Granite Peak Management has teamed up with Association Lien Services to get tough with dead beat North Lake Tahoe homeowners who fall behind in their homeowner’s dues. According to River Run’s HOA President Joe Baylock, “GPM has a long track record of doing collections successfully…”

If you are a homeowner that does not always meet that 5pm deadline on the 15th of each month, then you could be at risk as Association Lien Services will be more than happy to help your HOA steal your home from you.

Think I’m joking? Go Google. Review Fuller v ALS and Curry v ALS.

How does it work? Apparently too easily. All Granite Peak Management has to do is forward your account to Association Lien Services and tell you that your account has been frozen, that the association will no longer accept your payments until the entire bill, as determined by Association Lien Services is paid in full.

Under California Civil Code an association can only initiate non-judicial forclosure if the amount you owe exceeds $1800, a figure that cannot include any additional fines or penalties that your association may or may not have charged you with in accordance with your CC&Rs.

To force this limit, your account is frozen, the bill is jacked up, and if you don’t cough up the dough, that $1800 limit is reached. And the jack up can be costly. At a minimum by several hundred dollars and can quickly reach thousands of dollars.

If the inflated costs exceed your budget, then your home becomes prey to Association Lien Services.

Apparently Association Lien Services’ business practices have come under some scrutiny. According to the  Center for California Homeowner Association Law :
CONSUMER LAW FIRM FILES CLASS ACTION LAWSUIT AGAINST ASSOCIATION LIEN SERVICES
The consumer law firm of Mulligan Jenkins & Gabriel has filed a class action lawsuit on behalf of Sylvia Curry and countless other homeowners subjected to the business practices of debt collector Association Lien Services (ALS).

The lawsuit centers on what are described as the unfair and unlawful collection practices of ALS which, in pursuing collection activities for homeowner associations, has allegedly violated Civil Code 1367.1 by requiring homeowners to waive the protections of this statute before ALS will accept payment from homeowners for past-due assessments and fees.

Curry has always acknowledged that she owed the association money. She sought first to develop a payment plan through the board, then through the property manager, Massingham and Associates. When that didn’t work, she sought help from the Center for California Homeowner Association Law and then from her state Assembly Member Sandre Swanson. ALS fought every one of her efforts to pay down her account. The lawsuit escalates the fight.

An African-American grandmother, Curry has owned the same condominium in Oakland, California for 27 years. She has been trying since early 2008 to set up a payment plan to discharge her assessment debt. She has made numerous payments to ALS toward her account. ALS, however, has refused to cash any of her credit union checks or postal orders unless she lets ALS collect its profits first before paying down her homeowner dues. ALS has now returned all her checks and nearly doubled the collection costs.

Keeping the assessment balance high is the chief method for debt collectors like ALS to increase their profits by levying more interest, carrying charges, collection fees, and payment plan administration costs on the account balance.

The California statute requiring debt collectors to credit payments first toward assessments and only secondly to collection costs has been on the books since 1997. The law was authored by Congresswoman Jackie Speier when she was in the California State Assembly.

The consumer lawyers filed the lawsuit on behalf of Curry and “on behalf of all persons similarly situated.” The class is comprised of “all persons in California who submitted payments to ALS, but were required to waive their rights to have their payments applied according to state statutes and who were charged additional collection costs as a result.”

Association Lien Services is a subsidiary of the Los Angeles law firm of Swedelson & Gottlieb. They have several offices in both Northern and Southern California.

The firm has fought tooth and nail every legislative effort in Sacramento to expand consumer protection for homeowners during the assessment collection process. [Read their six page letter lobbying against Christine Kehoe's legislation AB 2289 posted under COURTCASES/DEBT COLLECTION.]

Curry’s lawsuit was filed in Alameda County on Nov 7. The first hearing is in January 2009.

CCHAL NewsBrief

November 20, 2008

For more information on Swedelson & Gottlieb’s actions against Association Lien Services please visit the American Homeowners Resource Center.  I have also found this little tidbit:

DID YOU GET A STRONG-ARM LETTER FROM YOUR HOA’S DEBT COLLECTOR?

Did it ask you to waive your rights under Civil Code 1367(a)? Did it tell you that, if you don’t waive your legal rights, you can’t pay down your assessment debt?

That’s what happened to homeowner Sylvia C.

In April, she got a letter from debt collector Association Lien Services (ALS) saying they wouldn’t accept any of her payments unless she waived her legal rights under Civil Code 1367(a).

Sylvia didn’t know what 1367(a) WAS, but she knew instinctively that the debt collector’s letter “didn’t pass the smell test,” so she brought the letter to the Center for Homeowner Association Law.

Civil Code 1367(a) is a California law requiring that, when a homeowner makes payments on the assessment debt, the debt collector MUST apply payments FIRST toward paying down the assessments and only SECONDLY toward paying down the collection costs, that is, to collecting profits.

This consumer protection law has been on the books since 1997. It was authored by Congresswoman Jackie Speier, when she was in the California State Assembly.

A moment’s thought will make clear why this law is crucial to homeowner consumer protection: if the assessment balance is being paid down FIRST, then the collection costs — i.e. profits — decrease. Debt collectors typically charge interest, late fees, payment plan administration fees, and who know what else ‐ fees that are computed on the account balance. The longer a debt collector like ALS can keep the assessment balance high and string out the payments, the bigger their profits.

Debt collectors like ALS then sock homeowners like Sylvia with a big balloon payment as the final payment ‐ though they won’t tell the homeowner what that figure is while strong-arming them into signing away their legal rights under 1367(a).

Debt collectors like Association Lien Services hold the homeowner’s payments hostage until they sign away their rights. ALS dunning letters to homeowner don’t just ASK if the homeowner wants to waive his legal rights: the letters DEMAND it.

Sylvia wrote back to ALS saying she didn’t WANT to waive her rights under Civil Code 1367(a) and, furthermore, that ALS couldn’t FORCE her to waive her rights. With her letter she sent another payment and asked that it be credited to her assessment account.

What did ALS do? They sent back ALL her payments: cashier’s checks, money orders, moneygrams ‐ with yet another letter demanding that she waive her rights. Oh yes ‐ and they tacked on another $1000 or so in collection costs.

Not sure if you got a letter similar to Sylvia’s? Read the one ALS sent to her. It’s posted under COURT CASES/Fair Debt Collection Laws on the CCHAL website.

ALS isn’t the only one doing this, by the way: we have seen similar letters from at least five other debt collection companies, so blackmailing homeowners seems to be an industry practice. If you got a letter like the one Sylvia got, then CCHAL wants to hear from you (info@calhomelaw.org)

ALS is a subsidiary of the Los Angeles law firm of Swedelson & Gottlieb. As debt collectors, they are supposed to comply with both state and federal Fair Debt Collection laws ‐ but do they?

CCHAL NewsBrief

November 9, 2008