My HOA partial payment victory
Appellate Court Fourth District Division three ruled in our favor for a second time 10/14/2014
A true victory for 9,000,000 who live in California HOAs. Many homes will be saved by this ruling!
For homeowners in California it all started with a clever attorney crafting a contract requiring the attorney fees be paid first from the payments paid by the homeowner during collection, rather, than as the law states, that the assessments be paid first. Attorney’s are really good at changing the meaning of a sentence, the meaning of a word, and completely twisting black to white, or white to black. However, the law is so clear that, that assessments are paid first, that a 6th grader would understand.
I have a copy of Feldsott and Lee’s contract to collect assessments given to me in court by Action Property Management. The contract between Huntington and Feldsott (signed by Rustan Laine),clearly states that rather than paying down the assessments with the money that comes in from collections, that the fund will go to pay the attorney first, it says that the “client” is free to get a second opinion. It also states the association does not have to pay the attorney (for the time being) for collections. So, what does this do? I think its easy to see if an association had to actually pay the attorney fees while foreclosing on someone’s home for just $1800 they would NEVER go through with it. In short order the attorneys fees are 10 times the amount they are trying to collect. This is what makes the whole thing a “racket” because the attorneys refuse your partial payments and you, as homeowner, are forced to pay the attorneys or have your home foreclosed. Like holding an axe over your neck with the attorney’s hand out for lots and lots of money.
It’s just my opinion, but if the funds collected by the attorney went to pay down the assessments, as the law states, most of these collection cases would have never ended in foreclosure and the attorney’s “racket” would have failed. Feldsott is not the only one doing this, most have jumped on this bandwagon, and many have grown to huge rich law-firms with lots of power and influence. The association signed what I believe is an illegal contract and not applying the assessments per law was illegal – at least that is what the court has ruled.
I just won, with the help of my excellent attorney, an appellate decision in Superior Court of Orange County a very important victory for each and every homeowner in the entire State of California. However, this victory may be short term unless homeowners like yourself band together to force HOAs like the Huntington Continental and it’s collection attorneys to follow the law and not make their own rules. While the laws have been clear since they were written it takes a court action to make a party follow those laws. This victory just came for all Home Owners in an Association, HOA, and Common Area Development members located in the State of California. This affects all Common Area Developments, Homeowner Associations, HOA, etc. – the law is clear, this ruling just supports what that law states (and the HOA attorneys hate it!). It is my understanding that all California Courts may refer to this decision.
In my case, had the HOA simply given me the accounting, and the attorney applied my payments, I would have owed nothing and this case would have never went to trial. As they say “pigs get fat and hogs get slaughtered” had the attorney just accepted the money this would have never gone to court and they wold still be enjoying their partial payment lawyer fee windfall.
Please email this website if you have a similar issue and your HOA in California is not accepting partial payments. The law is clear.
For years these HOA collection attorneys have been making a killing from the poor owners in associations convincing a Board of Directors to foreclose on people when they owe as little as a few hundred dollars in back assessment dues. The attorneys would write SECRET contracts with the HOA that was not conforming with the law. Legislation in California named the Davis-Stirling Act was passed to protect owners in associations. Unfortunately for owners, association attorneys gravitate to the entity who has the biggest pot of gold because that is who can pay their $200-$600 per hour paychecks. What does this do? It makes it almost impossible for someone to find a competent attorney to fight against the blatant disregard of the law and its clear common language.
You may find and read this exciting decision with the link below:
HUNTINGTON CONTINENTAL TOWN HOUSE ASSOCIATION, INC. v. THE JM TRUST
In a sentence this decision forces the HOA to accept partial payments so that an owner can stop foreclosure. Accepting partial payments is in conformity with the law. However HOA attorneys, who no one can fight these people because it costs a lot of money to fight an attorney who is paid by the HOA, have completely ignored this law for many years and have taken the homes of people who had the funds to pay partial payments to keep their home from foreclosure.
Why do they do this to owners who owe just a few hundred dollars? Here is their simple formula as stated by Feldsott on their own website….
