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HOA foreclosing for past dues


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Hello,

This site has very useful advice for fighting CA's for alleged CC debt and I’m hoping someone here has knowledge with HOA foreclosure procedures as well. Background of my case is below – it is long but it would be greatly appreciated if someone would take the time to read. I’ll spare you the particulars of my financial hardship at the moment but suffice to say I need to do this per se.

Background:

My home is located in Calif and has a homeowners assoc. Calif is a non-judicial & judicial state.

Mo dues are $225 and current arrearage, w/late and interest fees are approx $2000 (exact amount disputed though) & approx $1000 in atty fees & collection charges.

July 2010 - Property manager (HOA) sends pre-lien letter and as required by law, provides us with 30 days from date of letter to pay full amount due, if not Board of Directors (BOD) could vote to lien property. However, HOA allowed the BOD to vote and approve a lien at the August HOA meeting, which occurred only 18 days after letter and thus is in violation of the Davis-Stirling Act. Btw, within that 30-day period I sent a check for all dues arrearages, late fees & interest charges that were listed on the pre-lien letter and also requested HOA to ask BOD to waive the $200 pre-lien letter fee. HOA cashed my check 2 days after the August HOA meeting and then sends me letter stating they had received check and would place my request on September’s agenda for BOD review. I received no further correspondence from HOA or BOD regarding whether my request was approved or denied. Received no mo statement after this either – presumably because the attys were helping to handle the matter. I subsequently missed Sep, Oct & Dec dues pymt, making only Nov pymt which I sent in w/o a statement.

January 2011- HOA sends letter stating that in November 2010, they had recorded a lien against my property. I email HOA and protest that the lien was inappropriately filed. That I became current when my check was cashed, and only charge remaining was pre-lien letter fee that I requested waived. I never heard back from you regarding my request and considered the matter closed and my acct current since the BOD would have directed you to inform me of any decision still leaving me with a balance due. She replied that the BOD voted to approve a partial credit at the Aug meeting but their decision still left me with a $100 balance due. She apologized for not only failing to make me aware of this but for also failing to even apply the credit to my acct. But she said since I didn’t pay Sep & Oct assessments (true) I was delinquent when they recorded the lien and therefore it was filed appropriately. We continued to squabble via emails for a couple days over what amount needed to be paid to bring the acct current and release the lien. They offered what they thought was due, I countered what I thought was due and that was the last I heard from them. I continued to make sporadic payments for the next several months.

Fast forward to August 2011 – HOA atty sends “Notice of intent to Foreclose” letter. Says I need to pay $3,000 within 30 days of letter or action will be commenced in superior court to foreclose the assessment. Letter states I have option of resolving matter through assoc’s IDR/ADR programs.

Sep 2011 - I send certified letter to HOA and HOA atty. I confirm receipt of their letter and say I am unclear as to specific amounts of arrearage. I formally request that I be afforded the opportunity to resolve the matter through the associations IDR/ADR policy.

Oct 2011 – HOA atty sends letter with payment history reflecting what they feel is amount due (now $3500 with fees). Letter states that my request for IDR/ADR has been received and to please email the address provided to set up a resolution meeting.

Oct 2011 - I email as requested, confirming receipt of letter and ask if the meeting will be with the BOD or will it be with him? And will it be prior to or after an HOA meeting?

Oct 2011 - Receive email back from atty named Amanda (email chain shows my email had been forward to her). Amanda informs me she has taken over my account. She says the BOD usually have monthly meetings (ours doesn’t) but since she had just taken over this association she would have to check to see when they actually meet. (I receive nothing further from her or anyone else).

Feb 2012 - I email Amanda. I identify myself by name and community association (prior email chain is attached). I told her I had yet to hear back from her regarding my IDR/ADR and wanted to make sure she hadn’t forgotten me. I again ask if the meeting would be with her or the BOD, or both? My email came back undeliverable - as user unknown. I resend the email (with prior email chain attached) to Amanda and also copy previous recipient who had originally forwarded it to her. It was delivered to previous recipient but again came back as undeliverable to Amanda. In the email I tell previous recipient that Amanda informed me she had taken over my acct but I hadn’t heard from her in a while so I attempted to contact her today, but the email was returned. I asked if he’d forward the email to her or read it and reply back with updated information. I received no reply.

Ten days later I receive summons by personal delivery. HOA is suing to foreclose lien. Obviously they are moving forward w/judicial foreclosure since it involves court action.

Atty violated Davis-Stirling act again - this time by not participating in a formally requested IDR/ADR meeting prior to commencing court action. Nor did they file a certificate with their complaint that IDR/ADR had been completed. I believe this could be cause for demurrer or Motion to Strike. I assume the law firm no longer employs Amanda and that they forwarded my file to a new atty who didn’t properly pursue the IDR/ADR meeting.

