Assembly votes to ban non-judicial foreclosures in associations
Article Courtesy of the Associated Press

 
By JIM WASSERMAN
Published May 28, 2004

SACRAMENTO - California's 36,000 homeowner associations would lose one of their toughest remedies to deal with overdue assessment payments if an Assembly bill to ban non-judicial foreclosures becomes law.

The Assembly voted 64-6 Thursday to end what is called non-judicial foreclosure, a practice that has cost some residents their homes for late payment of fees as small as $120. The bill by Assemblyman Darrell Steinberg, D-Sacramento, requires that judges oversee home foreclosures in the private world of homeowner associations, much as they do in traditional housing.

Now the bill goes to the Senate, which voted without opposition last week to ban both non-judicial and judicial foreclosures for amounts under $2,500.

Both votes signal an aggressive legislative challenge to a practice that has long ruled in private associations that now govern one fourth of the state's homes and 60 percent of its new housing. But while the Senate and Assembly are expected to agree on one bill before the Aug. 31 end of this legislative session, previous attempts to ban home foreclosures as a way to collect overdue assessments have been defeated by the supporters of association boards, property managers and attorneys.

Those groups maintain that placing a lien on the property - a legal right to collect when it's sold - is not an adequate threat to make some homeowners pay assessments, which cover costs of shared common areas including lawns, swimming pools and streets. They also argue that small claims court is a more expensive, time-consuming option that could still cause homeowners to lose their homes.

Supporters of reforming the rules said non-judicial foreclosure has been abused.

"There is an old maxim in criminal law that the punishment should fit the crime," Steinberg said. "This bill says if a homeowner falls behind in paying assessments that the remedy of eviction, of losing your home, is the last and final resort."

His bill, as well as that in the Senate, came after a Calaveras County couple, Tom and Anita Radcliff, lost their home last year after failing to pay a $120 assessment fee. The Radcliffs are still living in the home pending the outcome of a lawsuit against their homeowners association.

"There are other inexpensive remedies," Steinberg said. "If I owe the homeowners association money you can garnish my salary, put a lien on my property, go to small claims court."

The Assembly also approved without opposition a bill to give prospective buyers in homeowners associations a clearer picture of their likely assessments.

Written by Assemblyman John Laird, D-Santa Cruz, and backed by the California Association of Realtors, the bill responds to complaints from numerous buyers about unexpected assessment hikes from their homeowner associations. Realtors want buyers to have a better idea of an association's true financial condition, including planned fee increases to pay for deteriorating roofs, buildings and other parts of the common area. Experts said up to one-third of the state and nation's private communities have delayed necessary assessments for fear of political backlash and now face repairs they can't pay for.

Laird's bill requires a summary statement for prospective buyers listing the current average assessment per unit, hikes already scheduled and the amount of assessments needed to keep reserves adequate for the next 30 years. The bill goes now to the Senate for consideration and must pass by Aug. 31 and be signed by Gov. Arnold Schwarzenegger by Sept. 30 to become law.


 Read Steinberg's AB2598 and Laird's AB2718 at http://www.leginfo.ca.gov

HOA ARTICLES
OUT-OF-STATE
HOME HOA
FORECLOSURES