AB 2273 is a community association law that every HOA should be supporting, and it could have ripple effects all across the country as other legislatures look into the same types of measures to protect homeowners.
What is AB 2273?
Whenever a piece of legislation is proposed it has to be written by lawyers in such a way as to make it nearly unreadable to the average person. AB 2273 is no different.
The big take away from the eight pages of legalese is that the bill “requires recordation of foreclosure sales within thirty (30) days after sale.”
Translation: When a bank or lending company forecloses on a property governed by an HOA they need to inform that HOA that they are the new owner.
Why does this matter?
Consider some facts put forth by CAI-CLAC as they mustered support for the bill:
- In 2011, half of the HOAs surveyed had delinquencies of more than 10%; some had a 50% delinquency rate.
- 97% of delinquent assessments are more than 30 days late; 73% are more than 91 days late; 44% are more than 4 months late.
- 49% of the HOA sales in 2011 were foreclosure and short sales.
- 75% of the lenders delayed foreclosure sales even when the owner had vacated the unit and no one was paying assessments or making mortgage payments.
- 60% of the time foreclosure sales are not timely recorded by the foreclosing party, or the purchasing party; 73% were delayed more than 60 days; 23% were delayed more than 6 months.
- 76% of the time, assessments are not paid until more than 60 days after the sale; 28% of the time assessments are not paid until more than 6 months after the sale; and 14% of the time the assessments are not paid until more than 6 months after the sale.
- 79% of the time, foreclosing parties fail to pay any assessments; of the foreclosing parties that do pay, the consistency of the payments ranges from as low as 10% to as high as 50% of the time.
Clearly, like everywhere else in the country, California is still in the throes of a foreclosure crisis. However, unlike the average property that is foreclosed or abandoned, the properties that are foreclosed upon and are governed by a HOA still have to be properly maintained. This means that, without AB 2273, the cost of those fees would unfairly be put upon the shoulders of the other residents in that community.
With the passage of this law, the banks and/or lending companies will now have to step up and pay the HOA fees like every other owner. Thanks to the bill, banks will no longer be able to evade the homeowners association as those institutions will now be compelled to provide information and begin paying their fair share quickly.
Is your HOA protected in your state with a similar measure?
How has foreclosure touched your community?
Let us know.
This article is provided by The Management Trust.