Once-burned owner demands receipts, but board is balking

Question: A management company threatened to place a lien against my house for alleged nonpayment of association assessments. It cost me thousands of dollars from my retirement fund and untold sleepless nights trying to prove their mistake and save my house, all with no reimbursement or assistance from my board. I now demand a receipt for all association-related payments and meticulously detail how I want my payment applied. Still, management misapplies or fails to post payments in a timely or accurate manner, while insisting owners use indecipherable payment coupons. This makes tracking payments impossible for me.

No management company we’ve had has voluntarily provided owners with a year-end statement history of payments. I had to threaten a lawsuit before management would give me a running account of my payments, and it said I’d have to pay for it in advance. They invoiced me “$200 per hour and $1 per page copy charges,” then made me wait until their “primary accounts are accommodated first.” Many months later, the “accounting” they provided was inaccurate and incomplete.

The board president announced at a meeting that I’m “causing the association big problems by ruining the board’s relationship with management” because I write letters demanding receipts and accountings and refuse to use coupon books. He said, “Only one owner costs us money by demanding a receipt every time he makes a payment.”

Now the board has passed a motion to stop owners asking for receipts. Can they force me to use coupons and stop asking for receipts and enclosing an explanatory letter with payments?

Answer: Boards cannot avoid liability or responsibility for their decisions by hiring a management company, nor can they avoid their legal duties by passing motions. A “board-passed” motion that violates existing law is illegal and unenforceable.

Owners must pay association assessments as they become due, but no law mandates the use of payment coupons. Those coupon books are for the convenience of the billing party.

Owners have reported receiving receipts without a company name on them; receiving receipts bearing false names, feigned signatures or names scribbled to make them illegible, and the receiving person’s refusal to sign them. Such actions violate laws meant to protect consumers.

California Civil Code section 1367.1(b) requires that if an owner makes a request for a receipt, “the association shall provide it.” That means the association must give you a legibly identifiable receipt every time you make a payment and it must indicate the date of payment, what the payment was for, the person’s name that received it with their signature and the receiving company’s name. If the association delegates that responsibility to management, it cannot charge you.

The board’s attempt to eliminate this statutory requirement is illegal. The association must provide a receipt pursuant to the Davis-Stirling Act.

Civil Code section 1363.2(c) requires the management company to maintain a separate record of the receipt and disposition of funds received on behalf of the association. Board assertions that a homeowner is creating “problems” may be a smokescreen for hiding incompetent accounting practices or a board’s failure to monitor the conduct of its vendors. All such actions place titleholders at risk.

Pay all association-related charges using postal money orders. Mail each payment to the board via certified mail, return receipt requested. In some cases the law has been interpreted to find that a letter mailed by this method, even if refused, is deemed “delivered.”

When payments are made and a portion of the payment is for past-due assessments, the association is obligated to apply those payments in a specific sequence that may not benefit the owner. Precisely state on each separate payment instrument what that payment is for.

Civil Code section 1368 permits an association, its agent or its management company to charge an owner reasonable costs for producing and duplicating documents. Reasonable charges should be no more than 10 cents a page with no document retrieval charges because that is what the association already pays management to do.

Each owner is responsible for his own careful record keeping. That includes copies of payment instruments, letters, management and board communications, payment receipts and proof of mailing. Avoid the temptation to destroy what may appear to be superfluous association-related papers as all such material must be kept for as long as you own in that common-interest project.

Whether requested or not, a management company should provide every titleholder with a continuous monthly or semiannual “statement of account” at no cost. Failing to receive a year-to-date statement of all payments made on an annual basis would raise a reasonable suspicion that management or the association has something to hide.

Send questions to P.O. Box 11843, Marina del Rey, CA 90295 or e-mail noexit@mindspring.com.