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An HOA is putting a $2500 lien on an unimproved lot in Lake…

An HOA is putting...

An HOA is putting a $2500 lien on an unimproved lot in Lake County CA. My name as recorded is Dale Moore, Trustee. My ex wife is now trustee through a divorce settlement. The change was never recorded. The trust was dissolved many years ago. My wife and I have an ongoing dispute about the $2500 fine. In what name will the lien be recorded. Will it be against me personally. How likely will it be picked up by credit agencies and what potential effect will it have on my 750+ FICO? I have received a pre-lien letter.

Lawyer's Assistant: Since estate law varies from place to place, can you tell me what state this is in?

CA

Lawyer's Assistant: Has any paperwork been filed?

With the Co Recorder? Not to my knowledge

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

I think that covers it.

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1/8/2018
Attyadvisor
Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 8,465
Experience: 30 years of experience in General Practice, Real Estate Law and Estate Law.
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Welcome and thank you for your question. I will be the professional that will be assisting you.

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An HOA lien is both a personal debt as well as a debt that can be foreclosed.

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The lien will be in the name of the party or parties that are on the title to the real property. Is the unimproved property lien in your name?

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Customer reply replied 4 months ago
As written in my question, it is in the name of Dale Moore, Trustee. My name is*****

You are personally liable and can be foreclosed.

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What matters is the lien was filed against at the time the lien was filed

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Customer reply replied 4 months ago
Despite that I am trustee?

If it is in the name of a trustee the trustee is liable personally.

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Is your wife ended up with the real property it needed to be deeded into her name.

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Customer reply replied 4 months ago
Is it likely that the lien would be picked up and shown on my personal credit report even though it is recorded as Dale Moore, Trustee?

"How HOA Liens Work

In most cases, once you fall behind in payments, the HOA can record a lien on your property. Almost all HOAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”).

Pre-Lien Notice Requirement in California

In California, a lien cannot be recorded until 30 days after the HOA has sent notice to the homeowner regarding the delinquent assessments. The notice must include (among other things):

  • a general description of the collection and lien enforcement procedures
  • an itemized statement of the charges owed, and
  • various options to try to resolve the problem of the delinquent assessments (Cal. Civ. Code § 1367.1(a)).

The HOA must notify the homeowner in writing at both a primary and, if available, a secondary address (Cal. Civ. Code § 1367.1(k)).

Board Approval Required Before Lien Can Be Filed

Only the board of directors of the HOA has the authority to make the decision to record the lien for delinquent assessments. The board must approve the decision by a majority vote of the board members in an open meeting and must record the vote in the minutes of that meeting (Cal. Civ. Code § 1367.1(c)(2)).

Charges the HOA May Include in the Lien

In California, an assessment is considered delinquent 15 days after it is due, unless the Declaration of Covenants, Conditions, and Restrictions(CC&Rs) provides for a longer time period (Cal. Civ. Code § 1366(e)).

If an assessment is delinquent, the association may recover all of the following:

  • Assessments. The HOA can include amounts for unpaid assessments in the lien.
  • Reasonable attorney's fees and costs. The association may include the costs expended in attempting to collect the past-due assessments in its lien.
  • Late charge.The association may include a late charge so long as it does not exceed 10% of the delinquent assessment or $10, whichever is greater (unless the CC&Rs specify a late charge in a smaller amount, in which case any late charge imposed cannot exceed the amount specified in the CC&Rs).
  • Interest. The HOA may impose interest on all of the above charges, including the delinquent assessments, reasonable attorney's fees, and reasonable fees and costs of collection at an annual interest rate not to exceed 12% (unless the CC&Rs specify a lesser amount, in which case the lesser rate of interest applies), beginning 30 days after the assessment becomes due (Cal. Civ. Code section 1366(e)).

HOA Lien Priority in California

An HOA lien is prior to all other liens recorded after the notice of assessment, except that the CC&Rs may provide that the HOA lien may be subordinated to any other liens and encumbrances (Cal. Civ. Code § 1367(b),(d)). (Learn more about lien priority and what happens to a first mortgage in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)

HOA Foreclosures in California

If you default on dues or assessments, the HOA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)

In California, the HOA may foreclose its lien judicially or nonjudicially (Cal. Civ. Code § 1367.1). Most HOA foreclosures in California are nonjudicial. (Learn more about the difference between judicial and nonjudicial foreclosures and foreclosure laws and procedures in California.)

