An association has the power to record an assessment lien against an owner’s property to secure the delinquent assessment debt and related sums owed by that owner to the association. If the owner fails to pay the association the amounts secured by the assessment lien within thirty (30) days after the lien is recorded, the association has the power to enforce the lien through nonjudicial foreclosure (aka “trustee sale”). (Civ. Code § 5700(a).)
Limitations on Foreclosure
The power an association has to enforce an assessment lien through nonjudicial foreclosure is subject to the limitations set forth in Civil Code Section 5720. Section 5720 generally prohibits the institution of a nonjudicial foreclosure action unless the amount of delinquent assessments owed by the delinquent owner total at least $1,800 or the delinquent assessments secured by the assessment lien are more than twelve (12) months delinquent. (See “Limitations on Foreclosure of Assessment Lien.”)
Nonjudicial Foreclosure Procedure
The nonjudicial foreclosure must be conducted in accordance with the procedural requirements contained in Civil Code Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trust. (Civ. Code § 5710(a).) In addition to those procedural requirements, Civil Code Sections 5705, 5710, and 5715 contain further requirements with regard to the board’s decision to initiate foreclosure, the service of the Notice of Default on the owner, and the contents of the Notice of Sale:
- Decision to Initiate Foreclosure – The decision to initiate nonjudicial foreclosure must be made by the board of directors in an executive session meeting, and notice of the board’s decision must be delivered to the owner by personal service (or first-class mail if the owner does not occupy the property). (Civ. Code § 5705; See also “Decision to Initiate Foreclosure.”)
- Service of Notice of Default – The association must also serve the Notice of Default on the owner 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 § 5710(b); See also “Notice of Default (NOD).”)
- Notice of Sale Includes Statement of Redemption Right – The Notice of Sale that is recorded prior to conducting the nonjudicial foreclosure sale must include a statement that the owner’s property is being sold subject to the right of redemption created under Civil Code Section 5715. (Civ. Code § 5715(b); See also “Right of Redemption.”)
90 Day Right of Redemption
Notwithstanding any law or provisions of an association’s governing documents to the contrary, the nonjudicial foreclosure of an assessment lien is subject to a ninety (90) day “right of redemption.” (Civ. Code § 5715(b).) The right of redemption generally allows for the foreclosed owner to “redeem” (reinstate his/her ownership of) the foreclosed property within ninety (90) days following the nonjudicial foreclosure sale by paying a certain amount of money to the person who conducted the foreclosure sale. (Civ. Code § 5715(b); Code Civ. Pro. § 729.035; See also “Right of Redemption.”)
- Civil Code Section 2924c. Notice of Default; Trustee’s Fees.
- Civil Code Section 2924. Power of Sale Foreclosure.
- Civil Code Section 5720. Limitations on Foreclosure of Assessment Lien.
- Civil Code Section 5715. Right of Redemption.
- Civil Code Section 5710. Assessment Lien Foreclosure Procedure; Trustee’s Fees.
- Civil Code Section 5700. Assessment Lien Enforcement Generally.
Related Case Law
- Barry v. OC Residential Properties
(2011) 194 Cal.App.4th 861
[Foreclosure; Redemption Price] When a property is sold through nonjudicial foreclosure of an assessment lien, the redemption price may include maintenance and repair expenses incurred by the purchaser during the redemption period that were reasonable necessary for the preservation of the property.
- Multani v. Witkin & Neal
(2013) 215 Cal.App.4th 1428
[Assessment Collection; Redemption Rights] A nonjudicial foreclosure sale may be set aside where a HOA fails to notify the foreclosed owner of his/her redemption rights after the foreclosure sale.
- Diamond v. Superior Court
(2013) 217 Cal.App.4th 1172
[Assessment Collection; Notice Requirements] A HOA must strictly adhere to the statutory lien and foreclosure notice requirements in order to perfect an assessment lien and foreclose on a homeowner’s property.