California HOA Delinquent Assessments: Civil Code 5650 to 5720

Quick answer: In California, an HOA assessment is delinquent 15 days after it is due (or later if your declaration says so). The association can then add a late charge of up to 10% of the assessment or $10, whichever is greater, reasonable collection costs and attorney's fees, and interest of up to 12% a year starting 30 days after the due date (Civil Code 5650). Before it records a lien, the board must send a certified-mail notice at least 30 days ahead (5660), offer meet and confer (5670), and vote to record the lien in an open meeting (5673). It cannot foreclose until the delinquent assessments reach $1,800 or are more than 12 months past due (5720).

California's collection rules live in Davis-Stirling, Civil Code sections 5650 through 5740. They are strict about order. Skip a step and Section 5690 makes the association start the notice process over at its own expense. This guide walks a volunteer board through each step in the order the statute requires, and shows where the money side (budgets, bad debt, collection costs) fits in.

The California HOA collection timeline at a glance

Step 1: When an assessment becomes delinquent

The starting point is Section 5650. It sets when an assessment is late and caps what the association can add to it:

(b) Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent, the association may recover all of the following: (1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney’s fees. (2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration. (3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney’s fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.

A few practical points for the treasurer:

• Check your declaration first. If it gives owners more than 15 days, or sets a smaller late charge or a lower interest rate, the declaration controls. The statute sets ceilings, not defaults you must use.
• Interest runs on the whole debt, including collection costs and attorney's fees, but not before day 30.
• Charges must be reasonable. Reasonable costs and attorney's fees are recoverable; padded fees invite a dispute.

Step 2: Apply payments to assessments first

When a delinquent owner pays, the money goes to assessments before anything else:

(a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.

This matters for your bookkeeping. If your software applies payments to the oldest charge, and the oldest charge is a late fee, you are out of compliance. Set the payment order to assessments first, then fees, costs, late charges and interest. Owners can also ask for a receipt showing the payment date and who received it, and the association must give a mailing address for overnight payments in its annual policy statement (5655(b) and (c)).

Step 3: Send the 30-day pre-lien notice by certified mail

At least 30 days before recording a lien, Section 5660 requires a certified-mail notice to the owner of record. Paraphrasing the required contents (confirm the exact wording with the statute and your attorney):

• A general description of the association's collection and lien enforcement procedures and how the amount was calculated, plus a statement that the owner may inspect association records under Section 5205.
• A specific foreclosure warning in 14-point bold type (or capital letters if typed). Copy it word for word from 5660(a).
• An itemized statement of the charges: delinquent assessments, collection costs, attorney's fees, late charges and interest.
• A statement that the owner owes no charges, interest or costs if the assessment turns out to have been paid on time.
• The owner's right to request a meeting with the board (5665), to use the association's meet and confer program, and to request alternative dispute resolution before foreclosure.

Step 4: The payment plan meeting

An owner who receives the notice can ask in writing to meet with the board about a payment plan. The board has a deadline:

(b) The board shall meet with the owner in executive session within 45 days of the postmark of the request, if the request is mailed within 15 days of the date of the postmark of the notice, unless there is no regularly scheduled board meeting within that period, in which case the board may designate a committee of one or more directors to meet with the owner.

If your association has payment plan standards, you must share them. While an owner keeps to a payment plan, additional late fees do not accrue, but the plan does not stop the association from recording a lien (5665(c) and (d)). If the owner defaults, collection picks up where it left off (5665(e)).

Since the meeting is in executive session, the minutes of the next open meeting should note in general terms that it happened, without naming the owner. Our sister site covers how to write that entry in HOA executive session minutes.

Step 5: Offer meet and confer before recording a lien

Section 5670 requires the association, before recording a lien, to offer the owner its internal dispute resolution (meet and confer) program and to participate if the owner asks. Keep a copy of the offer in the owner's collection file.

Step 6: The board votes to record the lien in an open meeting

This is the step boards most often get wrong, because it cannot be handed to a manager or collection agent:

For liens recorded on or after January 1, 2006, the decision to record a lien for delinquent assessments shall be made only by the board and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors in an open meeting. The board shall record the vote in the minutes of that meeting.

Put the lien vote on the open meeting agenda and identify the account without exposing more than necessary. For agenda and notice rules in California, see Civil Code 4920 board meeting rules.

Step 7: Record the lien, mail the copy, and release it on payment

The lien is created when the association records a notice of delinquent assessment with the county recorder (5675(a)). The itemized statement from the pre-lien notice is recorded with it, and a copy of the recorded notice goes to every owner of record by certified mail no later than 10 calendar days after recording (5675(b) and (e)).

When the owner pays in full, the clock runs the other way:

(a) Within 21 days of the payment of the sums specified in the notice of delinquent assessment, the association shall record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest a copy of the lien release or notice that the delinquent assessment has been satisfied.

If a lien was recorded in error, the association must reverse all late charges, fees, interest, attorney's fees and lien costs, and pay the dispute resolution costs (5685(c)). Calendar the 21-day release deadline the day the payment clears.

