Reader Questions - Foreclosed Home, Member Questioning Board

Dear Mr. Richardson,

How do we collect past dues on a condo which was foreclosed? I am Secretary on the board. A homeowner walked away from the property, unable to make the payments.

We were under the impression that the lending bank was liable for the monthly dues, but they were never received. Now it seems, Freddie Mac has taken over the mortgage and we were told by our escrow officer that, even though we put a lien on the property for the past dues, we will not collect because when Freddie Mac took over, all liens were wiped out. This doesn’t seem right, somehow. I always thought liens had to be paid before closing escrow on a property.

I do not have the authority to pursue the delinquencies on my own, and our President feels that we have done all we can by putting a lien on the property. I enjoy your column, cutting it out each week for my files.

Thank you very much,

A.P., Newhall

Dear A.P.,

The owner of the property is responsible for the assessments during the owner’s ownership of the property. A foreclosing lender is not required to pay pre-foreclosure assessments. The association can place a lien upon the property of a delinquent member.

The association has two methods of collecting the debt. It can pursue non-judicial foreclosure, taking the property the same way a mortgage lender would, or it can sue for the enforcement of the debt. Non-judicial foreclosure can be unsatisfactory if a senior mortgagee is also foreclosing, because the completed foreclosure by a senior lienholder (the bank) wipes out the HOA lien. Some HOAs complete a non-judicial foreclosure only to find out that the HOA is shortly after wiped out by the bank’s foreclosure, leaving the HOA with nothing to show for the effort.

So long as the HOA did not complete a non-judicial foreclosure, it can still sue the prior owner for the assessments.

The lender, while an owner of the residence, must pay the ongoing monthly assessments. If the lender does not pay, the HOA can place a fresh lien on the residence- the lender is responsible for this one.

Thanks, and good luck to your HOA,
Kelly

Member Questioning Board

Dear Kelly,

At our HOA board meetings when the board is discussing an issue, we sitting in the audience are not allowed to ask questions. We are told by the president we can’t ask questions, because only the board can be in the discussion. If that is the case, why have an open board meeting?

Thank you,

T.B., Oceanside

Dear T.B.,

The Open Meeting Act gives members the right to observe all open meetings of the board, but observing is not the same as participating. The Act requires that every open meeting (board or meeting of all members) have an open forum session. This is the time to contribute your concerns or other important information.

If any homeowner present could question the board throughout the meeting, the meeting is no longer a board meeting, but then becomes a less productive “town hall” meeting. You are holding the board accountable to the association to make good decisions, so let them deliberate… or become a director!

Boards: Consider occasionally reopening open forum on major agenda items.

Thanks,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.