California HOA Foreclosures

If you live in a common interest development in California and default on the dues and assessments, the association might foreclose.

People who live in a house, condo, or townhome that's part of a common interest development in California are usually responsible for paying dues and assessments to a community association, like a homeowners' association (HOA). If you don't make the payments, in most cases, the HOA can get a lien on your property that could lead to a foreclosure.

How HOA Liens Work

Almost all HOAs have the power to place and record a lien on a property if the homeowner becomes delinquent in paying the monthly dues and any special assessments (generally referred to as "assessments" in this article).

In California, a lien can't be recorded until 30 days after the HOA has sent you (the homeowner) notice about the delinquent assessments. The notice must include, among other things:

  • a general description of the collection and lien enforcement procedures, including a foreclosure warning
  • an itemized statement of the charges owed, and
  • various options to try to resolve the problem of the delinquent assessments. (Cal. Civ. Code § 5660).

Before recording its lien for delinquent assessments, the association has to offer you and, if so requested, participate in dispute resolution pursuant to association's "meet and confer" program. (Cal. Civ. Code §§ 5900 to 5920, § 5660(e)). Under California law, you may also submit a request to meet with the board to discuss a payment plan. (Cal. Civ. Code § 5665).

Assuming you don't work out a way to get caught up on the amounts due, the HOA can then record a lien on your property in the county records. (Cal. Civ. Code § 5675). A notice must be mailed to all record owners no later than ten calendar days after recording. (Cal. Civ. Code § 5675(e)).

Board Approval Required Before Lien Can Be Filed

Only the board of directors of the HOA has the authority to decide 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 § 5673).

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 amount of time. (Cal. Civ. Code § 5650).

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 attorneys' 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 doesn't 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 can't 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 attorneys' 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 § 5650, § 5675(a)).

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 can be subordinated to any other liens and encumbrances. (Cal. Civ. Code § 5680). (Learn about lien priority and what generally happens to a first mortgage in an association foreclosure in 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 might foreclose. A common misconception is that the association can't foreclose if you're still paying your mortgage, but the association's right to foreclose has nothing to do with whether you're current on your home loan payments.

In California, thirty days after the lien was recorded, the HOA may foreclose its lien judicially or nonjudicially. (Cal. Civ. Code § 5700, § 5705, § 5710). Most HOA foreclosures in California are nonjudicial.

HOA Foreclosure Limitations

California law limits the HOA's ability to foreclose in some circumstances. The HOA can't foreclose unless:

  • the delinquent amount is $1,800 or more, not including any accelerated assessments, late charges, fees and costs of collection, attorneys' fees, or interest, or
  • the assessments secured by the lien are more than 12 months delinquent. (Cal. Civ. Code § 5720).

If the HOA can't foreclose, it might instead sue you in court to get a money judgment. (Cal. Civ. Code § 5705).

Also, before initiating a foreclosure, an association must also offer the "meet and confer" program or another alternative dispute resolution with a neutral third party. (Cal. Civ. Code §§ 5925 to 5965, § 5660(f)).

Right of Redemption Following Foreclosure

If the HOA forecloses using a nonjudicial process, the foreclosure is subject to a 90-day right of redemption after the sale. (Cal. Civ. Code § 5715). To redeem (and keep ownership of) the property, you must pay all assessments, interest, attorneys' fees, and possibly costs of repair. (See Barry v. OC Residential Properties, LLC, 194 Cal.App.4th 861 (2011)).

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)).

Talk to a Lawyer

If you're facing a foreclosure by your HOA and you need help dealing with the association or want to learn about all legal options available in your particular circumstances, consider consulting with an attorney licensed in California.

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