Decision to Initiate Foreclosure

After an assessment lien has been recorded against an owner’s property, the decision to initiate foreclosure of the assessment lien (whether through nonjudicial or judicial foreclosure) must be made by the board of directors and may not be delegated to an agent of the association. (Civ. Code § 5705(c).) The board’s vote to approve foreclosure of an assessment lien must take place at least thirty (30) days prior to any public sale. (Civ. Code § 5705(c).)

Decision Made in Executive Session & Recorded in Minutes of Next Open Meeting
The decision to initiate foreclosure must be made by a majority vote of the directors in an executive session meeting, and the board’s vote must then be recorded in the minutes of the next open board meeting. (Civ. Code § 5705(c).)

Must Maintain Confidentiality of Delinquent Owner(s)
The board is required to maintain the confidentiality of the owner or owners of the property by “identifying the matter in the minutes by the parcel number of the property, rather than the name of the owner or owners.” (Civ. Code § 5705(c).)

Notice to Owner of Board’s Decision
The board must provide notice of its decision to initiate foreclosure to the owner. (Civ. Code § 5705(d).) The method of required notice varies depending upon whether the owner occupies the property that is the subject of the foreclosure action:

  • Owner Occupies the Property: Personal Service – Where the owner occupies the property, the notice must be personally served upon the owner (or the owner’s legal representative) in accordance with the manner of service of summons in Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure. (Civ. Code § 5705(d).) This essentially mirrors the methods of personal service required in connection with a lawsuit.
  • Owner Does Not Occupy the Property: First-Class Mail – Where the owner does not occupy the property, the notice must be provided by first-class mail, postage prepaid, at the most current address of the owner shown on the books of the association. (Civ. Code § 5705(d).) If the owner has not provided the association with written notification of an alternative mailing address, the address of the property may be treated as the owner’s mailing address. (Civ. Code § 5705(d).)

Condition Precedent for Judicial Foreclosure Action
Providing an owner with notice of the board’s decision to foreclose is a “condition precedent” to the filing of an action for judicial foreclosure of an assessment lien. (Diamond v. Superior Court (2013) 217 Cal.App.4th 1172, 1196.) Serving the owner with the board’s decision to foreclose at the same time/along with a summons and compliant for a judicial foreclosure action is insufficient to satisfy this requirement. (Diamond, at 1196-1197.)

Procedural Noncompliance
Where an association fails to strictly adhere to the requirements set forth above (i.e., those pertaining to how the board’s decision is made, recorded, and notified), it may provide grounds for an owner to legally challenge the validity of the assessment lien and stop the association’s foreclosure efforts. (Diamond, at 1197.)