If anyone could guide me to the appropriate defense strategy; denial, MTC arb, counterclaim, it would be greatly appreciated.

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You file an answer and for affirmative defenses, show that the law was not followed (your email/snail mail chain for the IDR/ADR, the minutes from the Aug board meeting and the original letter). You then request the lien be removed, the case be dismissed, and your legal fees.

After you file your answer, you call the attorney and probably offer to pay the past due fees and the $100 letter fee you agreed to and they eat their legal fees and all the other late fees.

The are going judicial foreclosure because odds are, your place is not worth enough to pay the mortgage which is ahead of them in line (and hence needs to be paid first) and they want to be able to go after you when all is said and done.

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Thank you for your response, no idea how much it's appreciated.

I would certainly agree to pay total past due assessments, but I would need to pay it in 3 or so installments, which is what i was hoping to agree on when i originally requested the IDR/ADR. Would the HOA atty be in a position to agree on that if the case is dismissed?

I understand what you're telling me to produce as far as evidence, but what Affirmative Defenses apply in this case?

And there's probably a small amount of equity still but I guess that's a relative term - it would certainly be wiped out if they foreclosed and sold the home at auction, especially with the HOA third in line.

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I agree with the basic strategy of WhoCares1000, but there is a twist to this HOA foreclosure.

Here, in Florida, we are a judicial foreclosure state. We are also the land of HOA's ...:(.

It is very common in our area for the HOA to foreclose on their lien first WITHOUT PAYING OFF THE MORTGAGE(S). :shock:

This makes for a very interesting situation because the HOA "owns" the property with an unclear title. In net effect they actually only own it until the bank forecloses on their mortgage. Here the bank foreclosures take much, much longer than the HOA foreclosures. So in the meantime, while the HOA owns it, the HOA rents the property to recover HOA fees both current and past due. The tenant has to be able to vacate when the bank forecloses. The HOA can't complete a short sale during this period because they need the cooperation of the previous owner and for obvious reason that is nearly impossible to get after the HOA has f/c against them!

Naturally the HOA attorney's make out like a bandit with the fees and are encouraging the HOA's into these foreclosures. Sometimes there is a year or more where the HOA is able to collect the rent from the tenant to offset HOA fees.

So, be careful with your HOA foreclosure. If they have an attorney encouraging your board to foreclose, it can be done very quickly.

Edited by Denita
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Denita, complaint asks for lien to be foreclosed and property sold at auction by Sheriff. with proceeds first going to Sheriff for his services and then to HOA. Also says HOA can be a purchaser at auction.

So it doesn't sound like the HOA is trying to "grasp control" of my property and rent it out - sounds like they're trying to have it sold at auction and hopefully recoup their $3k. I have a 1st & 2nd mortgage, and if the HOA jumps ahead of the 2nd (do they?) then there is equity after sale for the HOA. It's a desireable area so even auction at the courthouse steps would likely get hoa paid.

One last thing. Bought the house in Feb 05. My 1st lender (BofA) started the foreclosure process back in Jan 2011, when i first became 90 days late. I engaged in a loan mod process at that time and BofA suspended the foreclosure until there is an outcome. (I am still in that very long and arduous process and have made only sporadic partial payments to them). So technically i wonder if the foreclosure just initiated by the hoa has standing? HOA lien was filed in 11/10 if that is relevant.

I completed successful loan mod with 2nd lender and am current with payments.

Edited by cal328
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Denita, complaint asks for lien to be foreclosed and property sold at auction by Sheriff. with proceeds first going to Sheriff for his services and then to HOA. Also says HOA can be a purchaser at auction.

So it doesn't sound like the HOA is trying to "grasp control" of my property and rent it out - sounds like they're trying to have it sold at auction and hopefully recoup their $3k. I have a 1st & 2nd mortgage, and if the HOA jumps ahead of the 2nd (do they?) then there is equity after sale for the HOA. It's a desireable area so even auction at the courthouse steps would likely get hoa paid.

One last thing. Bought the house in Feb 05. My 1st lender (BofA) started the foreclosure process back in Jan 2011, when i first became 90 days late. I engaged in a loan mod process at that time and BofA suspended the foreclosure until there is an outcome. (I am still in that very long and arduous process and have made only sporadic partial payments to them). So technically i wonder if the foreclosure just initiated by the hoa has standing? HOA lien was filed in 11/10 if that is relevant.

I completed successful loan mod with 2nd lender and am current with payments.

Sounds just like what they do here. The lien jumps ahead of the first. The sale is very fast. The property goes to the HOA. If the owner still occupies then the HOA starts an eviction action. Check your state's laws first. It happens here regularly. However, as I posted, the HOA only can own it until the bank finishes their foreclosure.

