CA Court Says No to Foreclosure by HOA, Yes to Payment Plan by Member

California Appellate Court decision (January 13, 2014).

An HOA member (“Owner” ) failed to pay applicable homeowner’s association fees. A year and a half later, the association notified Owner that he was $3,864.96 delinquent and recorded a lien against Owner’s property. Prior to foreclosure of the lien, Owner requested that the association refrain from foreclosing in exchange for $2,000 and a formal payment plan. The association accepted the payment plan but Owner only made a few payments before defaulting. Association threatened foreclosure again if Owner did not pay the full amount within a 10 day period. Owner then paid $188 per the agreed payment plan, followed by a $3,500 cashier’s check to be applied to the balance of the amount owed. Association claimed it was “unable to accept partial payments” and proceeded with foreclosure efforts.

The court awarded foreclosure and damages of $5,715.93 against Owner. Owner appealed, on the grounds that the court misinterpreted Civil Code 1367. Owner contended that Civil Code section 1367.1 Subdivision (b) allows for partial payments and delineates to what debts, and in which order, payments are to be applied.

The appellate court reversed the trail court’s judgment and found that that the legislative intent behind Civil Code 1367.1 allows for partial payments to pay down delinquent assessments, and limits the remedy of foreclosure to only a last resort. Accordingly, the Association’s refusal of the partial payments by the owners did not justify a foreclosure.

See case decision: Huntington Continental Town House Association , Inc. v. The JM Trust et al..>