Alterra’s collection process is continuously monitored and refined by expert HOA lawyers to:
- ensure compliance with statutory requirements
- capitalize on the latest and most effective methods for securing recovery
- ensure the appropriate method is being employed at key stages
Unlike typical HOA collection agencies and law firms, Alterra offers a comprehensive menu of services. This gives our team the ability to employ the collection method and tools that will be the most effective for each particular file. In the majority of circumstances we prefer to utilize the non-judicial process because it typically allows for the file to be resolved quicker and with lower costs.
Non-Judicial Collection Process/Timeline
*The following illustrates the non-judicial process/timeline in a simplified form.
Recovering Assessment Debt through Non-Judicial Foreclosure
HOA boards have a duty to collect delinquent assessments. Fortunately, California law provides HOAs with strong collection remedies–including the ability to record liens and to enforce those liens through non-judicial foreclosure. While other collection options are available, we prefer to utilize non-judicial foreclosure for the majority of files because it is very effective and significantly cheaper than alternative avenues such as filing lawsuits.
Initial Demand Letter
Alterra’s process begins with formal legal correspondence to the homeowner demanding immediate payment of the delinquent amount owed plus late charges, interest and the collection fees and costs incurred by the HOA. This correspondence encloses the HOA’s collection policy, an itemized statement of the amount owed, and additional disclosures required under state and federal statutes.
Delinquent Assessment Lien
If the homeowner fails to remit payment, the process continues with the recording of a delinquent assessment lien (“Lien”) against the homeowner’s property pursuant to California law. If the HOA’s management company has already filed a lien, Alterra verifies the information contained in the lien to ensure all statutory requirements have been satisfied. If the homeowner does not resolve the matter within the prescribed period of time (typically an additional 1-2 months), the HOA will then be in a position to begin the foreclosure process.
Commencement of Non-Judicial Foreclosure Process
At this stage an attorney will review the file along with pertinent information about the property and the homeowner to determine what collection route is the most appropriate for the association moving forward (e.g., continuing with the non-judicial foreclosure action or filing a lawsuit against the homeowner to obtain a money judgment). There are numerous factors that impact this determination, such as the amount of equity in the property and the homeowner’s employment/financial status. Once the review of the file and pertinent property/homeowner information is complete, the HOA is provided with Alterra’s recommendation as to how to proceed.
Assuming that non-judicial foreclosure is the recommended option, a Notice of Default (NOD) is prepared and recorded to formally start the non-judicial foreclosure process. The Board’s decision to initiate foreclosure is served on the homeowner. Alterra also sends out notices to all parties who have a legal interest in the property, as required by law.
**The vast majority of files are resolved at this stage of the process. When a homeowner is served with notice that the Board has decided to commence foreclosure, the homeowner usually contacts Alterra and either agrees to pay in full or to enter into a payment plan approved by the HOA.
The Notice of Sale (NOS)
If the homeowner has still not paid after 90 days from the NOD, Alterra will obtain the HOA’s authorization to schedule the foreclosure sale. The Notice of Sale (NOS) is prepared, recorded, and then published in a newspaper for three weeks prior to the scheduled sale date. The NOS is also posted on the property itself–often inducing the homeowner to finally step up and resolve the file. At any time prior the the actual opening of the sale on the sale date, the HOA may elect to postpone or cancel the sale.
Foreclosure Sale
If there is still no resolution of the file, the property is put up for auction. There are two (2) potential outcomes from the sale: (1) the property can be sold to the highest bidder, with the HOA being paid everything that is owed (all assessment debt, late charges, interest, collection fees/costs, etc.), or (2) if there are no successful bidders, the property reverts back to the HOA and the HOA can seek to recoup its losses by renting out the property or by selling it to a third-party.
This information is of course a basic overview of the non-judicial foreclosure process. The process involves numerous, legally required steps and each matter may be impacted by events such as payment plan requests, bankruptcy filings, or foreclosure of the property by a first trust deed holder. Alterra’s process is built to accommodate all potential scenarios and to secure the best recovery possible for the HOA.