An Ax Over Homeowners

For sale: charming house near the Sonoma County coast. Market value: $300,000. Asking price: $2,403. That’s not a typo. It’s the steal-of-a-deal that a real estate partnership snagged at a foreclosure auction. The owner had fallen $567 behind in homeowner association dues, used to maintain the development’s swimming pools and other amenities. He got his title back, but only after a yearlong court fight.

Many Californians lose their homes after missing a single payment of the dues used to keep up common areas. This legal rip-off allows homeowners associations to add collection fees and lawyers’ costs to the missed payment, quickly ballooning the amount owed.

Condos, townhouses, mobile homes and houses in subdivisions that share grounds or amenities too quickly go to auction. Bidding starts low, at an amount equal to the delinquent dues, other fees and foreclosure costs. At some sales, the winner is a single bidder who obviously knows something that desperate house-hunters do not.

California law should protect property owners by giving them 30 days to catch up before homeowners associations impose debt-collection and attorney fees and threaten to impose liens. The owners also should get a fair chance to discuss payment plans with association boards before liens are recorded and their homes are sold.

The Legislature can help by approving a bill, AB 2289, that would require adequate notice and a reasonable period before a homeowners association pounced. The measure, by Assemblywoman Christine Kehoe (D-San Diego), on behalf of the California Congress of Seniors, has already passed the Assembly.

This bill does not excuse missed payments or forgive back dues. It would stop boards and their predatory hired guns from rapidly taking advantage of owners who were slightly behind on their association dues.

In May, a student missed a $31 payment for the upkeep of a little green space in her townhouse complex near Sacramento. On May 16, she was delinquent. She included the amount and a $10 late fee with her June payment. Because part of that payment was delinquent, the homeowners association returned her uncashed check and sicced its lawyer on her. By June 24, she faced a bill nearly 10 times the original amount. She didn’t pay that $307. She did send in her July payment on time. Back went that $31 check. The lawyer’s meter kept running until she paid $598.72 early last month to satisfy the original dues and avoid a lien and foreclosure. She kept her home.

A missed payment shouldn’t double, triple or quadruple in a couple of weeks. Thirty days would be fair to property owners as long as they received proper and timely notification. AB 2289 would require those consumer protections. The state Senate is scheduled to vote this week. The bill should become law.