Foreclosure Remedies Under the Davis‐Stirling Act
By Jeffrey A. Beaumont and Kyle Meade
This article first appeared in our Communicator Magazine, Summer 2025 Edition.
California law under Civil Code Sections 4000 et seq. grants home‐ owners associations (HOAs) the ability to recover delinquent assessment payments through foreclosure. There are two types of foreclosure available: judicial and nonjudicial. Each has its own procedures, advantages, and disadvantages. This article outlines the requirements for handling both judicial and nonjudicial foreclosure, compares and contrasts their respective processes, and highlights factors for boards to consider when choosing a foreclosure type.
JUDICIAL FORECLOSURE PROCEDURE
Judicial foreclosure involves filing a lawsuit in superior court to obtain a court order authorizing foreclosure, and potentially to secure a personal money judgment against the property owner. To initiate this process, an HOA must first send a pre‐lien letter to the delinquent owner via certified mail. This letter outlines the delinquent assessments, late fees, interest, collection costs, and attorneys’ fees that the HOA is entitled to recover by foreclosing on an assessment lien recorded against the owner’s property. The pre‐lien letter must also outline the delinquent owner’s right to dispute the debt. HOAs should always consult with legal counsel or a collections agent to ascertain compliance with the pre‐lien letter requirements.
Once the pre‐lien letter is sent, the delinquent owner has 30 days to contest the debt. If 30 days pass without a raised dispute, or if any such disputes are resolved but the owner remains delinquent, the HOA can proceed with recording an assessment lien against the owner’s property. The HOA board must approve recording an assessment lien in open session board meeting and record that decision in the meeting minutes. A copy of the assessment lien must be sent to the owner by certified mail within 10 days of recording the lien.
The HOA must wait 30 days from when it records and mails a copy of the lien to the delinquent owner before enforcing the lien, i.e., initiating the judicial foreclosure process by filing a lawsuit.
Before filing the judicial foreclosure law‐ suit, the HOA must personally serve a “pre‐lawsuit letter” on that owner. This is done after the HOA board authorizes foreclosure against the owner’s separate interest in executive session and records the decision in the minutes of the next open meeting. Sometimes, issues arise with serving the pre‐lawsuit letter on an owner, such as the owner evading personal service. It is best in these situations for HOAs to consult with legal counsel or a collections agent to determine how to locate an owner or qualify for an alternative form of service that satisfies the Civil Code requirements.
Thirty days after the pre‐lawsuit letter is personally served on the delinquent owner, the HOA can file the foreclosure lawsuit. In most cases, HOA foreclosure lawsuits are uncontested, which enables the HOA to expedite the process by obtaining a default judgment authorizing foreclosure or a money judgment for the delinquency. Even if the lawsuit is contested, HOAs can still get a judgment against an owner without much incident given the straightforward nature of the debt owed, and assuming all procedures were properly followed.
Once an HOA gets a judgment for foreclosure, it can execute a writ of sale that authorizes the sheriff to schedule and hold the foreclosure sale. Once the writ of sale is approved, the sheriff schedules and conducts the foreclosure sale. Owners do, however, have a right to redeem their property within 90 days of the foreclosure sale by paying their delinquency. Additionally, if the foreclosure sale proceeds do not fully satisfy the assessment lien, the HOA can seek a deficiency judgment within three months of the sale. The rights to pursue a deficiency judgment are exclusive to judicial foreclosure.
PROS AND CONS OF JUDICIAL FORECLOSURE
One of the greatest advantages of judicial foreclosure is the flexibility HOAs are granted in recovering debt owed under an assessment lien. Judicial foreclosure allows HOAs to choose whether to obtain a money judgment against an owner as an alternative to a foreclosure sale. A money judgment is best when there are senior liens on an owner’s property that will be paid out first in a foreclosure sale with amounts that exceed the foreclosure sale proceeds. Instead of the HOA’s assessment lien being wiped out, the HOA can instead pursue a money judgment against an owner for the assessment lien amount and forgo the foreclosure sale. However, if the HOA does proceed with a foreclosure sale and is not paid the entire assessment lien amount due to senior liens taking priority in recovery, the HOA can obtain a deficiency judgment for what it did not collect from the fore‐ closure sale. Combining the foreclosure sale proceeds and the deficiency judgment amount, HOAs can recover their entire assessment lien amounts owed, assuming the owner is not insolvent. Judicial foreclosure, as a judicial remedy, is an HOA’s safest way to recover money owed by an assessment lien, as the risk of dispute or legal challenge once a judgment is issued by the court is very low.
The disadvantages of judicial foreclosure include the time and upfront costs. Judicial foreclosure can take about a year to complete and can require somewhat significant upfront legal costs. However, most HOAs can recover most or all their legal fees and collections costs incurred collecting on a delinquent account through judicial foreclosure. Courts will recognize the recorded covenants and conditions of an HOA’s governing documents authorizing recovery of collections costs and legal fees, and most times award them as part of the fore‐ closure judgment. At minimum, courts often award reasonable attorneys’ fees incurred, which the Civil Code allows as well. Considering recovery of collections and legal costs through judicial foreclosure is typically unproblematic (again, assuming the owner is not insolvent), the only real disadvantage of judicial foreclosure is the time it takes to obtain a judgment, which hinges on factors an HOA cannot control, such as a court’s backlog and processing time, or an owner challenging the lawsuit.
NONJUDICIAL FORECLOSURE PROCEDURE
The first steps of nonjudicial foreclosure are the same as for judicial foreclosure: HOAs must follow the same pre‐lien letter steps as well as the procedures for approving, recording, and sending a copy of the assessment lien to the delinquent owner. HOAs must wait 30 days from recording the assessment lien to take the next steps with nonjudicial foreclosure.
