HOA and condo association foreclosure in California

HOA and condo collection rules in California, step by step

• Which law covers your community

  First step

  The Davis-Stirling Act covers residential common interest developments with common area, such as condos, planned developments and stock cooperatives. It does not cover commercial or industrial developments. Its collection article applies to liens created on or after January 1, 2003.

  Cal. Civ. Code §§ 4201, 4202, 5740

• Late fees, interest and how payments apply

  Assessments are late 15 days after due

  The late charge can be no more than 10 percent of the late assessment or $10, whichever is greater, and interest is capped at 12 percent a year starting 30 days after the due date, or less if your declaration says so. Your payments go to assessments first, and only then to fees, attorney's fees, late charges and interest. You can ask for a receipt.

  Cal. Civ. Code §§ 5650(b), 5655

• 30-day certified notice before a lien

  At least 30 days before the lien is recorded

  Before recording a lien, the association must mail you by certified mail an itemized statement of what you owe, its collection procedures, and notice of your rights to inspect records, meet with the board, and use its meet and confer program. The notice must warn in bold or capitals that your home may be sold without court action. The board itself must vote to record the lien in an open meeting.

  Cal. Civ. Code §§ 5660, 5670, 5673

• Your right to a payment plan meeting

  Ask in writing within 15 days of the notice

  You can send a written request to meet with the board about a payment plan. If you mail it within 15 days of the notice's postmark, the board must meet with you in executive session within 45 days. While you keep up with an agreed plan, no new late fees can be added, though the association can still record a lien.

  Cal. Civ. Code § 5665

• Limits on foreclosure

  $1,800 or more than 12 months late

  The association cannot foreclose, in or out of court, if the unpaid assessments are under $1,800, not counting fees, interest and late charges, unless they are more than 12 months late. Fines for breaking the rules cannot be turned into a lien that is foreclosed by sale. Before foreclosing, the association must offer you dispute resolution, and the board must vote in executive session at least 30 days before any sale and personally serve you if you live there.

  Cal. Civ. Code §§ 5705, 5720, 5725

• How the association forecloses

  At least 30 days after the lien is recorded

  After the lien has been recorded for 30 days, the association can foreclose through court or through a trustee's sale that follows the same notice rules as a mortgage trustee's sale. It must personally serve you the notice of default, and trustee fees are capped. The association's lien comes ahead only of liens recorded after its notice of delinquent assessment, so your existing mortgage stays ahead of it.

  Cal. Civ. Code §§ 5680, 5700, 5710

• 90 days to redeem after an HOA trustee's sale

  Ends 90 days after the sale

  After an out of court HOA foreclosure sale, you have 90 days to redeem the home, and the notice of sale must say the property is sold subject to that right. Talk to a lawyer right away, because the amount and steps matter.

  Cal. Civ. Code § 5715

Common questions in California