– By Steven R. Napoles, Esq. (originally published in Fall 2001)
The pre-lien warning letter is often the last step in an Association’s collection efforts before collection is turned over to the attorney. If done properly, the pre-lien letter can be an effective tool to collect from delinquent homeowners without experiencing the time and headaches that the collection process can often bring. However, in order to be successful, the pre-lien warning letter must contain language which affords the owner the required opportunity of the “right to challenge” the amount owing and inform the owner of the Association’s intent to proceed with a lien and further legal action.
The Fair Debt Collection Act requires that an owner be given a thirty (30) day “right to challenge,” during which an owner can contest the validity of a debt. In essence, this means that an owner can challenge the Association’s accounting for thirty (30) days from the first attempt to collect the delinquent assessment.
California Civil Code Section 1367 requires that prior to liening an owner’s unit or lot, the Association must first provide the owner with notice of its intent to lien which includes an accounting of the delinquent assessment owed by the owner. Civil Code Section 1367 does not specify a time frame for response to this letter.
As a result, there is often uncertainty in whether two notices are required and how much notice the owner must be given of the Association’s intent to lien. Depending on the Association’s collection policy, generally the two requirements can be accomplished in one pre-lien warning letter that should be sent to the owner thirty (30) days prior to filing the lien. The advantage to such a practice is that the Association only needs to send one letter and the letter has some teeth: Pay within thirty days or have your property liened!
When preparing the pre-lien warning letter, the following language must be included in the letter:
NOTICE REQUIRED BY LAW
Please be advised that this communication is being made by (Insert Association/Management name), in our role as a debt collector working on behalf of the Association to collect the debt described above. Any information obtained will be used for that purpose. If you dispute the validity of this debt, you may request validation of the debt in writing within thirty (30) days from the date of this letter. If you do not provide such written request within thirty (30) days, the debt will be assumed to be valid. Pursuant to California Civil Code Section 1366.3, if you dispute the charges owed, you are required to (a) pay in full the amount of assessments, late charges, interest, and any attorneys fees and costs incurred by the Association in preparing and recording the Lien/Notice of Delinquent Assessment, the amounts of which are set forth in this letter, and (b) notify this office in writing, by certified mail no later than thirty (30) days from the recording of any ‘Notice of Delinquent Assessment Lien’, that you wish to pay such amounts “in protest.” Upon receipt of notification that you are paying said sums under protest, in whole or in part, the Association will advise you of the procedures available to you to resolve such dispute.
Remember, a well written, forceful pre-lien letter which contains the above language may often result in swift collection, saving the Association time and headaches! If you have any further questions regarding the collection of assessments, please contact our office.