2005 California Civil Code Sections 1366-1367.5 Article 4. Assessments

CIVIL CODE
SECTION 1366-1367.5

1366.  (a) Except as provided in this section, the association shall
levy regular and special assessments sufficient to perform its
obligations under the governing documents and this title.  However,
annual increases in regular assessments for any fiscal year, as
authorized by subdivision (b), shall not be imposed unless the board
has complied with subdivision (a) of Section 1365 with respect to
that fiscal year, or has obtained the approval of owners,
constituting a quorum, casting a majority of the votes at a meeting
or election of the association conducted in accordance with Chapter 5
(commencing with Section 7510) of Part 3 of Division 2 of Title 1 of
the Corporations Code and Section 7613 of the Corporations Code.
For the purposes of this section, "quorum" means more than 50 percent
of the owners of an association.
   (b) Notwithstanding more restrictive limitations placed on the
board by the governing documents, the board of directors may not
impose a regular assessment that is more than 20 percent greater than
the regular assessment for the association's preceding fiscal year
or impose special assessments which in the aggregate exceed 5 percent
of the budgeted gross expenses of the association for that fiscal
year without the approval of owners, constituting a quorum, casting a
majority of the votes at a meeting or election of the association
conducted in accordance with Chapter 5 (commencing with Section 7510)
of Part 3 of Division 2 of Title 1 of the Corporations Code and
Section 7613 of the Corporations Code.  For the purposes of this
section, quorum means more than 50 percent of the owners of an
association.  This section does not limit assessment increases
necessary for emergency situations.  For purposes of this section, an
emergency situation is any one of the following:
   (1) An extraordinary expense required by an order of a court.
   (2) An extraordinary expense necessary to repair or maintain the
common interest development or any part of it for which the
association is responsible where a threat to personal safety on the
property is discovered.
   (3) An extraordinary expense necessary to repair or maintain the
common interest development or any part of it for which the
association is responsible that could not have been reasonably
foreseen by the board in preparing and distributing the pro forma
operating budget under Section 1365.  However, prior to the
imposition or collection of an assessment under this subdivision, the
board shall pass a resolution containing written findings as to the
necessity of the extraordinary expense involved and why the expense
was not or could not have been reasonably foreseen in the budgeting
process, and the resolution shall be distributed to the members with
the notice of assessment.
   (c) Regular assessments imposed or collected to perform the
obligations of an association under the governing documents or this
title shall be exempt from execution by a judgment creditor of the
association only to the extent necessary for the association to
perform essential services, such as paying for utilities and
insurance.  In determining the appropriateness of an exemption, a
court shall ensure that only essential services are protected under
this subdivision.
   This exemption shall not apply to any consensual pledges, liens,
or encumbrances that have been approved by the owners of an
association, constituting a quorum, casting a majority of the votes
at a meeting or election of the association, or to any state tax
lien, or to any lien for labor or materials supplied to the common
area.
   (d) The association shall provide notice by first-class mail to
the owners of the separate interests of any increase in the regular
or special assessments of the association, not less than 30 nor more
than 60 days prior to the increased assessment becoming due.
   (e) Regular and special assessments levied pursuant to the
governing documents are delinquent 15 days after they become due,
unless the declaration provides a longer time period, in which case
the longer time period shall apply.  If an assessment is delinquent
the association may recover all of the following:
   (1) Reasonable costs incurred in collecting the delinquent
assessment, including reasonable attorney's fees.
   (2) A late charge not exceeding 10 percent of the delinquent
assessment or ten dollars ($10), whichever is greater, unless the
declaration specifies a late charge in a smaller amount, in which
case any late charge imposed shall not exceed the amount specified in
the declaration.
   (3) Interest on all sums imposed in accordance with this section,
including the delinquent assessments, reasonable fees and costs of
collection, and reasonable attorney's fees, at an annual interest
rate not to exceed 12 percent, commencing 30 days after the
assessment becomes due, unless the declaration specifies the recovery
of interest at a rate of a lesser amount, in which case the lesser
rate of interest shall apply.