Step 8: Foreclosure, and the $1,800 floor

California sharply limits HOA foreclosure for small balances:

(b) An association that seeks to collect delinquent regular or special assessments of an amount less than one thousand eight hundred dollars ($1,800), not including any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest, may not collect that debt through judicial or nonjudicial foreclosure, but may attempt to collect or secure that debt in any of the following ways:

The $1,800 counts only the delinquent regular and special assessments. Late charges, fees, attorney's fees, interest and accelerated assessments do not count toward it. Below that amount, the association can sue in small claims court, record a lien it cannot foreclose on yet, or use any other lawful method except foreclosure. The limit stops applying once the assessments secured by the lien are more than 12 months delinquent (5720(c)(1)).

When foreclosure is available, the decision again belongs to the board alone:

(c) The decision to initiate foreclosure of a lien for delinquent assessments that has been validly recorded shall be made only by the board and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors in an executive session. The board shall record the vote in the minutes of the next meeting of the board open to all members. The board shall maintain the confidentiality of the owner or owners of the separate interest by identifying the matter in the minutes by the parcel number of the property, rather than the name of the owner or owners. A board vote to approve foreclosure of a lien shall take place at least 30 days prior to any public sale.

Before foreclosing, the association must also offer meet and confer or alternative dispute resolution, at the owner's choice, and binding arbitration is not available if the association plans a judicial foreclosure (5705(b)). A nonjudicial sale is also subject to a right of redemption:

The redemption period within which the separate interest may be redeemed from a foreclosure sale under this paragraph ends 90 days after the sale.

Fines are not assessments

Boards sometimes try to roll fines into the collection process. The statute does not allow foreclosure on them:

(b) A monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing documents, except for the late payments, may not be characterized nor treated in the governing documents as an assessment that may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.

A charge to repair common area damage caused by a member, a guest or a tenant can become a foreclosable lien if the governing documents authorize it (5725(a)). Track fines, damage charges and assessments in separate ledger accounts so you can prove which is which.

The money side: budgeting for delinquencies

Collections are a cash-flow problem before they are a legal one. A few habits that help:

• Budget a bad debt allowance based on your actual delinquency history, and a line for collection and legal costs. Recoverable costs still have to be paid up front. Our HOA master budget guide shows where these lines go.
• Keep enough operating cash to cover a few slow-paying owners without dipping into reserves. See how much cash to keep in the operating account.
• Send the required collection notice every year. Section 5730 requires a specific assessments and foreclosure notice in the annual policy statement under Section 5310. It travels with the budget package covered in our Civil Code 5300 annual budget report guide.
• Run an aging report monthly and act on day 15, not day 90. The earlier the first friendly reminder goes out, the fewer accounts reach the lien stage.

If you manage associations in more than one state, compare these steps with Washington's rules in our RCW 64.90.485 collections post. The two states differ on notice timing and foreclosure limits.

Common mistakes that force a restart

• Letting a manager or attorney decide to record a lien without a board vote in an open meeting (5673).
• Sending the pre-lien notice by regular mail instead of certified mail, or fewer than 30 days before recording (5660).
• Applying payments to late fees before assessments (5655).
• Counting late fees and interest toward the $1,800 foreclosure threshold (5720).
• Missing the 21-day lien release after payment (5685).

Under Section 5690, an association that does not follow Article 2 must restart the notice process before recording a lien, and the association, not the owner, pays the cost of starting over.

These sections are current as published on the Legislature's site; check leginfo.legislature.ca.gov for any later amendment before relying on a specific number, and confirm with the statute and your attorney.

This is not legal advice. Talk with a California HOA attorney before recording a lien or starting foreclosure.

Need help keeping collections on track?

Dynamite Management handles the financial side for self-managed associations in any state: assessment billing, aging reports, payment posting in the right order, and the paper trail your attorney will need. Talk to Dynamite about taking collections off your volunteers' plates (here is why self-managed HOAs need a backend financial manager), or compare options in HOA accounting software for self-managed associations.

FAQ

When is a California HOA assessment considered delinquent? Fifteen days after it is due, unless the declaration gives a longer period (Civil Code 5650(b)).

What is the maximum late fee a California HOA can charge? The greater of 10% of the delinquent assessment or $10, unless the declaration sets a smaller amount (5650(b)(2)).

Can a California HOA charge interest on late assessments? Yes, up to 12% a year, starting 30 days after the assessment is due, unless the declaration sets a lower rate (5650(b)(3)).

Can a California HOA foreclose for less than $1,800? No, not until the delinquent assessments, excluding fees, interest and costs, reach $1,800 or are more than 12 months delinquent (5720).

Who decides to record a lien or foreclose? Only the board. The lien vote happens in an open meeting; the foreclosure vote happens in executive session and is recorded in the next open meeting's minutes by parcel number (5673, 5705(c)).

Cover: Photo by Darya Sannikova on Pexels