HOA Foreclosure Limitations

California law limits the HOA’s ability to foreclosure in certain circumstances.

Limitation Based on Amount and Length of Delinquency

The HOA cannot foreclose unless:

  • the delinquent amount is $1,800 or more (not including any accelerated assessments, late charges, fees and costs of collection, attorney's fees, or interest), or
  • the owner has been delinquent for more than 12 months (Cal. Civ. Code § 1367.4).

Right of Redemption Following Foreclosure

If the HOA forecloses on the homeowner using a nonjudicial foreclosure, the foreclosure is subject to a 90 day right of redemption after the sale (Cal. Civ. Code § 1367.4(c)(4)). When you redeem the property, you get it back by repaying all assessments, interest, attorneys fees, and possibly costs of repair. (Learn more in Nolo’s article The Right of Redemption Following an HOA Foreclosure.)

In California judicial foreclosures, the redemption period is:

  • 90 days, if the proceeds of the sale are sufficient to satisfy the debt, or
  • one year, if the proceeds from the sale are insufficient to satisfy the delinquency (Cal. Code Civ. Proc. §729.030(a) and (b))." https://www.nolo.com/legal-encyclopedia/california-hoa-foreclosures.html
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"An HOA Foreclosure’s Effect on Your Credit Score

Your credit score influences the credit that lenders will offer you, as well as the terms, like the interest rate. A FICO credit score, for example, ranges from 300–850. A foreclosure will likely damage your FICO score by reducing it by at least 100 points, probably more. The actual number of points the score will drop varies from one person to the next. If you had a really high credit score before the foreclosure, the drop will be more severe. But if your credit score is already pretty low, there will be less of an impact. Missed HOA payments might also lower your score, if the HOA reports them to the credit reporting bureaus.

A Low Credit Score Will Likely Affect Your Ability to Obtain a Mortgage Later On

When you apply for a mortgage, one of the first things a potential lender will take into consideration when deciding whether or not to lend to you is your credit score. Lenders prefer to make loans to borrowers who are most likely to repay them, such as those people with the highest scores. If you have a low score as a result of a foreclosure, you may be able to get a mortgage loan eventually, but the interest rate will probably be higher or you may have to put more money down." https://www.nolo.com/legal-encyclopedia/hoa-liens-foreclosures-an-overview.html

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Customer reply replied 4 months ago
This is for a disputed $2500 fine. I am not concerned with foreclosure at this time. The unimproved lot is worth $10,000. My question is if the lien is recorded as Dale Moore, Trustee, Is it likely the credit reporting agencies will pick it up as Dale Moore and add to my personal credit report or does the designation of Trustee confuse the issue?

When you say you are the trustee the land is a trust?

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If you are the owner in your name alone or through trust it is a personal debt.

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Customer reply replied 4 months ago
It was originally a trust 30 years ago. The trust (Georgia Moore Trust) no longer exists due to the death of my mother. Due to a divorce, my Ex was awarded the property, but never recorded the name change.

Unfortunately it is still in your name and will be picked up as a personal debt.

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It may be time to record the property in her name.

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Customer reply replied 4 months ago
I agree, but will it forestall recording the lien in my name?
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"There are several legal distinctions between condominiums and Planned Unit Developments (PUDS)—the ownership of common areas is one of the most cited. However, whether a townhouse or a single-family dwelling is part of a PUD or condo development, both are deed-restricted properties subject to homeowner associations regulated by California’s Davis–Stirling Common Interest Development Act in the California Civil Code. A power reserved for the board of all common interest developments is the right to place a lien on the property of an owner who violates the covenants or fails to pay on some association-related debt. The lien lets the board foreclose on and take that property to satisfy the debt.

This is tough for estate planning, because if a lien is applied to the property and the owner passes away, the estate can be attached. This keeps the property from passing to the owner’s heirs until any outstanding debts are paid.

Unfortunately, the most commonly used trusts won’t protect these assets." http://blog.411probate.com/2017/02/trusts-and-home-owners-association-hoa-not-necessarily-a-good-match.html

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http://www.latimes.com/business/la-fi-associations-trusts-20170201-story.html

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Trusts do not have the same protections against HOA's due to deed restrictions. If the lien is not recorded yet, transfer the HOA property into her name.

Attyadvisor
Attyadvisor, Attorney
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Experience: 30 years of experience in General Practice, Real Estate Law and Estate Law.
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Thank you.

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