   (f) Associations are hereby exempted from interest-rate
limitations imposed by Article XV of the California Constitution,
subject to the limitations of this section.
1366.1.  An association shall not impose or collect an assessment or
fee that exceeds the amount necessary to defray the costs for which
it is levied.
1366.2.  (a) In order to facilitate the collection of regular
assessments, special assessments, transfer fees, and similar charges,
the board of directors of any association is authorized to record a
statement or amended statement identifying relevant information for
the association.  This statement may include any or all of the
following information:
   (1) The name of the association as shown in the conditions,
covenants, and restrictions or the current name of the association,
if different.
   (2) The name and address of a managing agent or treasurer of the
association or other individual or entity authorized to receive
assessments and fees imposed by the association.
   (3) A daytime telephone number of the authorized party identified
in paragraph (2) if a telephone number is available.
   (4) A list of separate interests subject to assessment by the
association, showing the assessor's parcel number or legal
description, or both, of the separate interests.
   (5) The recording information identifying the declaration or
declarations of covenants, conditions, and restrictions governing the
association.
   (6) If an amended statement is being recorded, the recording
information identifying the prior statement or statements which the
amendment is superseding.
   (b) The county recorder is authorized to charge a fee for
recording the document described in subdivision (a), which fee shall
be based upon the number of pages in the document and the recorder's
per-page recording fee.
1367.  (a) A regular or special assessment and any late charges,
reasonable costs of collection, and interest, as assessed in
accordance with Section 1366, shall be a debt of the owner of the
separate interest at the time the assessment or other sums are
levied.  Before an association may place a lien upon the separate
interest of an owner to collect a debt which is past due under this
subdivision, the association shall notify the owner in writing by
certified mail of the fee and penalty procedures of the association,
provide an itemized statement of the charges owed by the owner,
including items on the statement which indicate the assessments owed,
any late charges and the method of calculation, any attorney's fees,
and the collection practices used by the association, including the
right of the association to the reasonable costs of collection.  In
addition, any payments toward that debt shall first be applied to the
assessments owed, and only after the principal owed is paid in full
shall the payments be applied to interest or collection expenses.
   (b) The amount of the assessment, plus any costs of collection,
late charges, and interest assessed in accordance with Section 1366,
shall be a lien on the owner's interest in the common interest
development from and after the time the association causes to be
recorded with the county recorder of the county in which the separate
interest is located, a notice of delinquent assessment, which shall
state the amount of the assessment and other sums imposed in
accordance with Section 1366, a legal description of the owner's
interest in the common interest development against which the
assessment and other sums are levied, the name of the record owner of
the owner's interest in the common interest development against
which the lien is imposed, and, in order for the lien to be enforced
by nonjudicial foreclosure as provided in subdivision  (e) the name
and address of the trustee authorized by the association to enforce
the lien by sale.  The notice of delinquent assessment shall be
signed by the person designated in the declaration or by the
association for that purpose, or if no one is designated, by the
president of the association, and mailed in the manner set forth in
Section 2924b, to all record owners of the owner's interest in the
common interest development no later than 10 calendar days after
recordation.  Upon payment of the sums specified in the notice of
delinquent assessment, the association shall cause to be recorded a
further notice stating the satisfaction and release of the lien
thereof.  A monetary penalty imposed by the association as a means of
reimbursing the association for costs incurred by the association in
the repair of damage to common areas and facilities for which the
member or the member's guests or tenants were responsible may become
a lien against the member's separate interest enforceable by the sale
of the interest under Sections 2924, 2924b, and 2924c, provided the
authority to impose a lien is set forth in the governing documents.
It is the intent of the Legislature not to contravene Section 2792.26
of Title 10 of the California Code of Regulations, as that section
appeared on January 1, 1996, for associations of subdivisions that
are being sold under authority of a subdivision public report,
pursuant to Part 2 (commencing with Section 11000) of Division 4 of
the Business and Professions Code.