“Of course, the prevailing party may recover attorney fees. Not too long ago, our office litigated a case where the attorney fees awarded and paid (trial and appeal) were more than $60,000 in a suit over $3,000 in assessments.”
Where do they get their goldmine payment?
FROM THE SALE OF YOUR HOME!
You owe $3,000, they spend $60,000 to collect your milk money of just $3,000, then the HOA allows them to sell you home and collect their unconscionable winnings of $60,000 on your itty bitty $3,000 debt. The sell your home, they take the equity in the home to pay their unconscionable fees which is nothing less than a Mafia-style racket. Mickey Cohen would have been proud. So who benefits most, the HOA? or the attorney?
How do they make the scheme work? By not accepting partial payments. We are not singling out any specific attorney or firm because most of them have decided play this game and it has worked for several years until now. And, believe me, the attorneys who have made so much money from this scam, are not happy with this ruling.
My side of the story – What the lawyers say is not accurate
In a nutshell
- I got behind on my HOA dues due to unavoidable circumstances;
- I wrote a letter to the management that I would pay my dues in full and enclose a check;
- I asked repeatedly for “itemized” accounting from HOA, BOD, managers and attorneys;
- No one on HOA side would send the accounting – they simply ignored me;
- I send additional payments and continued to ask for accounting;
- I paid off the complete balance of my HOA account before I was ever served with a lawsuit;
- The lawyer rejected my cashier check payment in full sent to her office;
- The lawyer then sued me;
- I was not served with a lawsuit UNTIL after I attempted to make my payments in full!;
- In the trial court, the sleepy 85 yo retired judge ruled against me;
- In appeals court where they strictly follow the law, 3 judge panel, in concert, reversed the trial court and ruled in my favor;
- It was clear that partial payments had to be accepted per the law, and the attorney had not followed the law;
- The appeals court Certified the Decision which means other homeowners may force payments;
- That is the basics, there is a lot more to the story, but that is the basics;
- The collection attorneys HATE the ruling and now they are fighting to have it changed;
- They are attempting to fight the ruling, protecting you, using YOUR HOA money!
There is always more to the story. The trial was rather short and the judge was dis-interested, sleepy – he could not have cared less and I found out later his grand-daughter is friends with the collection attorney daughter! This is more about the attorney firm doing everything in their power to get their attorney fees than me paying my assessments. I asked for my line item accounting many times in every conceivable manner I could. Even writing the BOD several letters. The collection attorney kept adding their fees to the assessments I owed and taking their “pay” off the top… right from my assessment payments. It was an evil game but the only entity that can stop the attorney from playing the game is the court.
My attorney had flown in. The story was much much longer than the evidence selected for the case. This case concerns a rental condo I had not lived in for 8 years. I never asked for or agreed to a “attorney generated payment plan” they simply sent one in the email. I never even saw the payment plan from the attorney until I was searching email for the case. I kept asking for my accounting, as it changes every month with the fees they add. No one would send my accounting, not the HOA, the management or the attorney.
I sent a simple letter with a $2,000 check stating I would pay of the account. I then sent two more payments of $1,000 and $500. I then thought I was close to full payment of the account and I demanded my accounting in several letters. No accounting came. I then sent a letter stating that if you are not going to give me my accounting I must only owe my regular assessments. I then sent in checks for my regular assessments of $188 each. After that, out of nowhere I get a “default letter” from the attorney that I had been defaulted on my case! Not funny, I had never been served with any lawsuit. According to the attorney I had been served at my condo. I informed the attorney that I had not lived at the condo for 8 years and that my married tenants state they had never received anything – she insisted I had been served (I have an email from the HOA President stating they knew I was not served). I have been called by three people the process server did the same thing to. It’s called gutter service where the server throws the service in the gutter and swears to the court he served you.
