Assessment Collection Policy

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MENDOCINO MANAGEMENT ASSOCIATION No. 1


NOTICE OF POLICIES AND PRACTICES FOR ASSESSMENT COLLECTION
AND LIEN ENFORCEMENT PROCEDURES AND REMEDIES
CIVIL CODE §§ 1366, 1367, 1367.1
(last revised 1/1/2003 except for new Property Manager mailing address)

The Board of Directors of the Association has adopted the following policies, practices and procedures for the collection and enforcement of assessments as provided in the Declaration of Restrictions and in the California Civil Code.

GENERAL: The Association’s collection practices and procedures are in accordance with Sections 1366, 1367 and 1367.1 of the California Civil Code and the Declaration of Restrictions. The member is responsible for payment of assessments, late charges, interest and costs of collection (which include reasonable attorney’s fees) which will be charged to the member’s account at each stage of the collection process. All actions taken in the collection process are an attempt to collect a debt and any information obtained will be used for that purpose.

PAYMENTS/LATE CHARGE: Assessments are due on the first day of each month. Assessments are delinquent if not received by the 15th day of each month. After the 15th  day of each month a late charge of ten percent (10%) of the delinquent assessment will be imposed for that late assessment payment. Payments are applied first to the oldest assessment balance due. When a payment leaves the current month’s assessment delinquent, a late charge will be imposed, plus interest on the unpaid balance. The member is responsible to make all payments on time without notice or request for payment from the Association. The member will not be liable to pay late charges (or interest or costs of collection) if it is determined that the same were charged for an assessment that was in fact paid on time to the association. Members may make payments of assessments by overnight mail addressed to the association at:  Mendocino Management Association No. 1, c/o The Helm Management Co., 4668 Nebo Dr, Ste A, La Mesa, CA 91941-5200.

INTEREST: Interest on all sums imposed, including delinquent assessments, late charges, interest, costs of collection including attorney’s fees, will be charged to the member’s account at an annual rate not to exceed twelve percent (12%) commencing thirty (30) days after the assessment or outstanding balance was due.

PRE-LIEN NOTICE: If a member becomes delinquent in the payment of amounts due, then at a time set by the Board, the attorney will be instructed to send a demand letter to the delinquent owner requesting payment of the full amount due, together with other charges as stated in the notice. The member has the right to inspect the association’s records pursuant to the provisions of Section 8333 of the Corporations Code. The member may dispute the amount due in the notice as provided in Section 1367.1(c)(1) of the Civil Code. The member has the right to request a meeting with the Board to discuss a payment plan for the amount of the debt stated in the pre-lien notice as provided by Section 1367.1(c)(2) of the Civil Code. The notice letter will advise the member that a Notice of Delinquent Assessment (Lien) may be processed and recorded against the member’s separate interest if the debt due is not paid in full within 30 days of the date of mailing the notice.

LIEN: If the member’s account remains delinquent 30 days after the date of mailing of the pre-lien notice, then the Association’s attorney will be instructed, at a time set by the Board, to process a Notice of Delinquent Asse4ssment (Lien) with the County Recorder’s Office which will be recorded against the owner’s separate interest. The Lien secures payment of all assessments, late charges, interest and costs of collection (including attorney’s fees) by imposing the lien on the member’s separate interest. In addition, the member is also personally liable for the payment of all amounts claimed by the Notice of Delinquent Assessment (Lien). A copy of the recorded Lien will be sent to the delinquent member. Whenever the member has paid in full all amounts due pursuant to a recorded Notice of Delinquent Assessment (Lien) the association will cause to be recorded a Lien Release and provide a copy thereof to the member.

FORECLOSURE:

“IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION”

If the member remains delinquent 30 days after the date of recordation of the Notice of Delinquent Assessment (Lien), then at a time deemed appropriate by the Board, the Association’s attorney will be instructed to proceed with a Civil Action in Superior Court to enforce collection of amounts due against the member and/or the member’s separate interest, by any means provided in Sections 1367 and 1367.1 of the Civil Code. The Civil Enforcement Action may seek a personal judgment against the member and/or a judgment for judicial foreclosure of the member’s separate interest, or both, to satisfy the amount of the judgment obtained for all amounts due, including costs of collection, attorney’s fees, court costs and the costs to process the sale of the property as provided by law.

STANDARDS FOR PAYMENT PLANS: The association’s standards for payment plans pursuant to Section 1367.1(c)(2) of the Civil Code include the following: A member may submit a written request to meet with the Board to discuss a payment plan to satisfy the amount of the delinquent debt in the pre-lien notice discussed above. The member’s request must comply with all of the requirements of Section 1367.1(c)(2). The request must demonstrate reasonable cause for the Board to grant the requested payment plan. In evaluating the request, the Board will consider the reasons behind the member’s request, the member’s payment or delinquency history, the reasonableness of the payment plan given the member’s circumstances, the reasonableness of the payment plan given financial status and obligations of the association, the reasonableness of the proposed payments given the amount of the debt owed, the duration of the proposed payment plan, and any similar considerations deemed relevant to the member’s request as may be determined in the discretion of the Board in each case. The Board will notify the member of its decision regarding the request for a payment plan.

 

HUH? WHAT DOES THAT MEAN?!?

The above Assessment Collection process is not always easy to understand. As such, here is a simpler explanation (though not in a legal format) of what happens if a monthly dues payment is missed. This assumes you have only missed one payment. If additional payments are missed, fines and late charges grow even larger.

  1. Payment is due on or before the 1st day of the month. We suggest you mail 5 days before the 1st.

  2. Your account is delinquent if payment (currently $180) is not received by close of business on the 15th. Even though no penalties are applied during this 15-day “grace period”, failure to pay on time may affect the HOA’s ability to pay its own bills on time, and thus cost all of us more money in the long run.

  3. If still delinquent on 16th, a 10% late charge is applied ($18).

  4. If still delinquent after 30 days, interest at an annual rate of 12% will be charged to the account.

  5. If still delinquent after 45 days, a Pre-Lien letter is created by a lawyer (cost to you: ≈$55).

  6. If still delinquent after 75 days, a Lien Requirement letter is created by a lawyer (cost to you: ≈$390).

  7. If still delinquent after 105 days, Foreclosure proceedings begin (cost to you: ≈$800 AND YOU COULD LOSE YOUR HOME!)

  8. Assuming you pay your debt before you are evicted, you will have paid $1245 in legal fees, plus any interest that has accumulated, plus the actual missed dues themselves.

As previously stated, the above applies to missing just one payment. If additional payments are missed, additional late charges and interest rates will be applied to each missed payment.

In most cases, we (the other paying homeowners) have to use a portion of our operating fund to pay the lawyer for his services. In many cases, the legal, penalty, and interest charges become more than the amount of the missed dues payments. If more than a few people fail to pay their dues in a timely manner, this quickly becomes a burden on the Association. In October of this year (2003), the Association was burdened with about $25,000 of missed payments and legal fees. As of this writing (mid-December 2003), we are now down to about $10,000 of monies owed to the Association related to late payments. At least we’re moving in the right direction J.

Bottom Line: Most everyone forgets to make a payment from time-to-time. However, we are on a very tight budget now, so missed payments really hurt. If you find yourself in a position of not being able to pay your dues in a timely manner, please contact the Board of Directors or Property Manager as soon as possible. We may be able to work with you to figure out a payment schedule. However, it is not in the Board’s power to remove or reduce any monies/fees/penalties that may apply to your account. But at least we may be able to work out a payment schedule that keeps you from losing your home without imposing additional legal fees.

Page last modified: May 09, 2004


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