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Military
Personnel Protections: Limitations Upon
Association Lawsuits and Assessment Lien Foreclosure
By Bradley J. Epstein, Angius & Terry LLP
Federal and State law protect homeowners in
the military by prohibiting associations from obtaining
court default judgments or from foreclosing upon
assessment liens against active servicemembers. The
purpose of the Federal law, known as the Servicemembers'
Civil Relief Act (50 U.S.C. App. § 501, et seq.),
and the State law (Cal. Mil. & Vet. Code § 400, et
seq.) is to strengthen and expedite the United
States’ national defense by giving homeowners in the
military certain protections in lawsuits and with
respect to home foreclosures. In particular, by
providing for the temporary suspension of lawsuits and
foreclosures , these laws enable homeowners in the
military to focus their energy on the defense of the
United States. Further, consistent with this purpose,
these laws provide for severe penalties against
associations who violate these prohibitions.
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Associations
are prohibited from obtaining court default judgments
against active servicemembers
A court default judgment is a judgment that
a plaintiff receives when the defendant fails to appear
in the lawsuit after the defendant has received
sufficient notice of the lawsuit. Whenever an
association is taking steps to obtain a default judgment
against a homeowner for his failure to appear in a
lawsuit, the association must file a declaration with
the court, under penalty of perjury, stating whether the
homeowner is in the military, or that the association
was unable to determine whether the homeowner is in the
military. Homeowners are considered to be active
servicemembers if they are on full time active duty.
However, it is not necessary that they be deployed in a
war zone.
If the association indicates in the court
declaration that the homeowner is in the military, then
the court may not enter judgment against the homeowner
until after the court appoints an attorney to represent
them. If the association indicates that it does not
know whether the homeowner is in the military, the
court may require the association to file a monetary
bond with the court in order to obtain judgment. The
bond would be used to reimburse the homeowner against
any resulting monetary loss if the judgment is later set
aside.
In many instances, it is impossible for an
association to be certain whether a homeowner is in the
military, regardless of how much investigation it
performs. Accordingly, even if an association is
fairly certain that the homeowner is not in the
military, it may be prudent to indicate that the
association is "informed and believes" that the
homeowner is not in the military.
Also, if a homeowner in the military appears
in the lawsuit, then she may request a temporary
suspension of the lawsuit. The court will grant the
homeowner’s request to suspend the lawsuit if it is
proven that the homeowner’s current military duties
affect her ability to defend herself in the lawsuit and
that her military superiors will not authorize military
leave.
Further, the courts may suspend an
association’s execution of a judgment against a
homeowner in the military, including suspending an
attachment or garnishment of the homeowner’s property or
assets, if the court determines that the homeowner’s
ability to comply with the judgment is materially
affected by her military service. The court may also
order the homeowner to make installment payments to the
association to satisfy the judgment.
Associations are prohibited from foreclosing on
assessment liens against homeowners in the military
where the homeowner had
purchased her home before
her military service commenced.
State law and CC&Rs authorize associations
to foreclose on liens for most assessments. However,
associations may not foreclose upon assessment liens
against a homeowner in the military (or within nine
months after her military service ends), where the
homeowner had purchased her home before her military
service commenced. The only exceptions to this
prohibition are upon a court’s order for foreclosure or
upon the homeowner’s agreement that the home may be
foreclosed. It is noteworthy that associations are not
prohibited from foreclosing upon a lien against a
homeowner in the military who had purchased her home
after her military service had commenced.
Associations who violate these prohibitions may be
subject to severe penalties
Associations and their representatives (such
as board members and managers) who knowingly violate
these protections for homeowners in the military can
potentially face criminal prosecution. Further, such
violations can potentially result in association fines
up to $200,000, and association representative fines up
to $100,000 and/or imprisonment of up to one year.
Finally, if a homeowner in the military prevails in a
lawsuit against an association for filing a false
declaration about whether the homeowner is in the
military, then the association could also be liable for
the homeowner’s attorney’s fees incurred in the lawsuit
and for punitive damages. Consequently, the association
and association representatives should exercise great
care prior to proceeding with default judgments or
foreclosure actions against association members who are,
or could potentially be, in the military.
Reprinted with permission from California Association of
Community Managers, Inc. (CACM) Law Journal
(Copyright, 2011, CACM)”
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