Collection Policy | California Homeowners Association

SAMPLE HOMEOWNERS ASSOCIATION

DELINQUENT ASSESSMENT COLLECTION POLICY

Prompt payment of assessments by all owners is critical to the financial health of the Association and to the enhancement of the property values of our homes. Under the Declaration of Covenants, Conditions and Restrictions (CC&Rs) and the California Civil Code, the Board of Directors is obligated to enforce the members' obligation to pay assessments.

The policies and practices outlined herein have been adopted by the Board to ensure a prompt and fair collection of delinquent assessments. These policies and procedures shall remain in effect until such time as they may be changed, modified, or amended by a duly adopted resolution of the Board of Directors.

Therefore, pursuant to the CC&Rs and Civil Code Section 5650(a), the _____ HOA

delinquent assessment practices and policies, are as follows:

1. Owner's Obligation to Pay Assessments

Assessments, late charges, interest and collection costs, including any attorneys' fees, are the personal obligation of the owner of the property at the time the assessment or other sums are imposed (Civil Code Section 5650(a)).

2. Quarterly Assessments

Quarterly assessments are due and payable on the first day of each quarter, i.e.:

1^st Quarter = June 1 ^st

2^nd Quarter = September 1 ^st

3^rd Quarter = December 1 ^st

4^th Quarter = March 1 ^st

A quarterly assessment shall be deemed delinquent fifteen (15) days after the stated due date. A courtesy billing statement is sent each quarter to the billing address on record with the Association.

HOWEVER, IT IS THE OWNER'S RESPONSIBILITY TO PAY EACH ASSESSMENT IN FULL EACH QUARTER REGARDLESS OF WHETHER A STATEMENT IS MAILED OR RECEIVED.

3. Other Assessments

All other assessments, including special assessments, are due and payable on the date specified by the Board on the Notice of Assessment, which date will not be less than thirty (30) days after the date of notice of the special assessment.

A special assessment payable in installments shall be deemed delinquent thirty (30) days after the stated installment due date. Any remaining installments will be accelerated and the entire unpaid balance shall become immediately due and payable and shall be subject to a late charge and interest as provided below.

4. Late Fees

Assessments which are not postmarked or received within the grace period following the due date are delinquent and shall be subject to a ten dollar ($10.00) late charge.

5. Interest

Interest, at the rate of ten percent (10 %) per annum, will be assessed against any outstanding balance, including delinquent assessments, late charges and cost of collection, which may include attorneys' fees.

Interest charges shall accrue thirty (30) days after the assessment becomes due and shall continue to be assessed each month until the account is brought current.

6. Delinquency & Legal Notices

1^st Reminder:

The first notice of past due assessment ("1^st Reminder") will be prepared and mailed once an assessment becomes delinquent.

2^nd Reminder:

The second notice of past due assessment ("2^nd Reminder") will be mailed if the required payment has not been received within fifteen (15) days of mailing the 1 ^st Reminder.

Pre-Lien Letter:

If an assessment is not received within forty-five(45) days after the assessment becomes delinquent, the Association, the Management Company, or its designee, will send a Pre-Lien Letter to the owner as required by Civil Code Section 5650(a)by certified and first class mail, to the owner's mailing address of record advising of the delinquent status of the account, impending collection action and the owner's right to request that the Association participate in the internal dispute resolution process ("IDR"). Charges associated with the preparation of the pre-lien letter will be considered a "cost of collection" and may be charged to the owner.

Notwithstanding this provision, the Association reserves it right to issue a Pre-Lien Letter following delinquency but before expiration of the 45 days referenced above, when (1) there is an open escrow involving the owner's lot; or (2) if a Special Assessment becomes delinquent.

Communications to Owner

Any and all communications to the owner as referenced herein will be made to the owner's property address. Owners have the right to provide a secondary address for the purpose of receiving collection notices. The owner's request shall be in writing and shall be mailed to the Association in a manner that verifies the Association has received it. An owner may identify or change a secondary address at any time, provided that, if a secondary address is identified or changed during the collection process, the Association shall only be required to send notices to the indicated secondary address from the point the Association receives the request.

