ACCOUNTS RECEIVABLE

§ 5600 (a)(b) Excessive Fees Not Permissible

(a) Except as provided in Section 5605, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this act.   (b) An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied5650.  (a) A regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorney's fees, if any, and interest, if any, as determined in accordance with subdivision (b), shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied.   (b) Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent, the association may recover all of the following:   (1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney's fees.   (2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.   (3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney's fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.   (c) Associations are hereby exempted from interest-rate limitations imposed by Article XV of the California Constitution, subject to the limitations of this section. 5655.  (a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney's fees, late charges, or interest.   (b) When an owner makes a payment, the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it.   (c) The association shall provide a mailing address for overnight payment of assessments. The address shall be provided in the annual policy statement. 5658.  (a) If a dispute exists between the owner of a separate interest and the association regarding any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and the amount in dispute does not exceed the jurisdictional limits of the small claims court 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 3 (commencing with Section 5925) of Chapter 10, pay under protest the disputed amount and all other amounts levied, including any fees and reasonable costs of collection, reasonable attorney's fees, late charges, and interest, if any, pursuant to subdivision (b) of Section 5650, 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) Nothing in this section shall impede an association's ability to collect delinquent assessments as provided in this article or Article 3 (commencing with Section 5700). 5660.  At least 30 days prior to recording a lien upon the separate interest of the owner of record to collect a debt that is past due under Section 5650, the association shall notify the owner of record in writing by certified mail of the following:   (a) A general description of the collection and lien enforcement procedures of the association and the method of calculation of the amount, a statement that the owner of the separate interest has the right to inspect the association records pursuant to Section 5205, and the following statement in 14-point boldface type, if printed, or in capital letters, if typed:   "IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION."   (b) An itemized statement of the charges owed by the owner, including items on the statement which indicate the amount of any delinquent assessments, the fees and reasonable costs of collection, reasonable attorney's fees, any late charges, and interest, if any.   (c) A statement that the owner shall not be liable to pay the charges, interest, and costs of collection, if it is determined the assessment was paid on time to the association.   (d) The right to request a meeting with the board as provided in Section 5665.   (e) The right to dispute the assessment debt by submitting a written request for dispute resolution to the association pursuant to the association's "meet and confer" program required in Article 2 (commencing with Section 5900) of Chapter 10.   (f) The right to request alternative dispute resolution with a neutral third party pursuant to Article 3 (commencing with Section 5925) of Chapter 10 before the association may initiate foreclosure against the owner's separate interest, except that binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.

COLLECTION PROCEEDINGS

A function of the Board of Directors is to collect the dues, assessments and other receivables of the association. The Board has a fiduciary responsibility to protect the assets of the association and the interests of the homeowners. The Board does not have the option nor the right to forgive the dues or other assessments owed the association by a homeowner.

1. Late Fees and Interest Charges

California Civil Code section 5650, Association’s CC&Rs and/or Bylaws allow the association to levy late fees when a homeowner fails to pay association dues or assessments on time. The amount of the late fee may vary depending on the respective association’s CC&Rs and/or Bylaws. A ten ($10.00) dollar late fee is common practice. The law also allows the association to levy a finance charge on the unpaid association dues. This is not commonly done though it is permitted. The interest charged may be determined by the Board of Directors but should be reasonable and not in violation of state law.

2. Liens

To assure that the interests of the association are protected, associations may file a lien against the unit of the owner in arrears. This lien, commonly known as a Default Lien, may be filed by the association without court action. This lien is only temporary and may be removed from the unit automatically in one year. A stronger and more permanent lien is a Judgement Lien. The court fills this lien when the association receives a judgement from the court. The association must file the proper forms with the court and pay the required fee. This fee will vary with each court but is generally a very small amount. This lien is good for ten (10) years.

3. Forbearance Agreement

In the process of collecting association dues or assessments from a cooperating homeowner, the board may decide to enter into a payment agreement with the homeowner rather than filing court or other action. This document, often referred to as a forbearance agreement, sets forth the conditions and provisions of the agreement.

CONDO SWEET CONDO

SAMPLE ONLY

HOMEOWNERS ASSOCIATION

FORBEARANCE AGREEMENT

We: ___________________________________, owners of record of unit # _______________ Ave. ______, California, do hereby acknowledge that we owe the “_______________ HOMEOWNERS ASSOCIATION” the amount of $________.00, for association dues, late fees, interest charges and foreclosure fees which are as of this date outstanding. We do herewith deposit with the Association a cashiers check in the amount of $_______.00 dollars towards this amount which shall result in a net balance of $_____.__.

I, (we) do hereby agree to pay off the balance, as indicated above, by making ______ (xx) equal monthly payments in the amount of $___.__. Said payments shall be paid in addition to the current monthly association dues, and shall be paid on or before the fifteenth (15) day of each month respectively until the account has been paid in full. The current monthly dues, as assessed by the Board of directors, for the homeowners association shall be paid monthly when due.

I (We) do hereby also agree to pay all current Association dues, late fees and interest, (and other costs which may subsequently accrue), on or before the fifteenth (15) day of each month, and to keep this account current in the future.

In the event legal action should be brought to compel payment, said owners do herewith agree to pay all legal fees, attorney’s fees and other costs incurred by the “_________________ Homeowners Association” in the collection or enforcement of this agreement.

I (We) do also herewith agree to fully exonerate, indemnify and save harmless “_________________ Homeowners Association” from and against all claims or actions and all expenses incidental to the defense of any such claims and actions based upon or arising out of or sustained in connection with the faithful performance of this agreement or by conditions created thereby and if requested by the association, to assume the defense of any such claims or actions.

WE DO ALSO ACKNOWLEDGE, THAT IN THE EVENT WE FAIL TO MEET ALL OF THE PROVISIONS AND CONDITIONS AS CONTAINED IN THIS AGREEMENT, AND AS PROVIDED IN THE CC&Rs AND BY-LAWS OF THE ASSOCIATION, THAT THE HOMEOWNERS ASSOCIATION WILL PROCEED WITH FURTHER LEGAL ACTION OR OTHER ACTION AS DEEMED APPROPRIATE BY THE BOARD OF DIRECTORS TO PROTECT THE INTERESTS OF SAID ASSOCIATION WHICH ACTION MAY INCLUDE SMALL CLAIMS COURT, JUDICIAL OR NON-JUDICIAL FORECLOSURE AND ETC.

Acknowledged this ___ day of ________, 200X.

_________________________________________________

Homeowner BOARD DIRECTORS

___________________________ __________________________________

Date:

4. Small Claims

Small Claims is becoming a more popular method of collecting outstanding dues and assessments from homeowners. The process is very inexpensive, does not require an attorney and with good account records and proper assessment procedures, judgement in favor of the association is almost guaranteed. When judgement is received, the association may proceed to collect the unpaid amounts by garnishment of wages, may file a judgement lien and proceed with other actions as provide by law.

5. Foreclosure: Judicial and Nonjudicial