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Foreclosure fee added to monthly bill may be illegal

It could be a phantom assessment, one made by a board without following the law and without substantiating its actions.

July 19, 2009|Stephen Glassman and Donie Vanitzian

Question: I am a senior citizen living in the Los Angeles area, and I'm on a very tight budget. I am having difficulty getting answers from my board. Recently I noticed a new nominal fee on my monthly bill from the association entitled "foreclosure." I asked the management office what this amount is for, but they told me I had to ask a specific person on the board. Whenever I request the information, that specific person, coincidentally, is unavailable and doesn't get back me. The board has not responded to homeowner questions posed at meetings. How can I find out why I am being billed an additional fee each month?

Answer: You may have encountered a phantom assessment, one made by a board without following the law and without substantiating its actions. An association normally collects only three types of assessments: regular, special and emergency. There is nothing in the Davis-Stirling Act that allows an association to collect for "foreclosure" as a type of preemptive or punitive measure. As such, this fee probably is being illegally collected. If so, you would be entitled to a refund of the "fees" you have paid, along with any late charges, including interest and perhaps legal fees.

The association needs to explain the charge before it can be collected, and evasive tactics used to thwart your efforts for answers will only complicate matters for the board. Board directors should be reminded that they have a duty to answer your questions.

You are entitled to demand association books and records, including minutes. If the board refuses to provide the documents, you could file an action in Small Claims Court for those records. If the court determines the board's actions in withholding those records were unreasonable, you could be awarded $500 in damages.

Homeowner association collections fall under the federal Fair Debt Collection Practices Act. This means the board must provide you with written proof that you owe the amount billed and the paperwork substantiating the amount allegedly owed. Homeowner association boards must also abide by the California Rosenthal Fair Debt Collection Act. Failure to abide by both of these statutes can cause serious problems for the association and all its titleholders.

Always document any problems in writing to the association's board. Under Civil Code Section 1365.1, an owner may pay under protest any disputed charge or sum levied by the association, and by so doing specifically reserves the right to contest the disputed charge or sum in court or otherwise. That means you must include a letter with your monthly payment objecting to each occurrence of the disputed fee and state that you are paying it under protest pending a determination on its legality. Be certain to send a copy of each protest to your board by certified mail, return receipt requested.

Because the board has declined to discuss it, you should start by making a written demand for the refund of these "overpayments." Then write to the board demanding a meeting to discuss this new charge. Should the directors still refuse to cooperate, consider taking your complaint to the Los Angeles city attorney's dispute resolution program, (213) 485-8324. There is no cost for the mediation, which assists owners in finding resolutions to such problems.


Send questions to P.O. Box 11843, Marina del Rey, CA 90295 or e-mail

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