How Do We Handle Delinquent Members and Delinquent Directors?

By Kelly G. Richardson, Esq. CCAL

Dear Mr. Richardson: What can be done to a person who refuses to pay their dues? A.M., Torrance.

Dear A.M.: While an unpleasant task, collecting past due assessments from members is a very important board responsibility. If the association does not require all members to timely pay their fair share, the good neighbors paying each month are going to have to pay more to make up for the neighbors who do not. Without collecting all due assessments, the association cannot pay its bills, which harms all HOA members.

Because of the importance of regular and timely assessment payment, the law gives HOAs some very powerful tools to help communities ensure they can meet the common expenses of homeowners.

 First, Civil Code Section 5650(1) provides that if the association pursues assessment delinquencies it can also recover attorney fees, interest, and late charges.

Second, Civil Code Section 5675(a) authorizes the HOA to record a lien (essentially an involuntary mortgage) on the property to secure the HOA’s assessment claim. The lien will make it harder to sell or refinance the property without first paying off the assessment claim.

Third, if the lien is still unpaid 30 or more days after it is recorded, the HOA can under Civil Code Section 5700 begin foreclosure proceedings to involuntarily take the property away from the owner. 

There are two types of foreclosure. One is nonjudicial foreclosure, in which the HOA (usually through a collection vendor) provides a series of notices and after prescribed waiting periods can have the property sold at a foreclosure sale. The other type of foreclosure is judicial foreclosure, in which the HOA files a lawsuit against the homeowner asking for a judge to award money to the HOA and/or to have the property sold to pay the debt. Homeowners should not ignore foreclosure notices and should act quickly to protect their home. Completing a foreclosure is a very serious action, and HOAs should consult legal counsel before sending a property to foreclosure sale.

The obligation to keep members current on assessments collection is a serious matter and should be taken seriously by both the HOA board and HOA homeowners. 

Sincerely, Kelly.

Mr Richardson: I'm a new elected board member. As I'm looking over homeowner's delinquency information, I'm concerned that several incumbent board members are delinquent. Is there any Civil Code that a board member should be current in their HOA dues? Hopefully this might make it in one of your articles - I'm in shock. Very concerned, D.S., Irvine.

Dear D.S.:

The only automatic eligibility requirement to serve on HOA boards in California is that one must be an owner in the HOA. Civil Code Sections 5103(d)(2) and 5105(c) provide five optional eligibility standards that associations may adopt, and one such standard is that candidates or directors not current in their payment of regular or special assessments may be disqualified from candidacy or serving on the board. “Delinquent” is defined by Civil Code Section 5650(b) as not paid 15 days after an assessment becomes due. Civil Code Section 5103(d)(3) states that board eligibility requirements must also be applied to the seated directors, which means that if the election rules bar delinquent candidates then directors must also not be delinquent.

Best regards, Kelly