I will be posting a short article on the following topics based on popular demand. Readers of my Blog! have asked very specific questions around the following area's;
These articles and others will be coming soon!
Even before a resident owner in a HOA community goes into default or foreclosure they may be faced with the choice of whether to pay or not pay their HOA dues. I have heard from both HOA Boards and community members that they are often faced with whether to pay the HOA dues or take that specific sum of money and apply it to their now-adjusting mortgage payment.
Of course, the Board and the community feel the impact of these decisions in delinquent assessments, and on-going collection efforts, which many times are fruitless where the homeowner is so upside down they couldn't even contemplate paying the dues without first considering the impact on their current adjusting mortgage.
There is really no easy solution to this problem and each community is faced with a responsibility to collect the assessments to ensure a proper functioning community. However, if Boards take a hard line with the residents over unpaid assessments they may find that they eventually have another foreclosure in their community.
Note: The information contained is not legal advice and does not establish an attorney-client relationship. Contact us via email Ryan.McClure.Esq@gmail.com, website: http://www.rpmcclurelaw.com/, or call us at 951.818.0687
I have received many phone calls and emails over the last year and more importantly after the real estate bubble popped concerning renting in a condo community. As developers try to finish their final phases of the condo communities they are faced with a surplus of units that either will not move because of lack of buyers or buyers that cannot finance the condo due to the credit crunch. However, there is a large contingent of vulture investors or value investors that usually circle every market collapse who are happy to purchase condo's at discounted prices.
These so-called vulture investors or value investors purchase condo's not as their own personal residence but as an investment. They are more than happy to turn the condo into a rental unit and capitalize on the falling prices of these units.
The problem becomes one where the condo community in which they just purchased has rental restrictions in their community. Many communities have some type of rental restriction in their governing documents, which either limit the percentage of units that can be rented at any given time or list fees or requirements that the renter must comply with while living in the community.
The dilemma for the communities and the board's facing the proposition of enforcing the governing documents and restricting rentals is that the community may already face massive foreclosures in the condo community and there may be large percentages of units already sitting idle starting to create an eye sore in the community with their multiple listing signs, overgrown lawns, and overloaded mailboxes.
I talked to a board member the other day in San Diego county that was facing with and trying to deal with a 35% foreclosure rate in their community. They offered assessment payment plans for their community and have tried working with everyone that they could but unfortunately the loss continues.
To compound the problem the community had a very restrictive rental requirements in their governing documents. So restrictive that many investors that were willing to purchase the idle property only to rent it out balked at purchasing the property because they knew that they would have difficulty with the property management company and the board.
So many communities must make the decision to either allow more rentals within their community or learn to deal with the mounting foreclosures and empty units.
Note: The information contained is not legal advice and does not establish an attorney-client relationship. Contact us via email Ryan.McClure.Esq@gmail.com, website: http://www.rpmcclurelaw.com/, or call us at 951.818.0687
You would have to be living under a rock to not know that the U.S. is experiencing one of the worst real estate down cycles in history. The real estate market seems to affect everyone that I have come into contact with recently. It is either the HOA board looking for advice on how to handle foreclosures in their neighborhood or the community member calling for advice on how to avoid or slow down the foreclosure of their condominium.
There really isn’t a one size fits all answer to these types of problems. Every homeowner and every community is unique and each faces their own unique challenges. However, there has been one running theme that seems to be present in all of these desperate calls. Many times the homeowner has waited until the bank is actually posting the foreclosure notice to the door.
Many lenders, in fact most, now have programs for the down and out homeowner. My best advice is to contact your lender as soon as you feel that you will be unable to meet your monthly mortgage payment. I cannot make any guarantees, but I can only assume that lenders today DONT want any more foreclosures on their books.
Well, what can the HOA board do in these type of situations? They could add general tips and advice to their monthly community newsletter, or HOA website. Any proactive advice and support from the Board doesn’t stop a foreclosure but it could certainly help under certain circumstances.
Good Luck!
Note: The information contained is not legal advice and does not establish an attorney-client relationship. Contact us via email Ryan.McClure.Esq@gmail.com, website: http://www.rpmcclurelaw.com/, or call us at 951.818.0687
California has amended Civil Code Section 1363.05 to include a new agenda provision. The recently signed amendment to the Common Interest Development Open Meeting Act requires among other things that a Board cannot "discuss or take action on any item at a non-emergency meeting unless the item was placed on the agenda included in the notice that was posted and distributed pursuant to subdivision(f)." 1363.05(i)(1). Subdivision (f) covers the notice requirements for Board meetings.
It is clear that this new rule does not apply to emergency meetings. The statute provides the following as to what is generally required for an emergency meeting "[a]n emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice." Civil Code 1363.05(4)(i).
So, what does all this mean? It means that members of the Board should become familiar with the new agenda law and implement it ASAP. There are other exceptions to the agenda meeting notice law that should be addressed with either legal counsel or board members to ensure compliance with the new rule.
Note: The information contained is not legal advice and does not establish an attorney-client relationship. Contact us via email Ryan.McClure.Esq@gmail.com, website: http://www.rpmcclurelaw.com/, or call us at 951.818.0687
Question:" What are the consequences associated with the paying or receiving a community assessment late?"
First, an assessment is delinquent 15 days after it becomes due unless the governing documents of the community state otherwise. Civil Code § 1366(e). So boards and homeowners when confronted with this issue should first consult the communities governing documents. Second, once the assessment is deemed delinquent the the association can recover and the homeowner must pay 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.
Note: The information contained is not legal advice and does not establish an attorney-client relationship. Contact us via email Ryan.McClure.Esq@gmail.com, website: http://www.rpmcclurelaw.com/, or call us at 951.818.0687
Question: " I am a recently appointed director of our HOA board. I would like to review the associations past records. What are my inspection rights?"
Many newly elected board members may wish to inspect the past records of the HOA. There may be a variety of reasons why the board member wishes to inspect the records. Some of which may be to become acquainted with the history of the community, its fiscal management, review meeting minutes, or to determine whether the board is acted appropriately in the past.
Corporations Code § 8334 states the following as it relates to director inspection rights:
"Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director."
Corp Code § 8334 gives a director of the board much broader discretion inspection rights than a non-director member would receive. The director does not need to provide written notification of their inspection rights, nor does the board member need to provide a reason for the inspection of the associations records.
It is also clearly evident that the board member has a broad inspection right to the type of documents they wish to inspect. The board member has a right to inspect and copy "...all books, records, and documents of every kind..." This is a much broader inspection right than non-board members receive under Corporations Code § 8333, which states the following:
"The accounting books and records and minutes of proceedings of the members and the board and committees of the board shall be open to inspection upon the written demand on the corporation of any member at any reasonable time, for a purpose reasonably related to such person's interests as a member."
Note: The information contained is not legal advice and does not establish an attorney-client relationship. Contact us via email Ryan.McClure.Esq@gmail.com or call us at 951.818.0687.