I continually asked for my line item accounting from all sources; the attorney’s assistant just played with me, never sending what I asked for (note that in court he lied on the stand and stated he sent my accounting). At that point I was pretty frustrated so I calculated what I could have owed and sent a long letter to the HOA President with a certified funds check to his home. He send me an email stating he accepted the payment. I had plenty of money to pay all the assessments for many months previously but the Collection Attorney prevented that by not sending the line item accounting and played Hocus Pocus with the numbers on his summary accounting. What I did not know, and what is against the law, is the collection attorney PAY THEMSELVES FIRST out of the assessments you pay in a situation such as this – so they have no incentive whatsoever to close your case because every payment you make is diverted to pay the collecting expenses, which is not in conformity with the law.
The bottom line is that there are many details and events that are left out of the ruling, and even though the ruling is in the favor of the homeowner, the actions of this group of collection attorneys is reprehensible. I did everything possible to pay the assessment dues and the Attorney just kept throwing them back in my face. Why, because at the end either you pay all their fees, or they sell your property and collect their fees from the sale of your property. In my case there was more than $100k equity – they had every reason to keep the case going, keep the billing going, take the house, and get they paycheck on sale. Just my opinion of course but if you read the collection attorney’s own website on how he collected $60,000 in fees on a $3,000 it’s rather pathetic – grotesque. It pure theft when some hard working soul gets into a situation where they can not pay their assessments, and some attorney forces their way into the situation demanding their fees on top of the assessments that can not be paid… “well sir, you owe just $3,000 in HOA assessments, but you now owe $60,000 in attorney fees, we will need to sell your house to pay our attorney!” It’s reprehensible that society allows this segment of law as a profession.
I don’t know know how these people can sleep at night. Some attorneys twist every word…. but this statement in the law could not be more clear… of course they don’t want to abide by this! Do you think an attorney wants the HOA to place a lien on your house for the attorney fees? That would never happen. So, unless they (the law firm) can force foreclosure and sell your house, their “racket” is over… and we expect they will fight hard just like Mickey Cohen. When there is a big pile of money the suits fight really hard to get their hands on it.
The law could not be more clear: “In addition, any payments toward that debt shall first be applied to the assessments owed, and only after the principal owed is paid in full shall the payments be applied to interest or collection expenses”
What is not clear? Any payments made SHALL be applied to the assessments owed…. and after the assessments are paid the future payments go to the other unpaid items. Ah ha! So what do the clever collection attorneys do? They write a “payment plan” (contract) for you to sign that forces you to give up your rights under the law. In my case the attorney kept arguing that I had a payment plan… which was never the case. I never asked for, accepted, signed, or agreed to a payment plan of any kind. I simply send the management company a letter that I would make the payments owed. Don’t sign a payment plan! Just make your payments and the law protects you. If you sign one of their evil payment plans then you are signing a contract and you are bound to what it states in the contract. Be careful!
The alarming part about all this – attorneys and law firms don’t want to play by the law! It’s been Goliath v. David for many years. The poor owner does not have the money for assessments let alone attorney fees. This is why the law was written – every dime goes to assessments first!
The ruling is starting to show up on the web. We have noticed that the major collection attorneys have not shown the ruling. We believe they are going to try and fight it with Feldsott and Lee. We believe they will band together to try and take away your rights.
Read this disturbing Attorney’s post about the new ruling
Attorney’s overview of how she reads the ruling
Basically she is stating paraphrased: “you are not going to take away my cash cow mister! Your Southern California law means nothing up here in Northern California and I am just going to advise my clients to continue to foreclose so I get my big paydays!”
A lien services comments on Facebook
Note that they want to keep reviewing this decision (which in code means they want to change it). This is why YOU MUST fight to keep this ruling for you! Sign the petition!
A more rational overview of the ruling
This is by a website that comments on “attorney fees” and rulings that affect them.
This might be Jacqueline Pagano the young attorney who lost the case. She wanted to keep beating it into the appellate judges that I had a “payment plan.” Having a payment plan, drawn up by the attorney, gives the attorneys some rights. Effectively it’s a contract. I NEVER HAD, NEVER ASKED FOR, NEVER READ, NEVER SIGNED and never wanted a payment plan. I wrote a simple letter to the management company NOT EVEN THE ATTORNEY. They are still trying to change history. Sorry, never had a payment plan of any kind.