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Limitation on Notice of Delinquent Assessments in HOAs (4 of 4)

Limitation on Notices of Delinquent Assessments in HOAs was imposed by the court in In re Guajardo (Bankr ND Cal, Mar. 11, 2016, No. 1531452DM) 2016 Bankr LEXIS 769, *8. For the collection of deliquent assessment in HOAs, the general practice has been, and continues to be,  to record the Notice of Delinquent Assessment with the County Recorder for the specific amount due with a clause that provided the amount would be increased to include all future unpaid assessements.

The Guajardo court ruled that a Notice of Deliquent Assessments recorded under California Civil Code sec. 5675(a) could not include a clause to incorporate future assessments defaults.  The Guajardo court made a finding the future amounts clause is inconsistent with the portions of the Davis-Stirling Act requiring the unpaid amounts to be specifically stated in the notice and in the attached accounting.

The effect of this ruling is that for each successive months unpaid balance a new Notice of Default will have to be recorded with the County Assessor's office. What is not clear from the ruling is the "best practices" for complying with the ruling.  In other words, do you serve a Notice of Intent to Lien and then after the time has elapse, record an additiona Notice of Delinquent Assessments on a per month basis and then if you have to foreclose, do you foreclose on each of the notices or do you release the prior lien and go through the process to include the total amount owing and then if you have to foreclose, foreclose on the last lien recorded.  If this appears burdensome and confusing to both the HOA and the member, it is.

This ruling substantially increases the bookkeeping, paperwork and costs to enforce the payment of delinquent assessments.  If your HOA needs additional information to bring your procedures and documents into compliance, please contact Ariel Bedell, Esq. at The Loftin Firm, P.C.

The information above is general in nature and is not intended as legal advice.

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