CALIFORNIA ASSESSMENT LIEN AND NON-JUDICIAL FORECLOSURE CHRONOLOGY
THE NON-JUDICIAL FORECLOSURE PROCESS
The four step procedure begins with notification to the unit owner of the delinquency and continues with recordation of a Notice of Delinquent Assessment (the “lien”), followed by the commencement of non-judicial or judicial foreclosure proceedings.
STEP 1: NOTICE OF DELINQUENCY
Notice of Delinquency If an assessment remains unpaid after the due date, you should immediately send the homeowner a demand letter, notifying him/her of the delinquency. The demand letter should state that the homeowner must pay the delinquent assessments within fifteen days from the date of the letter or the association will take other action for which the homeowner will be charged all attorneys’ fees and related costs incurred. In the event there is more than one owner of the property, the letter should be mailed to each one by certified mail. As managing agent or a member of the Board of Directors, it is your responsibility to ensure that a homeowner does not become excessively delinquent in the payment of his/her assessments. Aggressive collection will result in fewer delinquencies and increased cash flow for the association.
STEP 2: ATTORNEY’S NOTICE/PRE-LIEN
If the homeowner has not paid the delinquent assessments as requested by your demand, then ATC takes charge of the collection process. Upon receipt of the signed authorization form, we will immediately write a pre-lien letter to the delinquent homeowner advising that the matter has been turned over to ATC for processing and collection of delinquent assessments. The homeowner will be given ten days to cure the delinquency. The homeowner will be charged attorney’s time for preparation of the file, review and recalculation of the accounting, review of the governing documents, initial attorney letter and phone conversations with the homeowner and management company and/or Board of Directors.
STEP 3: NOTICE OF DELINQUENT ASSESSMENT/LIEN
If ten days after the attorney’s letter assessments still remain unpaid, ATC will prepare and record the Notice of Delinquent Assessment. We will forward a copy to the homeowner with a cover letter stating that a lien on their property for the total amount due has been recorded and that they have thirty (30) days to satisfy the lien. The lien will not be removed until all delinquent assessments, cost and fees have been paid. The homeowner will be billed for the preparation and recordation of the lien and, ultimately, the Release of Lien.
STEP 4: NOTICE OF DEFAULT/FORECLOSURE
If the delinquency is not cured within thirty days from the recording of the lien, we will proceed to have our Trustee record the Notice of Default, which is permitted under California law. This is the first step of the foreclosure process; the assessment lien being foreclosed in the same fashion as a trust deed. Nevada law requires a sixty (60) days redemption period. Upon expiration of the sixty or ninety days, if the homeowner has not either entered into a payment plan with the association, or paid the delinquency in full, a sale is consummated, and all the delinquencies will be paid to the association from proceeds of the sale to a third party. If the property reverts to the association, there is the possibility that the association will not obtain the entire amount of the unpaid assessments. Our experience, however, is that few homeowners will allow their home to go to a foreclosure sale for nonpayment of delinquent homeowner assessments. With a completed foreclosure (judicial or non-judicial), times are changing, and title companies are realizing that foreclosure on an assessment lien is an appropriate way to collect delinquent assessments and are issuing title insurance policies on foreclosure property. In the event the foreclosure process is terminated (by bankruptcy or foreclosure of a senior lien), a cancellation fee will be charged to the association, depending upon which stage the procedure has reached and what fees have been incurred. You are requested to review fully the authorization form provided. You will be notified of the status of each account by copies of letters and other notices which will be forwarded to you at the time they are sent to the delinquent homeowner, along with our monthly status report which is sent out at the beginning of each month. We make every effort to complete the process within the guidelines of our timetable and request that you refer to this article for information relating to the procedure. However, should you have any question, please feel free to contact our offices. Note: Once the matter has been turned over to ATC, the association should not have any further contact with the homeowner regarding the delinquent assessments, and should not accept any money from the homeowner. All inquiries must be directed to ATC. Otherwise, the foreclosure process may be hampered, resulting in the association being responsible for all of ATC’s costs and fees. Please refer all questions and/or correspondence from the delinquent homeowner to our office. When the homeowner pays the amount of the delinquent assessments plus all fees and costs, the money will be forwarded to the association.