Didn’t pay your HOA assessments? Get ready for steep penalties and interest costs
Los Angles Times
18 March 2017
Our homeowner association is trying to foreclose on our home
for unpaid dues and assessments. The mortgage payments have been paid
on time, but the board is still threatening foreclosure. Worse, after
the board hired a lawyer, our total owed dramatically increased.
We agree the unpaid dues are $3,240, but the board’s additional fees
bring our total to $11,300 for a 36-month repayment plan, which is
about 350% of the original unpaid dues. That includes $8,660 of past
assessments, late fees and interest; attorneys fees of $1,588; and
other assorted fees. In addition, we would have to pay $90 in ongoing
We have proposed a plan that includes an initial payment of $1,000, and
34 monthly installments of $120 for a total of $5,080 — in addition to
our ongoing monthly assessments. That would save us more than $6,000
compared with the board’s plan.
Is there any cap on fees? Is the board’s 36-month payment plan fair? What can we do about this?
It is important for titleholders to understand that their
mortgage payments are separate from their association dues, assessments
and fines. A mortgage has to do with your real property, while
assessments involve your standing within the association. Whether an
owner is up to date on mortgage payments, there is an obligation to pay
association assessments as long as a titleholder is the legal owner of
What’s more, the requirement to pay association assessments is not
relieved by a failure of the board to properly conduct its affairs. For
example, the California courts have ruled that even when an association
doesn’t make necessary repairs the titleholder still has an obligation
to pay maintenance-fee assessments. (Duffey v. Superior Court, 3 Cal.
App. 4th 425 (1992).)
The California courts have also ruled that an owner's remedy against
the association does not include a set off or withholding of assessment
payments; it consists of taking legal action against the association.
(Park Place Estates Homeowners Assn. v. Naber, 29 Cal. App. 4th 427
Unless your association’s governing documents provide for more time,
regular and special assessments are delinquent 15 days after their due
date. Once assessments are delinquent, the association under Civil Code
section 5650 is entitled to its reasonable costs of collection. That
includes attorneys fees, late charges of $10 or 10% of the assessment,
and interest not to exceed 12% on all charges except late fees, which
cannot be assessed any interest.
Although the total amount you owe has increased substantially since the
association began its collection efforts, it appears that most of the
increase is from interest and costs of collection that are reasonably
related to what you owe.
the board is not
required to offer you a settlement or a payment plan
Although it is in your best interest to make a lump sum payment to cut
off the accrual of interest, if you are unable to do so, any payment
plan is better than losing your home. In fact, the board is not
required to offer you a settlement or a payment plan.
If the board is unwilling to reduce the total amount you owe, ask that
the interest and collection costs be suspended while you’re making
payments. If you have accepted payment plan terms, keep in mind as you
approach the end of the payment plan, try to renegotiate the accrued
interest and collection costs.
think carefully about the associated mandatory
The situation you find yourself in serves as a reminder to all
prospective buyers who are considering living in a development with a
homeowner association to think carefully about the associated mandatory
costs. They include assessment dues, special and emergency assessments,
and possible fines and penalties.
At first, monthly dues may seem affordable, even predictable, but they
are subject to change at any time. Even reviewing the association’s
financial records and physically inspecting the entire property before
purchase is no guarantee that additional assessments won’t be levied in
the near future.
Zachary Levine, a partner at Wolk
& Levine, a business and intellectual property law firm, co-wrote
this column. Vanitzian is an arbitrator and mediator.