Associations are allowed to simultaneously file a lien on a property for delinquent assessments and sue for a money judgment, but must ultimately select a remedy. Once an association obtains a money judgment against a delinquent owner, any existing assessment lien on the property is automatically extinguished and must be replaced with a judgment lien if the association wants to preserve its rights. Diamond Heights v. Financial Freedom.

$5,000 Limitation for HOAs. The Civil Code statute is poorly written. It provides that "An association that seeks to collect delinquent . . . assessments of an amount less than . . . $1,800 . . . may not collect that debt through judicial or nonjudicial foreclosure, but may . . . collect . . . that debt . . . in small claims court . . ." Civ. Code §1367.4(b). In other words, the $1,800 limitation applies to foreclosures NOT small claims actions. The statute clarifies the point by stating that "The amount that may be recovered . . . for delinquent assessments may not exceed the jurisdictional limits of the small claims court." Civ. Code §1367.4(b)(1). Although owners can sue associations for claims up to $10,000 (Code Civ. Proc. §116.221), associations are limited to $5,000. Code Civ. Proc. §116.220.

Appeal. A delinquent owner may appeal an adverse judgment but the association (as plaintiff) cannot. Code Civ. Proc. §116.710. If the court rules against the association, its claim is wiped out. It cannot appeal and it cannot switch to a different means of collection per the single action rule. On the other hand, if the association obtains a judgment against the delinquent owner, he/she can appeal the decision into superior court. In superior court, both parties are allowed to be represented by an attorney. Even if the association prevails a second time, it cannot collect all of its attorneys' fees. Fees are limited to $150. Code Civ. Proc. §116.780(c).

Evidence. The association needs to present the following evidence:

• a copy of the association's collection policy and CC&Rs,

• a copy of the delinquent owner's deed,

• the owner's payment history,

• copies of billing statements mailed to the owner, and

• any demand letters mailed to the delinquent owner.

Three copies of your evidence should be taken to court--one set for the defendant, one for the judge and one for yourself.

Collecting the Judgment. If the association receives a personal money judgment, the board can levy against the owner's bank account, sell personal property (vehicles, boats), garnish the owner's wages, levy any rental income he/she may have, and record a judgment lien against his/her real property.