   (c) Except as indicated in subdivision (b), a monetary penalty
imposed by the association as a disciplinary measure for failure of a
member to comply with the governing instruments, except for the late
payments, may not be characterized nor treated in the governing
instruments as an assessment which may become a lien against the
member's subdivision interest enforceable by the sale of the interest
under Sections 2924, 2924b, and 2924c.
   (d) A lien created pursuant to subdivision (b) shall be prior to
all other liens recorded subsequent to the notice of assessment,
except that the declaration may provide for the subordination thereof
to any other liens and encumbrances.
   (e) After the expiration of 30 days following the recording of a
lien created pursuant to subdivision (b), the lien may be enforced in
any manner permitted by law, including sale by the court, sale by
the trustee designated in the notice of delinquent assessment, or
sale by a trustee substituted pursuant to Section 2934a.  Any sale by
the trustee shall be conducted in accordance with the provisions of
Sections 2924, 2924b, and 2924c applicable to the exercise of powers
of sale in mortgages and deeds of trusts.
   (f) Nothing in this section or in subdivision (a) of Section 726
of the Code of Civil Procedure prohibits actions against the owner of
a separate interest to recover sums for which a lien is created
pursuant to this section or prohibits an association from taking a
deed in lieu of foreclosure.
   (g) This section only applies to liens recorded on or after
January 1, 1986 and prior to January 1, 2003.
1367.1.  (a) A regular or special assessment and any late charges,
reasonable fees and costs of collection, reasonable attorney's fees,
if any, and interest, if any, as determined in accordance with
Section 1366, shall be a debt of the owner of the separate interest
at the time the assessment or other sums are levied. At least 30 days
prior to recording a lien upon the separate interest of the owner of
record to collect a debt that is past due under this subdivision,
the association shall notify the owner of record in writing by
certified mail of the following:
   (1) A general description of the collection and lien enforcement
procedures of the association and the method of calculation of the
amount, a statement that the owner of the separate interest has the
right to inspect the association records, pursuant to Section 8333 of
the Corporations Code, and the following statement in 14-point
boldface type, if printed, or in capital letters, if typed:
"IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE
BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT
COURT ACTION."
   (2) An itemized statement of the charges owed by the owner,
including items on the statement which indicate the amount of any
delinquent assessments, the fees and reasonable costs of collection,
reasonable attorney's fees, any late charges, and interest, if any.
   (3) A statement that the owner shall not be liable to pay the
charges, interest, and costs of collection, if it is determined the
assessment was paid on time to the association.
   (4) The right to request a meeting with the board as provided by
paragraph (3) of subdivision (c).
   (5) The right to dispute the assessment debt by submitting a
written request for dispute resolution to the association pursuant to
the association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4.
   (6) The right to request alternative dispute resolution with a
neutral third party pursuant to Article 2 (commencing with Section
1369.510) of Chapter 7 before the association may initiate
foreclosure against the owner's separate interest, except that
binding arbitration shall not be available if the association intends
to initiate a judicial foreclosure.
   (b) Any payments made by the owner of a separate interest toward
the debt set forth, as required in subdivision (a), shall first be
applied to the assessments owed, and, only after the assessments owed
are paid in full shall the payments be applied to the fees and costs
of collection, attorney's fees, late charges, or interest. When an
owner makes a payment, the owner may request a receipt and the
association shall provide it. The receipt shall indicate the date of
payment and the person who received it. The association shall provide
a mailing address for overnight payment of assessments.
   (c) (1) (A) Prior to recording a lien for delinquent assessments,
an association shall offer the owner and, if so requested by the
owner, participate in dispute resolution pursuant to the association'
s "meet and confer" program required in Article 5 (commencing with
Section 1363.810) of Chapter 4.
   (B) Prior to initiating a foreclosure for delinquent assessments,
an association shall offer the owner and, if so requested by the
owner, shall participate in dispute resolution pursuant to the
association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution with a neutral third party pursuant to Article 2
(commencing with Section 1369.510) of Chapter 7. The decision to
pursue dispute resolution or a particular type of alternative dispute
resolution shall be the choice of the owner, except that binding
arbitration shall not be available if the association intends to
initiate a judicial foreclosure.