After 30 days from recording the assessment lien, the HOA can designate and appoint an authorized trustee, who will handle the remaining steps of the nonjudicial foreclosure process. The trustee first must record and serve a notice of default. The notice of default puts the delinquent owner on notice that the property can be sold without court order, that the owner can halt the fore‐ closure by paying the amounts owed, and that the owner may lose legal rights if they do not act. This notice of default, after being recorded, must be served on the owner of the property and sent via certified mail to anyone with a legal interest in the property (i.e., mortgagees or other creditors with liens recorded against the property). HOAs should consult with their designated trustee to confirm all required language is included in the notice of default.
Then, three (3) months after the notice of default being recorded and served on the owner, the HOA may record a notice of sale against the property. The notice of sale indicates the date, time, and location where the foreclosure sale will take place. A notice of sale must be mailed, via certified mail, to the property owner at least twenty (20) days prior to the sale taking place, and the notice of sale must also be posted physically at the property. After the notice of sale is recorded and posted, the HOA’s appointed trustee can hold the foreclosure sale.
The final steps of nonjudicial foreclosure are for the appointed trustee to hold the foreclosure sale and the owner to be granted a 90‐day redemption period before title transfers. The entire nonjudicial foreclosure process is done without court intervention and roughly takes about six (6) months.
PROS AND CONS OF NONJUDICIAL FORECLOSURE
Nonjudicial foreclosure is far faster and less expensive than judicial foreclosure process. Nonjudicial foreclosure is a streamlined process without court intervention, which makes it very attractive to HOAs who do not want to entertain an arduous legal process of enforcing the lien and collecting the debt. With nonjudicial foreclosure, collections costs and reason‐ able attorneys’ fees can still be recovered against the lien through the trustee sale, which makes it even more appealing to HOAs seeking to expedite the process while preserving its recovery rights.
The greatest disadvantage of nonjudicial foreclosure is the lack of flexibility granted to HOAs in collecting assessment debt. Nonjudicial foreclosure only provides for a trustee sale, the proceeds of which can be used to satisfy the delinquency. However, the nonjudicial foreclosure process does not allow for obtaining a money judgment to pursue the owner personally as an alternative means of recovery. That makes the entire recovery of an assessment lien dependent on the trustee sale. If senior liens consume all the proceeds in a trustee sale, the HOA is left with no recovery. The HOA also cannot obtain a deficiency judgment with nonjudicial foreclosure, meaning the HOA’s maximum recovery will be whatever is recovered from the trustee sale.
Nonjudicial foreclosure is also more subject to legal challenges, as its process must strictly follow statutory requirements or can otherwise be invalidated. Typically, when a nonjudicial foreclosure is success‐ fully challenged, the assessment lien debt remains, meaning the HOA can still collect but must start the process over from the beginning. This adds to the time and collections costs, diminishing the appeal of nonjudicial foreclosure.
FACTORS TO CONSIDER WHEN CHOOSING A FORECLOSURE TYPE
While both foreclosure types begin with the same statutory notices and HOA board approvals, they differ in execution. Judicial foreclosure involves court oversight and a sheriff’s sale, while nonjudicial foreclosure relies on a trustee’s sale and strictly prescribed notice procedures. Moreover, judicial foreclosure allows HOAs to elect a money judgment remedy and grants HOAs the ability to obtain deficiency judgments, while nonjudicial foreclosure locks HOAs into recovering only what is obtained at the trustee sale. Judicial foreclosure takes more time and requires more upfront expenses than nonjudicial foreclosure, though these costs are typically recovered through the judgment and court order.
Judicial foreclosure should be used for larger delinquencies, since risk of legal challenge is oftentimes greater. Judicial foreclosure is also better suited when there are significant senior liens on the property that may take most or all of the foreclosure sale proceeds since it allows the HOA to obtain a deficiency judgment or to pursue a money judgment against the owner if the owner is not completely insolvent. Nonjudicial foreclosure is better suited for smaller delinquencies where risk of legal challenge is lower. Nonjudicial foreclosure is also preferable when there are less or no senior lien interests on the property that would interfere with the HOA’s proceeds from the trustee sale. Overall, the time and upfront expenses of judicial foreclosure are worth preserving an HOA’s rights to recover significant debts and those with many senior lien interests, while the convenience and expediency of nonjudicial foreclosure is best to resolve smaller debts without great risk of dispute or interference by senior liens.
Foreclosure is a critical tool that allows HOAs to enforce the financial obligations its members owe, thereby maintaining their fiscal health. Whether pursuing judicial or nonjudicial foreclosure, HOAs must follow statutory procedures and weigh factors such as time, cost, risk of litigation, and the likelihood of recovering the full debt. Selecting the appropriate foreclosure type ensures that HOAs can effectively collect delinquent assessments while minimizing risk and serving the best interests of their members. HOAs should consult with legal counsel before proceeding with any foreclosure to recover assessment lien debt. ■
Jeffrey A. Beaumont, Esq. is a shareholder of Beaumont Tashjian, a full‐service community association law firm providing general counsel, litigation, and assessment collections services to its clients with offices throughout California. He has been representing community associations for more than 25 years and is involved in HOA industry organizations serving in a variety of volunteer leadership capacities such as faculty member, speaker, article author and magazine editor, board of director and committee chair, as well as on a legislative level at the State Capitol.
Kyle Meade, Esq. is an associate attorney with Beaumont Tashjian, where he focuses on general counsel, providing risk assessment and management for community associations. He also serves as counsel for the firm’s Collections and Litigation departments.