Its not that they are trying to get control. They just want the rent it while they can to mitigate the HOA shortfall.

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Don't fully comprehend the chain of title transfer in an hoa foreclosure, or who has right to sell, or right to rent or if BofA would stand by and let it all happen - but referrences to the timeline being very fast has me a bit panicked.

I think right now it's important for me to focus my energies on filing an appropriate ANSWER. So to that end can denita or anyone help. Whocares you touched on this, can you elaborate?

1) What Affirmative Defenses are appropriate in my case?

2) Does the HOA lose standing in light of the fact that BofA already initiated foreclosure a year ago? Albiet, in suspended mode at this time.

3) In my ANSWER when I state that Plaintiff violated the Davis-Stirling Act at the time they allowed the BOD to vote and approve lien, do I include evidence at this time (minutes, cite law code, etc) and list as exhibits? Or wait for discovery phase if we actually proceed towards trial?

4) Same as #3 but regarding Plaintiff and Plaintiff's attorney violating DSA when they commenced foreclosure of lien without engaging in formally requested IDR/ADR - do i submit email chain, formal letter, other evidence at this time?

All guidance is appreciated.

Edited by cal328
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Look into your state exemptions for judgments as concerns your residence. Here, there is an exemption of XX dollars for each owner. Before any foreclosure can be instituted, the property must have equity that equals the exemption PLUS the amount sought. A consultation with a real estate attorney will fix this quickly. Try the one who represented you at your closing.

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Thank you legaleagle for your reply. Didn't use RE attorney when we bought home, it was new construction and we went through builder's sales office.

RE: "property must have equity that equals the exemption PLUS the amount sought, before foreclosure can be instituted" I see many foreclosures commenced on homes with zero equity, some in my neighborhood.

I believe the hoa is excersing a legitimate right to institute foreclosure - but in my case they violated the Davis-Stirling Act in the process by not engaging in a formally requested dispute resolution. So where I'm at now is trying to understand the most appropriate way to ANSWER the summons within 30 days. General Denial w/Affirmative Defenses? Motion to Strike? Cross-compalint? etc.

Would it help anyone if I were to pm you with the complaint attached??

Thank you

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I see many foreclosures commenced on homes with zero equity, some in my neighborhood.

These are bank foreclosures. this sounds like something akin to condo dues, correct? They are not the mortgage holder, so they get in line. Doubtful any judge would allow a forclosure for a debt like this.

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THANK YOU for the first step, 1stStep. Thanks to you to legaleagle.

I will ANSWER with a Denial and individually list the paragraphs I disagree with. Such as:

Defendants deny plaintiff’s allegation paragraph 8 and demands strict and authenticated proof thereof. (Para 8 incorrectly lists the dollar amount of dues that are being adding to the debt on a monthly basis).

Defendants deny plaintiff’s allegation paragraph 12 and demands strict and authenticated proof thereof. (Para 12 lists total amount due. And if para 8 is incorrect how can para 12 be vaild)

I will search for appropriate Affirmative Defenses. Perhaps "Mistake" & "Standing?"

DEFENDANTS FIRST AFFIRMATIVE DEFENSE: MISTAKE

1. Plaintiff errored by commencing judicial foreclosure prior to engaging in formally requested IDR/ADR pursuant to Civil Code Section 1363.810, et seq.

DEFENDANTS SECOND AFFIRMATIVE DEFENSE: PLAINTIFF LACKS STANDING TO SUE

1. Plaintiff that is named in the caption set forth above lacks standing to file suit as limited civil case; as action to enforce the lien affects property that is also affected by a similar pending action that is not a limited civil case, or where the total amount of the liens sought to be foreclosed against the same property aggregates an amount in excess of twenty-five thousand dollars ($25,000), the action is not a limited civil case. (My lenders foreclosure).

Then counterclaim for the Davis-Stirling violations? With my ANSWER of a follow up motion later?

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So, be careful with your HOA foreclosure. If they have an attorney encouraging your board to foreclose, it can be done very quickly.

Denita, they do but, they still have to wind through the judicial process right? Including motions and legal posturing and whatever else may occur, as well as the actual trial? So I imagine that could take 4-6 months or so to complete the foreclosure process, if it's not dismissed, which time I would think I'm allowed to stay in my home while I fight this action? Is that correct?

Thank you

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Florida is a judicial foreclosure state but California uses non-judicial foreclosure (more than judicial).