   (2) For liens recorded on or after January 1, 2006, the decision
to record a lien for delinquent assessments shall be made only by the
board of directors of the association and may not be delegated to an
agent of the association. The board shall approve the decision by a
majority vote of the board members in an open meeting. The board
shall record the vote in the minutes of that meeting.
   (3) An owner, other than an owner of any interest that is
described in Section 11212 of the Business and Professions Code that
is not otherwise exempt from this section pursuant to subdivision (a)
of Section 11211.7, may submit a written request to meet with the
board to discuss a payment plan for the debt noticed pursuant to
subdivision (a). The association shall provide the owners the
standards for payment plans, if any exist. The board shall meet with
the owner in executive session within 45 days of the postmark of the
request, if the request is mailed within 15 days of the date of the
postmark of the notice, unless there is no regularly scheduled board
meeting within that period, in which case the board may designate a
committee of one or more members to meet with the owner. Payment
plans may incorporate any assessments that accrue during the payment
plan period. Payment plans shall not impede an association's ability
to record a lien on the owner's separate interest to secure payment
of delinquent assessments. Additional late fees shall not accrue
during the payment plan period if the owner is in compliance with the
terms of the payment plan.  In the event of a default on any payment
plan, the association may resume its efforts to collect the
delinquent assessments from the time prior to entering into the
payment plan.
   (d) The amount of the assessment, plus any costs of collection,
late charges, and interest assessed in accordance with Section 1366,
shall be a lien on the owner's separate interest in the common
interest development from and after the time the association causes
to be recorded with the county recorder of the county in which the
separate interest is located, a notice of delinquent assessment,
which shall state the amount of the assessment and other sums imposed
in accordance with Section 1366, a legal description of the owner's
separate interest in the common interest development against which
the assessment and other sums are levied, and the name of the record
owner of the separate interest in the common interest development
against which the lien is imposed. The itemized statement of the
charges owed by the owner described in paragraph (2) of subdivision
(a) shall be recorded together with the notice of delinquent
assessment. In order for the lien to be enforced by nonjudicial
foreclosure as provided in subdivision (g), the notice of delinquent
assessment shall state the name and address of the trustee authorized
by the association to enforce the lien by sale. The notice of
delinquent assessment shall be signed by the person designated in the
declaration or by the association for that purpose, or if no one is
designated, by the president of the association. A copy of the
recorded notice of delinquent assessment shall be mailed by certified
mail to every person whose name is shown as an owner of the separate
interest in the association's records, and the notice shall be
mailed no later than 10 calendar days after recordation. Within 21
days of the payment of the sums specified in the notice of delinquent
assessment, the association shall record or cause to be recorded in
the office of the county recorder in which the notice of delinquent
assessment is recorded a lien release or notice of rescission and
provide the owner of the separate interest a copy of the lien release
or notice that the delinquent assessment has been satisfied. A
monetary charge imposed by the association as a means of reimbursing
the association for costs incurred by the association in the repair
of damage to common areas and facilities for which the member or the
member's guests or tenants were responsible may become a lien against
the member's separate interest enforceable by the sale of the
interest under Sections 2924, 2924b, and 2924c, provided the
authority to impose a lien is set forth in the governing documents.
It is the intent of the Legislature not to contravene Section 2792.26
of Title 10 of the California Code of Regulations, as that section
appeared on January 1, 1996, for associations of subdivisions that
are being sold under authority of a subdivision public report,
pursuant to Part 2 (commencing with Section 11000) of Division 4 of
the Business and Professions Code.
   (e) Except as indicated in subdivision (d), a monetary penalty
imposed by the association as a disciplinary measure for failure of a
member to comply with the governing instruments, except for the late
payments, may not be characterized nor treated in the governing
instruments as an assessment that may become a lien against the
member's subdivision separate interest enforceable by the sale of the
interest under Sections 2924, 2924b, and 2924c.