Communications to Association

Any and all communications to the Association as referenced herein should be made by fax and mail to:

7. Recording of the Lien

If an owner fails to pay the amounts set forth in the Pre-Lien Letter and fails to request IDR within thirty (30) days of the date of the Pre-Lien Letter, the Board shall decide, by majority vote in an open meeting, whether to authorize the recording of a lien for the amount of any delinquent assessments, late charges, interest and/or costs of collection, including attorneys' fees, if any, against the owner's property. If the Association authorizes the recording of a lien against the owner's property, the owner will be charged for the fees and costs of preparing and recording the lien. The lien may be enforced in any manner permitted by law, including, without limitation, judicial or non-judicial foreclosure.

8. Enforcing of the Lien

Once the lien has been recorded, the Association, the Management Company, or its designee, may enforce the lien thirty (30) days after recordation of the lien and may foreclose the lien by non-judicial foreclosure sale when either,

(a) the delinquent assessment amount totals One Thousand, Eight Hundred Dollars ($1,800.00) or more, excluding accelerated assessments and specified late charges and fees;

(b) the assessments are delinquent for more than twelve (12) months.

Owner's could lose ownership of the subject property if a foreclosure action is completed and may also be responsible for significant additional fees and costs if a foreclosure action is commenced.

The decision to foreclose on a lien must be made by a majority of the Board of Directors in an Executive Session meeting and the Board of Directors must record their votes in the minutes of the next open meeting of the Board.

The Board must maintain the confidentiality of the delinquent owner(s) by identifying the matter in the minutes by only the parcel number of the owner's property.

9. Release of Lien

Prior to the release of any lien, or dismissal of any legal action, all assessments, late charges, interest, and costs of collection, including attorneys' fees, must be paid in full to the Association.

10. Owner's Right to Inspect Accounting

Pursuant to Corporations Code Section 8333, an owner is entitled to inspect the Association's accounting books and records to verify the amounts owed

In the event it is determined that the owner has paid the assessments on time, the owner will not be liable to pay the charges, interests, and costs of collection associated with collection of those assessments.

11. Owner's Right to Dispute resolution

Prior to initiating any foreclosure sale on a recorded lien, the Association shall offer delinquent homeowners the option of participating in Internal Dispute Resolution (IDR) or Alternative Dispute Resolution (ADR).

Pursuant to Civil Code Section 1363.810 et seq., an owner has the right to dispute the assessment debt by submitting a written request for dispute resolution to the management Company for delivery to the Association.

Pursuant to Civil Code Section 1369.510 et seq., an owner has the right to request alternative dispute resolution with a neutral third party before the Association may initiate foreclosure against the owner's separate interest, except that binding arbitration shall not be available if the Association intends to initiate a judicial foreclosure.

12. request for a payment plan

Any owner who is unable to pay assessments will be entitled to make a written request for a payment plan for consideration by the Board of Directors. An owner may also request to meet with the Board in executive session to discuss a payment plan if the payment plan request is mailed within fifteen (15) days of the postmark date of the pre-lien Letter.

The Board will consider payment plan requests on a case-by-case basis and is under no obligation to grant payment plan requests. Payment plans shall not interfere with the Association's ability to record a lien on an owner's separate interest to secure payment for the owner's delinquent assessments.

If the Board authorizes a payment plan, it may incorporate payment of ongoing assessments that accrue during the payment plan period.

If a payment plan is approved, additional late fees from the homeowner will not accrue while the owner remains current under the terms of the payment plan. If the owner breaches an approved payment plan, the Association may resume its collection action from the time the payment plan was approved.

Nothing herein limits or otherwise affects the Association's right to proceed in any lawful manner to collect any delinquent sums owed to the Association.