Ct. Rules Homeowner “Waiver” of Order of Application of Funds Paid per Payment Plan is Void

U.S. District Court, Northern District of California, decision (December 23, 2016)

In this case, a homeowner that was delinquent in the payment of homeowners’ dues, contested the actions of the association’s attorney / collection agent relative to enforcing the outstanding debts. Initially, when the matter was turned over for collection by the association, the homeowner owed $1,239.08 for delinquent dues, plus an additional $587.50 for costs and fees charged by the collection agent. A six month payment plan was agreed to, but during the period before the plan was completed the total debt had grown to $2,479.44. As a condition of accepting the payment plan, the collection agent required the homeowner to waive a California code section (Civil Code §5655(a)) that requires homeowners associations to apply payments to the delinquent assessments first until fully paid, and then to the amounts owed for collection fees and costs. Notwithstanding said section, the collection agent combined the homeowner’s delinquent assessments and the collection fees/costs in a single statement of account and applied the payments without giving priority to the unpaid assessments.