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AB 2289- ASSESSMENT COLLECTION PROCEDURE FOR HOMEOWNERS ASSOCIATIONS AB2289 was enacted on September 29, 2002 , which in essence modifies specific sections contained in the Davis-Stirling Act. The following discusses the effect of AB2289 on associations collection procedures for delinquent assessments. I. YEAR END DISCLOSURE REQUIREMENTS AB2289 clearly requires that all associations distribute a written notice to all homeowners during the 60-day period immediately preceding the beginning of the association s fiscal year. The notice must be printed in at least a 12-point font. The notice must be entitled NOTICE - ASSESSMENTS AND FORECLOSURES and must contain the exact same language contained in the newly enacted legislation. Please be advised that our office has the exact language required and we can provide same upon request. In order to proceed forward with non-judicial foreclosures after January 1, 2003, an association must distribute the notice prior to that date, regardless of the beginning of the association s fiscal year. II. PRE-LIEN NOTICE REQUIREMENTS All associations are now required to send all delinquent
homeowners a pre-lien letter to notify them regarding the association
s intent to record a lien, at least 30 days prior to actually recording
the lien. Before AB 2289, the Civil Code simply required associations
to send a prelien letter prior to the recording of a lien, however
no statutory time period was mandated. Pursuant to AB 2289, the new
pre-lien letter must include the following: III. RECEIPTS Association must provide a receipt for any payments, upon the request of a homeowner, which states the date a payment was received and person who received such payment. In order to simplify this requirement, management companies should start keeping track of payments, i.e., a payment log, recording the pertinent information for each payment received from each individual homeowner. IV. LATE CHARGES AND INTEREST The new legislation has modified the amount of late
charges and interest that an association is allowed to charge as follows: V. RESPONSE TO OWNER DISPUTES If an owner disputes the amount owed in writing within 15 days from the date that the pre-lien letter is postmarked, the association has an obligation to respond in writing to that dispute within 15 days that the homeowner s letter is postmarked. Therefore, it may be wise for all management companies to save the envelopes they receive containing letters of dispute. In addition, please be advised that if a homeowner did in fact pay their assessments on time, the association must waive all late charges, interest and collection fees incurred with the lien and the association must release the lien previously recorded, and provided a conformed copy of same to homeowner within 21 days after the error is discovered. The actual release must state that the lien was recorded in error. VI. PAYMENT PLANS If the association has adopted a payment plan standard,
any payment plan accepted by the association must comply with same.
Associations may not want to adopt a written policy for accepting
payment plans, because this may just increase the margin of error
if such procedures are not followed exactly. An association may simply
want to state in their collection policy that payment plan requests
are encouraged and that the Board will consider each individual request
on a cases-by-case basis. VII. RELEASE OF LIENS Once an owner brings his account current or it is determined that a lien was recorded in error, the association has an obligation to record a release of lien and provide notice of same to the homeowner with 21 days of receipt of full payment or discovery of the error. If the lien was recorded in error the release must so state. VIII. PENALTY TO ASSOCIATION FOR NONCOMPLIANCE WITH REQUIREMENTS OF COLLECTION IN THE DAVIS-STIRLING ACT If an association fails to follow the Davis-Stirling Act in regards to collection of delinquent assessments, the association is required to re-commence collection proceedings starting from the pre-lien stage, and waive all costs of collection incurred with the previous collection attempt.
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