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I am the president of HOA in Los angles. we have mixed use…

I am the president...

I am the president of HOA in Los angles. we have mixed use residential (around 90 unit) and small 6 unit commercial. we discovered that the 6 unit commercial's assessment (monthly HOA fee) were setup extremly lower than residential. Through an expense audit we conducted last year, we discovered that residential side is subsdy commercial unit for the past 9 years. Per the CC&R, everyone has to pay HOA fee to be able to support the operations and allocate reasonable reserve fund, and can not goes to negative. Through this discovers the account record, we first stop the leak by charge higher fee for commercial side, also establish a seperate account book to keep track the expenses and budget. Now the issues is how we ask commerical to payback what they own the residential side, I did a reserach and found there is a california code of civil procedure 337. state that we can go back 4 years. My questions is in our situations, this is applicable. let me know. thanks

Lawyer's Assistant: Because real estate law varies from place to place, can you tell me what state the association is in?

Steve

Lawyer's Assistant: Has any paperwork been filed?

No, we are not looking for file law suite. the civial code 337 specified that regardness is fraud or error. commercial owner has done nothing wrong as they paid the lower fee as setup by previous board.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

I just need experts on this manner (may be hoa attorney) to see if we have solid foundation support us to ask the repay back the insufficient assessement over the past 4 years.

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Customer reply replied 4 months ago
the property is in LA, CA. a typo should "commercial side are subsided by residential side". -
Answered in 3 hours by:
12/18/2017
Michael Lykken, Esq
Category: Real Estate Law
Satisfied Customers: 120
Experience: Partner at Soares & Lykken, Attorneys at Law
Verified

Hello, my name is ***** ***** I am a California real estate attorney. Thank you for using this service, and please understand that I can only provide you with general lethal advice in this forum and that no attorney - client relationship is formed. Now that the formalities are out of the way, let's look at your question. First, I want to pull up the code section you are referring to and then will get back to you.

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So the code section you referred to is a statute of limitation. This doesn't necessarily apply in your case as you aren't planning on filling a lawsuit (this section means that you have 4 years to file a lawsuit based on the breach of a contract or other written adherent). In this case, you are looking at recouping assessments from the businesses that had insufficient assessment levels. What you should look at doing is making a special assessment against the businesses to equalize their assessment with the residential assessments.

I hope this has helped. If you need clarification, please do not hesitate to ask. Otherwise, I would appreciate it if you would rate my service as the only way I get credit for helping you is if you rate my service. Thank you and good luck!

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Customer reply replied 4 months ago
follow up questions:
make sure I understand you correct, 1. the HOA can just go ahead to make a special assessment against the businesses to equalize their assessment with the residential assessments. 2. the special assessment amount should be computed based on our audit, 3. it can go back up to 4 years from the date of discovery from the SOL of the ccv 337 code
4. The foundation/or legal support to ask this assessment to equalize with the residential side is simply the "contract" definition of every owner's duty with the HOA. Please confirm if above 4 are the essential of this. as you can expect, when you ask 6 commerical owner to pay back, they will not happy. However, is not, then the remaining 90 residential side will also not happy, plus I believe this is board's obligation to be fair. make sense. Please advise
I don't think you are limited to four years of assessments. As long as the CC&Rs do not differentiate between the assessments levied against residential owners and commercial owners, you should be able to make a special assessment to equalize the amounts paid. You state that your audit disclosed that they were not paying sufficient amounts compared to the residential owners, so you can use that to calculate the amount of the assessment. Do you know why the commercial owners were assessed at a lower rate than the residential owners?
Michael Lykken, Esq
Category: Real Estate Law
Satisfied Customers: 120
Experience: Partner at Soares & Lykken, Attorneys at Law
Verified
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Customer reply replied 4 months ago
you asked why commericial assessment is so low in previous BOD. The previous board is controlled by developer, and he owns 50% of the commercial unit. He always told us that the DRE budget for commercial is x. Once I took over the board, I actually looked at the DRE, found out they put those major expense items such as 'elevator' as "commercial should responsible", the developer then treat it as 0 dollar. by lower the fee, developer do not need pay that much. - simple like this.....
I believe you have answered all my questions. thank you very much.
Customer reply replied 4 months ago
Michael, I have another follow up questions: what if we notify them the special assessment with all supporting document to justify the amount, and give them reasonable time to pay. what happen if they refuse to pay? what are the actions hoa can take? should we go to a small court to ask for a judgement? or if they decide to sue hoa... or we do nothing, and just establish that they owe assessment money as fact, then they lost the voting priviliage, or not allow to run the officer in the future (this is defined in cc&r). what you think the above options? thanks

You would need to check your CC&Rs, but generally you would lien the property for the past due assessments. There could be other penalties such as loss of use of common areas and of course fees and interest, but that would all be set forth in the governing documents.

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Customer reply replied 4 months ago
for the worst case, if hoa need to lien the property in case owner refuse to pay the insufficient assessment. Is the file a lien, go to the court/or small court involve with attorney or ADA, is this process/cost complicate or huge? I just want to have some "feel" about the process. thanks

It wouldn't be a bad idea to retain an attorney to help you as you have to make sure you follow the Civil Code requirements. You can find them here. You need to provide a notice of intent to lien 30 days before you record the lien. Once the lien is recorded and 30 days have passed, you have to offer the owner the right to meet and confer or offer an alternative dispute resolution pursuant to these civil code sections. Once that is done the association has the right to begin foreclosing on the delinquent owner's interest. So this can take some time, but there is the ultimate right to foreclose on the lien if the owner doesn't pay. I hope this has helped!

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Customer reply replied 3 months ago
very good explanation. thank you. have a good holiday

Y​ou're very welcome, and happy holidays to you as well!

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Michael Lykken, Esq
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