It is my understanding that California allows both judicial and non-judicial foreclosures and that the primary method is non-judicial foreclosure. See here: California Courts - Foreclosure

You do have some protection from HOA foreclosure, check out SB 137 that was passed in 2006. It limits the HOA from foreclosing (in California only) unless two low level thresholds are met: 1) the debt must be greater than $1800 OR 2) the debt must be older than 12 months old. There is a good article here for you to review Realty Times - New California Law Protects Against HOA Foreclosure

That "new law" is a direct result of a homeowner being foreclosed upon in California by an HOA over $120 in past due fees. So now the amount has to be higher, but really it is not hard to get to 12 months or to $1800.

There is also a short time frame for notice: 15 days notice for HOA foreclosures in California. I would not count on having 4 to 6 months to stall them along.

If I were in your shoes, I would be negotiating with the HOA right now if your intent were to keep the house. JMO. (FYI, I was in your shoes, but here in Fl. and made the decision to not keep the house. But, because the F/C was so slow for the mortgage and fast for the HOA, I paid the HOA and let the house foreclose under the mortgage). Only you can make that decision.

Edited by Denita
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Yes Calif is both, and they primarily use non-judicial like you say. My HOA has decided to go judicial.

You say - "There is also a short time frame for notice: 15 days notice for HOA foreclosures in California. I would not count on having 4 to 6 months to stall them along". - 15 days from when??

Yes my interest is in keeping the house, i certainly don't want to lose it for $3500 in past hoa dues and atty fees ... but I cannnot speak with the HOA after litigation has begun.

My immediate plan of action is to ANSWER the summons and if prudent, subsequently send the hoa atty a letter describing how they violated the Davis-Stirling Act by not engaging in formally requested Internal Dispute Resolution. And then ask that they dismiss the case. If they refuse then they chance possible sanctions from the judge committing DSA violations. If they agree, then we go to IDR and ideally agree on a payment plan to get current.

I'm essentially looking for guidance on the best way possible way to answer the complaint.

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Aren't they SHOOL? They cannot force the sale with a Stayed action. They have committed several rosenthal violations ie Not validating, Improper billing per the FCBA, Taking an action they cannot take.

It would seem that the HOA has made major violations that would obliterate what you would owe.

I have seen many HOA actions and people demurrer to them alot.

Look at this they advocate paying the fees under protest:

http://www.fhcsd.com/pdf/ForeclosureWorkshop.pdf

CA Foreclosure Law - Civil Code 1367 | ForeclosureRadar

Cal. Civ. Code 1367.4. looks promising

Lona v. Citibank Docket

Cal.App. 6th Dist (H036140) 12/21/11 Case complete 2/22/12

TRUSTEE'S SALES: The court reversed a summary judgment in favor of defendants in an action seeking to set aside a trustee's sale on the basis that the loan was unconscionable. The court held that summary judgment was improper for two reasons:

1. The homeowner presented sufficient evidence of triable issues of material fact regarding unconscionability. Plaintiff asserted that the loan broker ignored his inability to repay the loan (monthly loan payments were four times his monthly income) and, as a person with limited English fluency, little education, and modest income, he did not understand many of the details of the transaction which was conducted entirely in English.

2. Plaintiff did not tender payment of the debt, which is normally a condition precedent to an action by the borrower to set aside the trustee's sale, but defendants' motion for summary judgment did not address the exceptions to this rule that defendant relied upon.

The case contains a good discussion of four exceptions to the tender requirement: 1. If the borrower's action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. 2. A tender will not be required when the person who seeks to set aside the trustee's sale has a counter-claim or set-off against the beneficiary. 3. A tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. 4. No tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee's deed is void on its face.

Edited by Seadragon
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THANK YOU Seadragon for your reply. Wow, that workshop would have been ideal, very appropriate to my situation. Too bad.

They have absolutely committed Davis-Stirling Act violations. I'm torn between just answering the summons with denials only and then contact the atty by phone and asking them to dismiss case so we can engage in required IDR.

OR

A full blown answer and listing all Davis-Stirling violations violations with evidence to support with maybe a counterclaim for the DSA violations. This would certainly piss off the atty though and if I do something wrong in my filings, they're sure to come after me strong.

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Wow! Today on the courts website I noticed the POS for the summons was filed. I called to ask the clerk what date they said i was served and she told me Feb 16th - which is a flat out lie. Sleazy processer really served me on the 18th. Glad I checked. Processer gave me both mine and my wifes and i guess since he didn't personally give it to her he mailed another copy to just her, which we did recieve. I just checked the date on the envelope, and it has a pitney bowes stamp with no date. Amazing how this system is rigged to screw the unsuspecting little guy.

I now have two less days to file my answer and had i not called the clerk i probably would have missed my 30 day window and been in default!

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File a motion to quash service...that could buy you some time.

Quash serveice? Instead of filing an answer? How do I prove my claim? Basically just my word against his. There's no record of anything, processer never had me sign for the summons, he just gave me both copies and left. And no date on envelope of wife's extra copy.

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