, and also under Civil Code §5650(a), it provides that there is a mandatory duty for members to pay:


(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 subdivision (b), shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied.


This is not one of those areas of law where it’s squishy and members can decide to withhold their assessment payments because they don’t like how the association is run. That idea was already denied by Park Place Ests. Homeowners Assn. v. Naber (1994), 29 Cal. App. 4th 427, 432 wherein the Court held that: “Permitting an owner to broadly assert the homeowners association's conduct as a defense or “setoff” to such enforcement action would seriously undermine these rules.”


Unless your governing documents state otherwise, assessments are delinquent after 15 days from the date of levy (See Civil Code §5650(b)). Depending on the amount and the history of the outstanding debt, the board of directors will need to look at the individual account and consider that debt against the association’s collection policy. This policy must be adopted and included in your annual disclosures (See Civil Code §5730). Civil Code §5730 provides some mandatory provisions that must be included in your collection policy and one of those key benchmarks is that the association may not foreclose until the principal debt reaches $1,800.00. That doesn’t mean that you cannot send the debt to your collections vendor until the debt reaches that amount. It just means you cannot start the foreclosure sale process.


Once the delinquent amount approaches $1,800, the board of directors typically resolve to send the account to collections. From there, the collections vendor will perform the series of collections notices required by statute and may also record a lien to secure the debt against the property. After the lien is recorded, the Board may be confronted with a decision by the collection vendor as to what to do next with the debt. Will it be foreclosure (judicial or nonjudicial)? File a lawsuit (small claims, limited, or unlimited superior court)? Or, some combination of the above? A whole series of articles could be written on whether and what option to pick. It’s important to involve your corporate counsel in the decision making because some collections vendors may specialize in only one form of collections and so the board may not have sufficient information to weigh the options.


As promised, the following are some cases that show examples and best practices for how boards of directors should treat some common issues related to collections. These cases describe how collections issues can turn into expensive mistakes.


In 2014, a homeowners association named Huntington Continental Town House Association refused to accept partial payments from a homeowner named Joseph A. Minor (Huntington Cont'l Townhouse Assn., Inc. v. Miner (2014), 230 Cal. App. 4th 590, 595). The basis was because Mr. Minor was playing games and only making payments to satisfy the assessment but not pay any amounts towards the collections costs. The association applied the money paid by the homeowner to collections cost first and not the assessment. The Court disagreed with handling the payments in this way. The Court analyzed the issue and stated that: (1) the association cannot deny any payments; and (2) the amounts received if it doesn’t satisfy all the debt must be applied to the principal assessment first before collections costs, late charges, and interest. (Id. at 602).


This lesson was not learned in 2024 when the Court in Doskocz v. ALS Lien Servs. (2024), 102 Cal. App. 5th 107 considered the issue of application of payments when members are on a payment plan with the association. In this matter, there was a class action filed concerning the debt collector’s violations of laws when handling a homeowner’s association member’s payment plan. The primary lesson in this case has to do with the debt collector attempting to force the member into waiving rights on the application of payments being applied to assessments first (as instructed in the Huntington Continental v. Miner case above). The problematic payment plan agreement was described by the Court as follows:  


“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.” ALS's standard payment plan includes this waiver, and its standard collection contract terms require HOAs to agree to payment plans with this waiver. During Doskocz's payment plan period, ALS applied only a portion of her payment towards unpaid assessments, applying the rest to ALS's collection fees and costs. (Id.)


The Court did not appreciate this type of creative lawyering and found that you cannot enter a contract or payment plan that changes the payment application requirements that exist in the law.


In reviewing the relevant assessment collection laws and some of the relevant cases, association board members should rigidly follow their CC&Rs and collections policies. Confer with counsel regularly when making collections decisions (if there is no attorney supervising the collections at the collection’s vendor’s company). Regularly and routinely consider your finances and weigh the options against resources being spent on certain amounts of debt. The association is obligated by law to collect assessments, but it is not always as easy as it seems.


Written by: Maria C. Kao, Briscoe Ivestor & Bazel LLP

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