BILL NUMBER: AB 2846 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 1, 2008
AMENDED IN ASSEMBLY APRIL 22, 2008
INTRODUCED BY Assembly Member Feuer
FEBRUARY 22, 2008
An act to amend Section 1365.1 of, and to add Section 1367.6 to,
the Civil Code, relating to common interest developments.
LEGISLATIVE COUNSEL'S DIGEST
AB 2846, as amended, Feuer. Common interest developments:
assessments.
The Davis-Stirling Common Interest Development Act provides for
the creation and regulation of common interest developments and for
the levying of assessments by homeowners' associations. Under the
act, a homeowners' association or an owner of a separate interest in
a common interest development may not file a civil action in the
superior court relating to enforcement of the act or certain other
matters unless the parties have endeavored to submit their dispute to
alternative dispute resolution in accordance with specified
procedures. This requirement does not apply to a small claims action
or an assessment dispute. The act requires an association to
distribute a written notice regarding assessments and foreclosure to
each member of the association during the 60-day period immediately
preceding the beginning of the association's fiscal year, as
specified.
This bill would provide that, if a dispute exists between the
owner of a separate interest and the homeowners' association
regarding assessments imposed by the association, and the amount in
dispute does not exceed the jurisdictional limits of the small claims
court, the owner of the separate interest may either request
alternative dispute resolution in accordance with the procedures
described above or pay under protest the disputed amount
under protest , including certain fees,
costs, and other specified amounts, and commence an action in
small claims court. The bill would state the intent of the
Legislature that an owner may, but is not obligated to, pay under
protest any disputed charge or sum, and by so doing, specifically
reserve the right to contest the disputed charge or sum in court or
otherwise. The bill would make related changes to the
notice described above.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1365.1 of the Civil Code is amended to read:
1365.1. (a) The association shall distribute the written notice
described in subdivision (b) to each member of the association during
the 60-day period immediately preceding the beginning of the
association's fiscal year. The notice shall be printed in at least
12-point type. An association distributing the notice to an owner of
an interest that is described in Section 11212 of the Business and
Professions Code that is not otherwise exempt from this section
pursuant to subdivision (a) of Section 11211.7, may delete from the
notice described in subdivision (b) the portion regarding meetings
and payment plans.
(b) The notice required by this section shall read as follows:
"NOTICE ASSESSMENTS AND FORECLOSURE
This notice outlines some of the rights and responsibilities of
owners of property in common interest developments and the
associations that manage them. Please refer to the sections of the
Civil Code indicated for further information. A portion of the
information in this notice applies only to liens recorded on or after
January 1, 2003. You may wish to consult a lawyer if you dispute an
assessment.
ASSESSMENTS AND FORECLOSURE
Assessments become delinquent 15 days after they are due, unless
the governing documents provide for a longer time. The failure to pay
association assessments may result in the loss of an owner's
property through foreclosure. Foreclosure may occur either as a
result of a court action, known as judicial foreclosure or without
court action, often referred to as nonjudicial foreclosure. For liens
recorded on and after January 1, 2006, an association may not use
judicial or nonjudicial foreclosure to enforce that lien if the
amount of the delinquent assessments or dues, exclusive of any
accelerated assessments, late charges, fees, attorney's fees,
interest, and costs of collection, is less than one thousand eight
hundred dollars ($1,800). For delinquent assessments or dues in
excess of one thousand eight hundred dollars ($1,800) or more than 12
months delinquent, an association may use judicial or nonjudicial
foreclosure subject to the conditions set forth in Section 1367.4 of
the Civil Code. When using judicial or nonjudicial foreclosure, the
association records a lien on the owner's property. The owner's
property may be sold to satisfy the lien if the amounts secured by
the lien are not paid. (Sections 1366, 1367.1, and 1367.4 of the
Civil Code)
In a judicial or nonjudicial foreclosure, the association may
recover assessments, reasonable costs of collection, reasonable
attorney's fees, late charges, and interest. The association may not
use nonjudicial foreclosure to collect fines or penalties, except for
costs to repair common areas damaged by a member or a member's
guests, if the governing documents provide for this. (Sections 1366
and 1367.1 of the Civil Code)
The association must comply with the requirements of Section
1367.1 of the Civil Code when collecting delinquent assessments. If
the association fails to follow these requirements, it may not record
a lien on the owner's property until it has satisfied those
requirements. Any additional costs that result from satisfying the
requirements are the responsibility of the association. (Section
1367.1 of the Civil Code)
At least 30 days prior to recording a lien on an owner's separate
interest, the association must provide the owner of record with
certain documents by certified mail, including a description of its
collection and lien enforcement procedures and the method of
calculating the amount. It must also provide an itemized statement of
the charges owed by the owner. An owner has a right to review the
association's records to verify the debt. (Section 1367.1 of the
Civil Code)
If a lien is recorded against an owner's property in error, the
person who recorded the lien is required to record a lien release
within 21 days, and to provide an owner certain documents in this
regard. (Section 1367.1 of the Civil Code)
The collection practices of the association may be governed by
state and federal laws regarding fair debt collection. Penalties can
be imposed for debt collection practices that violate these laws.
