August 27, 2004

By Mark Stivers (View author info)

The following is a press release from the office of Senator Denise Moreno Ducheny - California State Senate - 40th District

Senator Denise Moreno Ducheny (D-San Diego) announced that AB 2598, her bill to protect homeowners in common interest developments from foreclosure for small amounts of delinquent assessments, was approved today by the Legislature.

The vote in the Senate was 32-1. The vote in the Assembly was 53-6.

Nobody should lose their home over a small debt said Senator Ducheny.. Clearly, the Legislature is convinced that the use of foreclosure by homeowner associations should be limited.

AB 2598 prohibits a homeowner association from using foreclosure for delinquent assessments of less than $2,500, exclusive of collection costs and legal fees. When homeowner associations do use foreclosure for larger debts, they must first offer the homeowner mediation or other forms of dispute resolution, and the owner's equity must be protected. In addition, the homeowner may redeem the property within 90 days after sale.

Homeowner associations may still collect debts under $2500 through small claims or superior court. Court judgments may be enforced like all other judgments through wage garnishment, selling assets and, with court approval, even foreclosure. In addition, an association may record a lien on the property that gets paid whenever the homes sells or is refinanced.

AB 2598 responds to complaints regarding homeowners associations seizing members‚ homes for small amounts of delinquent dues. One such case involved the Radcliff family of Copperopolis, who lost their life savings, invested in their home, when the association foreclosed for $120 in late assessments.

This bill preserves the ability of homeowner associations to collect legitimate debts while ensuring that homeowners do not lose a lifetime of equity over $100 debts, said Ducheny. While AB 2598 was the bill approved by the Legislature, it is identical to SB 1682.

Senator Denise Moreno Ducheny represents parts of San Diego and Riverside Counties and all of Imperial County. She is the Chair of Housing and Community Development Committee.