Any payments made by an owner must first be applied to the assessments owed, and, only after the assessments owed are paid in full may payments be applied to the fees and costs of collection, attorney's fees, late charges, or interest. Civil Code §1367.1(b).


QUESTION: If I miss payment number one I get a late charge. If payment number two is assessed and I make a single payment, my association applies it toward my first assessment. That leaves the second assessment in arrears and another late charge is levied. So until I get 100% caught up I get a late charge every month.

RESPONSE: The practice appears to be lawful. The Davis-Stirling Act addresses the priority of payments by delinquent owners as follows:

(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 Section 1366, shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied. . . .

(b) Any payments made by the owner of a separate interest toward the debt set forth, as required in subdivision (a), 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. . . . (Civil Code §1367.1)

The statute does not prohibit associations from adopting collection policies that apply payments to the oldest outstanding assessments.