PAYMENTS
When an owner makes a payment, he or she may request a receipt,
and the association is required to provide it. On the receipt, the
association must indicate the date of payment and the person who
received it. The association must inform owners of a mailing address
for overnight payments. (Section 1367.1 of the Civil Code)
An owner may, but is not obligated to, pay under protest any
disputed charge or sum, including, but not limited to, an assessment,
fine, penalty, late fee, or collection cost, and by so doing,
specifically reserve the right to contest the disputed charge or sum
in court or otherwise.
An owner may dispute an assessment debt by submitting a written
request for dispute resolution to the association as set forth in
Article 5 (commencing with Section 1368.810) of Chapter 4 of Title 6
of Division 2 of the Civil Code. In addition, an association may not
initiate a foreclosure without participating in alternative dispute
resolution with a neutral third party as set forth in Article 2
(commencing with Section 1369.510) of Chapter 7 of Title 6 of
Division 2 of the Civil Code, if so requested by the owner. Binding
arbitration shall not be available if the association intends to
initiate a judicial foreclosure.
An owner is not liable for charges, interest, and costs of
collection, if it is established that the assessment was paid
properly on time. (Section 1367.1 of the Civil Code)
MEETINGS AND PAYMENT PLANS
An owner of a separate interest that is not a timeshare may
request the association to consider a payment plan to satisfy a
delinquent assessment. The association must inform owners of the
standards for payment plans, if any exist. (Section 1367.1 of the
Civil Code)
The board of directors must meet with an owner who makes a proper
written request for a meeting to discuss a payment plan when the
owner has received a notice of a delinquent assessment. These payment
plans must conform with the payment plan standards of the
association, if they exist. (Section 1367.1 of the Civil Code)"
(c) A member of an association may provide written notice by
facsimile transmission or United States mail to the association of a
secondary address. If a secondary address is provided, the
association shall send any and all correspondence and legal notices
required pursuant to this article to both the primary and the
secondary address.
SEC. 2. Section 1367.6 is added to the Civil Code, to read:
1367.6. (a) If a dispute exists between the owner of a separate
interest and the association regarding assessments imposed by the
association, and the amount in dispute does not exceed the
jurisdictional limits stated in Sections 116.220 and 116.221 of the
Code of Civil Procedure, the owner of the separate interest may, in
addition to pursuing dispute resolution pursuant to Article 5
(commencing with Section 1363.810) of Chapter 4, do either of the
following:
(1) Request alternative dispute resolution pursuant to Article 2
(commencing with Section 1369.510) of Chapter 7.
(2) Pay under protest the disputed amount of the assessments
, including any fees and reasonable costs of collection,
reasonable attorney's fees, late charges, and interest, if any,
pursuant to subdivision (e) of Section 1366, and commence an
action in small claims court pursuant to Chapter 5.5 (commencing with
Section 116.110) of Title 1 of the Code of Civil Procedure.
(b) It is the intent of the Legislature that an owner may, but is
not obligated to, pay under protest any disputed charge or sum,
including, but not limited to, an assessment, fine, penalty, late
fee, or collection cost, and by so doing, specifically reserve the
right to contest the disputed charge or sum in court or otherwise.
(c)
(b) Nothing in this section shall impede an association'
s ability to collect delinquent assessments as provided in
Section 1367.1 Sections 1367.1 and 1367.4 .