J & N REALTY, INC.

SMALL CLAIMS COURT ACTIONS  

- Common interest developments are governed by the Davis-Stirling Common Interest Development Act.  Common interest developments include (1) community apartment projects, (2) condominium projects, (3) planned developments, and (4) stock cooperatives.  A common interest development is created by a conveyance of a separate interest that is coupled with an interest in the common area or membership in the association.  In order for the common interest to be created, the declaration, any existing condominium plan, and a final parcel map must be recorded. 

- A Homeowner Association (also called a community association) is comprised of residents of the common interest development.  The HOA is responsible for the collection of monthly assessments of the members, which is used to maintain and service the building.  Most HOAs are nonprofit corporation and are therefore governed by the Nonprofit Mutual Benefit Corporation Law.  HOAs   Homeowner associations are also typically governed by covenants, conditions, and restrictions (CC&Rs), which serve as a contract between the HOA and the member (homeowner).  Other documents that may define the rights and duties of an HOA and its members include the tract map or condominium plan and the articles of incorporation, declaration and bylaws, and rules and regulations of the association.  The HOA may hire a managing agent to conduct day-to-day operations. 

- HOAs have the right to sue in small claims court as a creditor collecting delinquent assessments.  Similarly, members have the right to sue the HOA regarding access to records, election issues, and the recovery of disputed assessments, if the right to pay under protest has not been replaced by the right to request alternative dispute resolution.  A member should sue the HOA corporation or property management firm, not the individual members or directors of the HOA. 

- A community service organization (CSO) is often set up by a developer alongside the HOA and performs similar functions, such as collecting additional assessments and keeping financial records.  Like HOAs, CSOs are usually nonprofit corporations.  CSOs can be sued independently of, or along with, HOAs in small claims court. 

- A member may bring an action in small claims court to enforce various election and voting rights if the amount of the demand does not exceed small claims’ jurisdiction.  An action may be brought with respect to access to association resources by a candidate or member advocating a point of view; the receipt of a ballot by a member; or the counting, tabulation, or reporting of, or access to, any ballots for inspection after tabulation. 

- A member who prevails in an action to enforce his or her election or voting rights is entitled to reasonable attorney’s fees and court costs.  The court may impose a civil penalty of up to $500.00 for each violation by the HOA, but for identical violations, the HOA is subject to only one penalty if the violation affects each member equally.  Conversely, if the HOA prevails, it may not recover costs unless the court finds that the action was frivolous, unreasonable, or without foundation. 

- The homeowner’s association must make association records and enhanced association records available for the time periods and within the tem frames set out in Civil Code section 1365(i) and (j) for inspection and copying by a member, or by a member’s designated representative.  The HOA may bill the member for the cost of copying if it informs the member of the amount before copying the documents.  If the parties cannot agree on a place for inspection and copying, or the member submits a written request for specific records, the HOA may mail copies within the same timeframes.  The HOA may bill for the cost of copying and mailing if the member first agrees to the cost.  The association may also bill an hourly amount, not exceeding $10.00 per hour or $200.00, for the time required to redact enhanced records if the member first agrees to these costs. 

- The term “association records” includes financial documents required to be provided pursuant to Civil Code section 1365 and 1368, any interim financial statements such as income and expense statements, budget comparisons, general ledgers, tax returns, payment records form reserve accounts, meeting agendas and minutes, and membership lists.  “Enhanced association records” includes such items as invoices, receipts, purchase orders, and reimbursement requests.  A summary form to disclose assessment and reserve funding is set forth in Civil Code section 1365.2.5. 

- The HOA is entitles to withhold or redact information from association records if, among other reasons, the release of the information is reasonably likely to result in identity theft or fraud, is privileged under law, or is reasonably likely to compromise the privacy of a member.  If the HOA denies or redacts information, it must provide the member with a written explanation specifying the legal basis for the redaction. 

- A member may bring an action to enforce his or her right to inspect and copy association records.  The action may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.  Before filing the action, the member must file a written request for the records. 

- Both a member and the HOA may be awarded reasonable costs and expenses, including attorney’s fees, in a successful action to enforce rights to either gain or withhold access to association records.  If the court finds that an HOA unreasonably withheld records, it may also assess a civil penalty of up to $500.00 for the denial of each written request.  A prevailing HOA may recover any costs if the court finds the action to be frivolous, unreasonable, or without foundation.   

- These provisions governing the access to records also apply to community service organizations or other similar entities. 

- A dispute may exist between the owner of a separate interest and the HOA regarding any charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collections cost, or monetary penalty imposed as a disciplinary measure.  If the amount in dispute does not exceed the jurisdictional limits of small claims courts, the owner may pay under protest the disputed amount and all other amounts levied, including any fees and reasonable costs of collection, reasonable attorney’s fees, late charges, and interest, if any, and file an action in small claims court.  Additionally, the owner may pursue dispute resolution pursuant to Civil Code section 1363.810 – 1363.850.  These procedures, however, do not impede the association’s ability to collect delinquent assessments as provided in Civil Code section 1367.1, 1367, and 1367.6(b). 

- An HOA may bring an action in small claims court to collect delinquent regular of special assessments less than $1,800.00, not including any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest.  A prevailing association may enforce the judgment pursuant to small claims procedures.  The amount recovered may not exceed the jurisdictional limits of the small claims court and is the sum of (1) the amount owed on the date of filing and (2) in the court’s discretion, the amount owed from the filing date until satisfaction of the judgment, which total amount may include accruing unpaid assessments and any reasonable late charges, fees and costs of collection, attorney’s fees, and interest. 

- Alternative dispute resolution is not required for small claims litigants.  However, small claims litigants may be encouraged to us ADR to resolve their dispute.  An owner also may pursue dispute resolution to resolve a dispute regarding any charge or sum levied by an association.