California HOA Foreclosures
If you default on HOA dues and assessments in California, the homeowners association can foreclosure on your condo, townhome, or other home in a common interest development.
If you live in a house, condo, or townhome that is part of a common interest development in California, you are most likely responsible for paying dues and assessments to the homeowners’ association (HOA). If you don’t pay, in most cases the HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA foreclosures in California.
California HOA Laws
The Davis-Stirling Common Interest Development Act governs common interest developments in California (Cal. Civ. Code §§ 1350 through 1378). (Please note that in 2012, the California legislature reorganized this Act, which changed the citations effective January 1, 2014. To find a conversion chart showing the old citation and the corresponding new citation, go to www.davis-stirling.com and click on "See Davis-Stirling Conversion Chart".)
How HOA Liens Work
In most cases, once you fall behind in payments, the HOA can record a lien on your property. Almost all HOAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”).
Pre-Lien Notice Requirement in California
In California, a lien cannot be recorded until 30 days after the HOA has sent notice to the homeowner regarding the delinquent assessments. The notice must include (among other things):
- a general description of the collection and lien enforcement procedures
- an itemized statement of the charges owed, and
- various options to try to resolve the problem of the delinquent assessments (Cal. Civ. Code § 1367.1(a)).
The HOA must notify the homeowner in writing at both a primary and, if available, a secondary address (Cal. Civ. Code § 1367.1(k)).
Board Approval Required Before Lien Can Be Filed
Only the board of directors of the HOA has the authority to make the decision to record the lien for delinquent assessments. The board must approve the decision by a majority vote of the board members in an open meeting and must record the vote in the minutes of that meeting (Cal. Civ. Code § 1367.1(c)(2)).
Charges the HOA May Include in the Lien
In California, an assessment is considered delinquent 15 days after it is due, unless the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) provides for a longer time period (Cal. Civ. Code § 1366(e)).
If an assessment is delinquent, the association may recover all of the following:
- Assessments. The HOA can include amounts for unpaid assessments in the lien.
- Reasonable attorney's fees and costs. The association may include the costs expended in attempting to collect the past-due assessments in its lien.
- Late charge.The association may include a late charge so long as it does not exceed 10% of the delinquent assessment or $10, whichever is greater (unless the CC&Rs specify a late charge in a smaller amount, in which case any late charge imposed cannot exceed the amount specified in the CC&Rs).
- Interest. The HOA may impose interest on all of the above charges, including the delinquent assessments, reasonable attorney's fees, and reasonable fees and costs of collection at an annual interest rate not to exceed 12% (unless the CC&Rs specify a lesser amount, in which case the lesser rate of interest applies), beginning 30 days after the assessment becomes due (Cal. Civ. Code section 1366(e)).
HOA Lien Priority in California
An HOA lien is prior to all other liens recorded after the notice of assessment, except that the CC&Rs may provide that the HOA lien may be subordinated to any other liens and encumbrances (Cal. Civ. Code § 1367(b),(d)). (Learn more about lien priority and what happens to a first mortgage in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)
HOA Foreclosures in California
If you default on dues or assessments, the HOA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
In California, the HOA may foreclose its lien judicially or nonjudicially (Cal. Civ. Code § 1367.1). Most HOA foreclosures in California are nonjudicial. (Learn more about the difference between judicial and nonjudicial foreclosures and foreclosure laws and procedures in California.)
HOA Foreclosure Limitations
California law limits the HOA’s ability to foreclosure in certain circumstances.
Limitation Based on Amount and Length of Delinquency
The HOA cannot foreclose unless:
- the delinquent amount is $1,800 or more (not including any accelerated assessments, late charges, fees and costs of collection, attorney's fees, or interest), or
- the owner has been delinquent for more than 12 months (Cal. Civ. Code § 1367.4).
Right of Redemption Following Foreclosure
If the HOA forecloses on the homeowner using a nonjudicial foreclosure, the foreclosure is subject to a 90 day right of redemption after the sale (Cal. Civ. Code § 1367.4(c)(4)). When you redeem the property, you get it back by repaying all assessments, interest, attorneys fees, and possibly costs of repair. (Learn more in Nolo’s article The Right of Redemption Following an HOA Foreclosure.)
In California judicial foreclosures, the redemption period is:
- 90 days, if the proceeds of the sale are sufficient to satisfy the debt, or
- one year, if the proceeds from the sale are insufficient to satisfy the delinquency (Cal. Code Civ. Proc. §729.030(a) and (b)).
What to Do if You Are Facing Foreclosure by an HOA
If you are facing an HOA foreclosure, you should consult with an attorney licensed in California to discuss all legal options available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)