Alarmed by a flurry of horror stories, state lawmakers are rushing to resolve a long-standing complaint about homeowners associations: the power that they have to seize properties without going to court.
By law, associations are entitled to foreclose on the homes of members who fail to pay their dues. Though most residents pay their bills before their houses are actually sold, thousands have lost their homes, sometimes over disputes involving a few hundred dollars.
"It's legalized extortion," said Marjorie Murray, a state advocate for senior citizens, many of whom live in condominiums and private communities run by associations. "Why should homeowners associations have such a power?"
Some homeowners association leaders say they need so-called nonjudiciary foreclosure powers, which allow them to take property without seeking a judge's approval, to keep neighborhoods looking tidy and to protect property values. Without such powers, associations would have little ability to require homeowners to pay assessments that cover the costs of such projects as new roofing in a condominium complex or landscaping services and street maintenance in a gated subdivision.
"Unless and until these debts are collected, the remaining homeowners must make up the difference, and that is unfair to them all," said Skip Daum, a lobbyist for the Community Associations Institute, a trade group whose members include homeowners association boards, community managers and lawyers.
But the Assembly and the Senate, responding to recent high-profile cases, are considering two bills this year that would limit homeowners associations' nonjudiciary foreclosure powers.
"One of the doctrines of our laws is that the penalty or remedy should fit the violation," said Assemblyman Darrell Steinberg (D-Sacramento), whose bill banning nonjudiciary foreclosure passed the Assembly at the end of May. "And taking someone's home obviously should be the last resort."
The controversy over nonjudiciary foreclosure stretches beyond California as legislators from Arizona and Texas, among others, have attempted -- with mixed results -- to limit the power of homeowners associations. Still, associations in many states can simply auction a property after deeming a bill overdue and filing notices with the county.