   (f) A lien created pursuant to subdivision (d) shall be prior to
all other liens recorded subsequent to the notice of assessment,
except that the declaration may provide for the subordination thereof
to any other liens and encumbrances.
   (g) An association may not voluntarily assign or pledge the
association's right to collect payments or assessments, or to enforce
or foreclose a lien to a third party, except when the assignment or
pledge is made to a financial institution or lender chartered or
licensed under federal or state law, when acting within the scope of
that charter or license, as security for a loan obtained by the
association; however, the foregoing provision may not restrict the
right or ability of an association to assign any unpaid obligations
of a former member to a third party for purposes of collection.
Subject to the limitations of this subdivision, after the expiration
of 30 days following the recording of a lien created pursuant to
subdivision (d), the lien may be enforced in any manner permitted by
law, including sale by the court, sale by the trustee designated in
the notice of delinquent assessment, or sale by a trustee substituted
pursuant to Section 2934a. Any sale by the trustee shall be
conducted in accordance with Sections 2924, 2924b, and 2924c
applicable to the exercise of powers of sale in mortgages and deeds
of trust. The fees of a trustee may not exceed the amounts prescribed
in Sections 2924c and 2924d.
   (h) Nothing in this section or in subdivision (a) of Section 726
of the Code of Civil Procedure prohibits actions against the owner of
a separate interest to recover sums for which a lien is created
pursuant to this section or prohibits an association from taking a
deed in lieu of foreclosure.
   (i) If it is determined that a lien previously recorded against
the separate interest was recorded in error, the party who recorded
the lien shall, within 21 calendar days, record or cause to be
recorded in the office of the county recorder in which the notice of
delinquent assessment is recorded a lien release or notice of
rescission and provide the owner of the separate interest with a
declaration that the lien filing or recording was in error and a copy
of the lien release or notice of rescission.
   (j) In addition to the requirements of Section 2924, a notice of
default shall be served by the association on 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.
   (k) Upon receipt of a written request by an owner identifying a
secondary address for purposes of collection notices, the association
shall send additional copies of any notices required by this section
to the secondary address provided. The association shall notify
owners of their right to submit secondary addresses to the
association, at the time the association issues the pro forma
operating budget pursuant to Section 1365. The owner's request shall
be in writing and shall be mailed to the association in a manner that
shall indicate the association has received it. The owner may
identify or change a secondary address at any time, provided that, if
a secondary address is identified or changed during the collection
process, the association shall only be required to send notices to
the indicated secondary address from the point the association
receives the request.
   (l) (1) An association that fails to comply with the procedures
set forth in this section shall, prior to recording a lien,
recommence the required notice process.
   (2) Any costs associated with recommencing the notice process
shall be borne by the association and not by the owner of a separate
interest.
   (m) This section only applies to liens recorded on or after
January 1, 2003.
   (n) This section is subordinate to, and shall be interpreted in
conformity with, Section 1367.4.
1367.4.  (a) Notwithstanding any law or any provisions of the
governing documents to the contrary, this section shall apply to
debts for assessments that arise on and after January 1, 2006.
   (b) An association that seeks to collect delinquent regular or
special assessments of an amount less than one thousand eight hundred
dollars ($1,800), not including any accelerated assessments, late
charges, fees and costs of collection, attorney's fees, or interest,
may not collect that debt through judicial or nonjudicial
foreclosure, but may attempt to collect or secure that debt in any of
the following ways:
   (1) By a civil action in small claims court, pursuant to Chapter
5.5 (commencing with Section 116.110) of Title 1 of the Code of Civil
Procedure. An association that chooses to proceed by an action in
small claims court, and prevails, may enforce the judgment as
permitted under Article 8 (commencing with Section 116.810) of Title
1 of the Code of Civil Procedure. The amount that may be recovered in
small claims court to collect upon a debt for delinquent assessments
may not exceed the jurisdictional limits of the small claims court
and shall be the sum of the following:
   (A) The amount owed as of the date of filing the complaint in the
small claims court proceeding.
