The Orange County Appellate Division concludes in Huntington Continental v. JM Trust that the Davis-Stirling Common Interest Development Act compels a homeowner’s association to accept and apply partial payments that reduce delinquent assessments owed, but not any other amounts due such as late fees, interest, attorney fees, and costs. This is true even if an action has been commenced to foreclose the lien since there is nothing in the Act precluding the acceptance of partial payments of delinquent assessments once litigation has commenced.
The court concluded that the Act provides a comprehensive framework detailing how homeowner’s associations may secure delinquent assessments and related fees by way of a lien against the homeowner’s separate interest in the property. It specifically allows for partial payments and delineates to what debts, and in which order, payments are to be applied. The plain language contemplates partial payments of amounts owed. There would be no need to explain how payments are to be applied to the various charges if full payments, only, were contemplated.
The requirement that an association accept partial payments is important since, pursuant to Civil Code section 5720, before an association can foreclose a lien, the assessments (not including late fees, interest, attorney fees, and costs) must exceed $1,800 or be more than 12 months delinquent.
Update: The case was certified for transfer to the Court of Appeals. The Court of Appeals agreed with the Appellate Department’s analysis. See, Davis-Stirling: Partial Payments Reducing Assessments Must Be Accepted.
[The opinion cites to The Davis-Stirling Common Interest Development Act as written prior to January 1, 2014. The Act has been rewritten and renumbered and can now be found at Civil Code section 4000 et seq.]
Mr. Daymude consults with clients and accepts cases involving the Davis-Stirling Common Interest Development Act, including those involving assessments and foreclosures under the Act. For other types of cases accepted, please scroll the Home and My Practice pages. If you are seeking a legal consultation or representation, call Michael Daymude at 818-971-9409.