If you experience problems with this email newsletter, read it online.
Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #6 • November 2008
Don't Publish the Names of Owners who
Haven't Paid Their Assessments
By Steven S. Weil, Esq.
The economic crisis has impaired the ability of homeowner associations to pay for maintenance, insurance and to properly fund repairs and capital improvements. It is said that "Necessity is the mother of invention" and in other articles and presentations, we have identified smart, prudent ways of minimizing the effect the crisis has had on association operations, including, most recently, the efficient use of small claims court to pursue delinquency claims against owners whose homes have no equity. One idea we do not endorse is the publication the names of association members in a newsletter or other written media distributed by an association or its managing agent. Here are some reasons why publication is unwise.
The Davis-Stirling Act Does Not Authorize Publication
Assessment collection is highly regulated under Davis-Stirling and the Fair Debt Collection Practices Act. Many of the laws are intended to protect the debtor which includes those against whom collection action is taken for non-payment of assessments. None of these laws specifically authorize the publication of the names of delinquent owners; in one situation publication of the member's name is specifically prohibited and in others it seems clear that the statutory intent is not to identify delinquent owners by name in any public forum.
The decision to foreclose on a delinquent owner's property must be made by the board in executive session (Civ Code 1367.4) and, of course, executive session meetings entail confidentiality and privacy. According to the statute, the board is required to maintain "the confidentiality" of the delinquent owner by referencing their property by parcel "rather than the name of the owner". The decision to record a lien must be done in open session but the statute does not require that the owner's names be identified (1367.1(c)(2)). However, before the lien is recorded, the association must meet with an owner "in executive session" to discuss payment plans if they are timely requested and available. Further, at various points in the foreclosure process, the owner has the right to request mediation or arbitration, proceedings which are generally confidential and must be confidential if requested by the owner in the context of a disciplinary hearing. All this confidentiality implies that an owner's financial status is sensitive and private.
The Fair Debt Collection Practices Act
The FDCPA is a federal law that regulates the collection of debts which can include assessments. The law does not generally apply to restrict how creditors (like an association) collect their own debts but does impose restrictions on third party collections. In a particular case, this may or may not include an association's lawyer or manager. It is very likely that the publication of a list of delinquent owners would be contrary to the privacy protections contained in the FDCPA.
Right to Privacy
"Defamation" is basically oral ("Slander") or written ("Libel) statements that are intended to injure someone's reputation. We've all heard the phrase "truth is a defense" to defamation claims but this is inaccurate when it comes to the publication of "private facts". The first California case to acknowledge a right of privacy, decided in 1931, upheld a claim based on the publication of private facts. The California constitution now gives our citizens a right to privacy. The main question is whether the facts disclosed are private and not of legitimate public concern and if publication to a specific group for a specific purpose would be privileged under 47(c). In one homeowner association case, the court recognized that members have an expectation of privacy when it comes to the casting of ballots (Chantiles v. Lake Forest II Master Homeowners Association (1995) 37 Cal.App.4th 914); it is easy to imagine a court would extend this rationale to financial relations between an owner and their association and that breach of the privacy expectation would support claims against the association and others who participated in the publication.
Fiduciary Duty
Directors should act in good faith in ways intended to benefit the community. A board must weigh the pros and cons and risks and benefits of a particular action before authorizing it. Is it really likely that those owning homes whose debt exceeds value are likely to be shamed into paying association assessments by putting their names in the newsletter? Will publishing the names of owners who have vacated their homes motivate them to pay a debt? If they have left no forwarding address and thus are not likely to receive the newsletter, what possibly motivating criteria could justify publication? Is there a risk of wrongly publishing the names of owners who are current or who have cured the delinquency? Does publication for a family already desperate create a risk of litigation (which might not be covered under a "D&O policy)? Is the community benefited by knowing who is delinquent versus the amount of the collective receivables and steps the board is taking to address cash flow problems? Does publication breed support for positive approaches to the economic crisis?
The answer to these questions is "no". There are allot of reasons why an association should not publish the names of delinquent owners. Doing so is probably contrary to statutes and the state constitutional right to privacy, doing so subjects the association, directors and managers to risks of claims; can create anger and division in the community; and isn't really likely to work. As we've written before and addressed at our recent seminar, there are many positive things an association can do to overcome the current economic crisis; things that can reduce receivables and expenses and garner respect for the board and the association. As to publication of debtor's names, as Nancy Reagan famously said in another context: "Just say no".

No Right To Refuse Payment
The Court Turns a Right Into a Duty as it Orders a Board to Assess its Members to Pay a Creditor.
A 2005 decision of the California Second Appellate District Court of Appeal in James F. O'Toole Company vs. Los Angeles Kingsbury Court answers the question: can association members be forced to pay, by special assessment, debts incurred by their association?…»
Are They Building Condos Better?
Do New Construction Methods and New Materials make a Better Product?
"Obsolescence" is the process by which something loses its value and relevancy usually due to being supplanted by a better product or changes in its environment…»
The Contractual Community: Why Community Associations are not Governments
Articles in this and other publications devoted to the science of community association operations and management often discuss the concept of "community association" as if it were just another subdivision of local government…»
Copyright ©2008 BERDING | WEIL
All Rights Reserved.
BERDING | WEIL LLP - 3240 Stone Valley Road West | Alamo, CA | 94507-1558 | P: 925.838.2090 | F: 925.820.5592 | Contact Us
This email has been sent to: ^Email^
You are receiving this email newsletter courtesy of BERDING | WEIL.
Please do not reply to this email. If you have any questions, please use our contact form or call 925.838.2090.
To ensure delivery to your inbox (not bulk or junk folders), please add publications@berding-weil.com to your address book and/or allow emails from berding-weil.com to pass through your automated anti-spam software or service.
If you do not wish to receive this email newsletter on a regular basis, please unsubscribe here.
Disclaimer | Privacy Policy | Site Map | Search
2175 N. California Blvd., Suite 500 | Walnut Creek, CA | 94596 | P: 925.838.2090 | F: 925.820.5592 | Contact Us
©2017 BERDING | WEIL LLP. All Rights Reserved | Website Development by CENTERGRAPHICS