Payment Plans

Absent contrary provisions in an association’s governing documents, an association is not legally required to propose or grant payment plans to owners who are delinquent in the payment of assessments to the association. However, an association is required to provide owners with the association’s standards for payment plans (if any exists), and the board is also required to consider a payment plan request that is submitted to the board by a delinquent owner. (Civ. Code §§ 5665(a), 5730(a).) These requirements are discussed below.

Notice of Payment Plan Standards
An association is required to provide the owners with the association’s standards for payment plans, if any exists. (Civ. Code §§ 5665(a), 5730(a).) The obligation of an association to inform owners of the association’s standards for payment plans must also be disclosed as part of the association’s “annual statement of collection procedures” that is a component of the association’s annual policy statement. (Civ. Code §§ 5730(a), 5310(a)(6).)

Owner’s Request to Meet with Board to Discuss Payment Plan
Notwithstanding whether an association has any standards for payment plans, an owner may submit a written request to meet with the board to discuss a payment plan. (Civ. Code § 5665(a).) The board is required to meet with the owner in executive session within forty-five (45) days of the postmark of the request, if the request is mailed within fifteen (15) days of the date of the postmark of the request, unless there is no regularly scheduled board meeting within that period, in which case the board may designate a committee of one or more directors to meet with the owner (i.e., an executive committee). (Civ. Code § 5665(b).)

*Exception – Time Share Interests
The owner of a time-share interest does not have the right to request that the association consider a payment plan. (Civ. Code §§ 5665(a), 5730(a).)

Components of Payment Plan
A payment plan may incorporate any assessments that accrue during the payment plan period. (Civ. Code § 5665(c).) Additional late fees may not accrue during the payment plan period if the owner is in compliance with the terms of the payment plan. (Civ. Code § 5665(c).)

Effect on Assessment Lien
A payment plan does not impede an association’s ability to record an assessment lien on the owner’s property in order to secure the assessment debt owed to the association. (Civ. Code § 5665(d).)

Default on Payment Plan
In the event that an owner defaults on the payment plan, the association may resume its assessment collection efforts from the point in time prior to entering into the payment plan. (Civ. Code § 5665(e).)

Payment Plans Not Subject to Inspection
Payment plans are not “association records” which are subject to inspection by an association’s members, other than the member who entered into the payment plan. (Civ. Code § 5215(a)(5)(B); See also “Records Not Subject to Inspection.”)