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DUTY TO PAY ASSESSMENTS

Personal Debt of Owner. "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..., shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied." (Civ. Code § 5650(a).)

It should be noted that Civil Code section [5650], which gives the homeowners association the right to collect assessments made in conformity with their CC&Rs specifically makes this obligation a "debt of the owner" at the time the assessment is made. Therefore, such obligation is personal in nature, even though it may also become a lien against the property under circumstances as provided in that code section. (Cerro de Alcala HOA v. Burns.)
A condominium assessment becomes a debt of the owner when the assessment is levied by the condominium association. The debt is only a personal obligation of the owner, however, until the community association records a notice of delinquent assessment against the owner's interest in the development. Recording this notice creates a lien and gives the association a security interest in the lot or unit against which the assessment was imposed. The lien dates from the time the lien is properly recorded. California follows the "first in time, first in right" system of lien priorities. Condominium assessment liens follow this same system. An assessment lien is prior to all other liens recorded subsequent to the notice of assessment, except that the [CC&Rs] may provide for the subordination thereof to any other liens and encumbrances. (Diamond Heights v. Financial Freedom, internal cites and quotes deleted)

No Offsets. Members cannot deduct a portion of their dues because they do not use recreational facilities or because they have a grievance against their association.

A system that would tolerate a [condominium] owner's refusal to pay an assessment because the unit owner asserts a grievance . . . would threaten the financial integrity of the entire condominium operation. (Park Place v. Naber.)

These statutory provisions reflect the Legislature's recognition of the importance of assessments to the proper functioning of condominiums in this state. Because homeowners associations would cease to exist without regular payment of assessment fees, the Legislature has created procedures for associations to quickly and efficiently seek relief against a nonpaying owner. Permitting an owner to broadly assert the homeowners association's conduct as a defense or "setoff" to such enforcement action would seriously undermine these rules. (Park Place v. Naber.)

Abandonment of Property. Vacating or abandoning a property in an association (merely vacating possession) does not release a homeowner of liability for paying his maintenance assessments. (Cerro de Alcala HOA v. Burns.)

No Escrow Accounts. Owners cannot put their assessments in an escrow account and claim they are "paying" their assessments. Homeowners can dispute charges but they must continue to pay their assessments while they dispute them.

Notice of Right to Dispute. Owners have the right to dispute assessments which may have been incorrectly levied or where payments may not have been credited, etc. Associations must annually, before the beginning of each fiscal year, give owners notice of this disputed charge procedure. (Civ. Code § 5730(a).)

Pay Under Protest. Owners do NOT have the right to withhold assessments. Owners may dispute any assessment, fine, penalty, late fee, collection cost, or monetary penalty, by paying the disputed amount under protest and (i) submitting a written request for dispute resolution to the association in accordance with internal dispute resolution (IDR) procedures or (ii) filing an action in small claims court up to their jurisdictional limits. (Civ. Code § 5658.)

ADR. If the parties elect alternative dispute resolution (ADR) rather than internal dispute resolution (IDR), the parties must complete ADR within 90 days after the party initiating the request receives the acceptance, unless this period is extended by a written stipulation signed by both parties. (Civ. Code § 5940.)

Interest & Collection Costs. An owner is not liable for charges, interest, and costs of collection if the assessment was paid on time. (Civ. Code § 5730(a).)

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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