   (B) In the discretion of the court, an additional amount to that
described in subparagraph (A) equal to the amount owed for the period
from the date the complaint is filed until satisfaction of the
judgment, which total amount may include accruing unpaid assessments
and any reasonable late charges, fees and costs of collection,
attorney's fees, and interest, up to the jurisdictional limits of the
small claims court.
   (2) By recording a lien on the owner's separate interest upon
which the association may not foreclose until the amount of the
delinquent assessments secured by the lien, exclusive of any
accelerated assessments, late charges, fees and costs of collection,
attorney's fees, or interest, equals or exceeds one thousand eight
hundred dollars ($1,800) or the assessments are more than 12 months
delinquent. An association that chooses to record a lien under these
provisions, prior to recording the lien, shall offer the owner and,
if so requested by the owner, participate in dispute resolution as
set forth in Article 5 (commencing with Section 1368.810) of Chapter
4.
   (3) Any other manner provided by law, except for judicial or
nonjudicial foreclosure.
   (c) An association that seeks to collect delinquent regular or
special assessments of an amount of one thousand eight hundred
dollars ($1,800) or more, not including any accelerated assessments,
late charges, fees and costs of collection, attorney's fees, or
interest, or any assessments that are more than 12 months delinquent,
may use judicial or nonjudicial foreclosure subject to the following
conditions:
   (1) Prior to initiating a foreclosure on an owner's separate
interest, the association shall offer the owner and, if so requested
by the owner, participate in dispute resolution pursuant to the
association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution as set forth in Article 2 (commencing with Section
1369.510) of Chapter 7. The decision to pursue dispute resolution or
a particular type of alternative dispute resolution shall be the
choice of the owner, except that binding arbitration shall not be
available if the association intends to initiate a judicial
foreclosure.
   (2) The decision to initiate foreclosure of a lien for delinquent
assessments that has been validly recorded shall be made only by the
board of directors of the association and may not be delegated to an
agent of the association. The board shall approve the decision by a
majority vote of the board members in an executive session. The board
shall record the vote in the minutes of the next meeting of the
board open to all members. The board shall maintain the
confidentiality of the owner or owners of the separate interest by
identifying the matter in the minutes by the parcel number of the
property, rather than the name of the owner or owners. A board vote
to approve foreclosure of a lien shall take place at least 30 days
prior to any public sale.
   (3) The board shall provide notice by personal service to an owner
of a separate interest who occupies the separate interest or to the
owner's legal representative, if the board votes to foreclose upon
the separate interest.  The board shall provide written notice to an
owner of a separate interest who does not occupy the separate
interest by first-class mail, postage prepaid, at the most current
address shown on the books of the association. In the absence of
written notification by the owner to the association, the address of
the owner's separate interest may be treated as the owner's mailing
address.
   (4) A nonjudicial foreclosure by an association to collect upon a
debt for delinquent assessments shall be subject to a right of
redemption. The redemption period within which the separate interest
may be redeemed from a foreclosure sale under this paragraph ends 90
days after the sale.
   (d) The limitation on foreclosure of assessment liens for amounts
under the stated minimum in this section does not apply to
assessments owed by owners of separate interests in timeshare
estates, as defined in subdivision (x) of Section 11112 of the
Business and Professions Code, or to assessments owed by developers.
1367.5.  If it is determined through dispute resolution pursuant to
the association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution with a neutral third party pursuant to Article 2
(commencing with Section 1369.510) of Chapter 7 that an association
has recorded a lien for a delinquent assessment in error, the
association shall promptly reverse all late charges, fees, interest,
attorney's fees, costs of collection, costs imposed for the notice
prescribed in subdivision (a) of Section 1367.1, and costs of
recordation and release of the lien authorized under subdivision (b)
of Section 1367.4, and pay all costs related to the dispute
resolution or alternative dispute resolution.


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