HOA Assessment Dispute – When Is A Waiver of Rights Deemed Effective In An HOA Dispute?

Gholian Law’s HOA Dispute Attorneys were recently asked to determine if a waiver of rights granted to an individual homeowner by an HOA was in fact valid under Cal. Civ. Code § 5655(a). Specifically, our team was charged with investigating the validity of a wavier granted to homeowner as part the of an HOA assessment repayment plan. The homeowner had agreed to the payment plan as a means to become current on their obligations to the HOA. Cal. Civ. Code §5655(a) specifically states: “Any payments toward that debt shall first be applied to the assessments owed, and only after the principal owed is paid in full shall the payments be applied to interest or collection expenses.” Which means 1367(a) defines how an HOA must apply a delinquent payment plan.

HOAs or their collection agents often request, if not insist, that a homeowner behind on HOA dues waive his or her rights under 5655(a). This request is made so that the HOA is permitted to apply late payments in whatever fashion they choose. And this may include deferring payments toward a principal owed, instead paying down attorney fees, collection costs, and other “non-principal” debts accrued.

In this situation, the question is whether a homeowner behind on payments is allowed waive their rights under 1367(a)? Cal. Civ. Code § 3513 enables individuals to waive the advantage of a law intended solely for their benefit. A law established for a to serve the public, however, cannot be waived. A homeowner’s rights granted under 1367(a) can thus be waived because such “rights” were not established to serve the public.

The question then becomes: What makes a waiver effective? According to California law, a “Waiver of a right conferred by law must be voluntary, knowing and done with adequate awareness of the relevant circumstances and likely consequences. A waiver is not effective unless the party executing it is fully informed of: (1) the existence of the right being waived; (2) the meaning of the waiver; (3) the effect of the waiver; and (4) a full understanding of the explanation of the waiver. The burden is on the party claiming a waiver to prove it by clear and convincing evidence. Doubtful cases will be decided against the existence of waiver, especially when the right alleged to be waived is one that is favored by law.” [See Andrew Smith Co. v. Paul’s Pak, Inc., 754 F. Supp. 2d 1120, 1131 (N.D. Cal. 2010.) See also Record v. Indemnity Ins. Co. of North America, (1951) 103 Cal. App. 2d 434, 445  – “primary essentials of a waiver are knowledge and intent. Before one may be deemed to have waived a right granted by statute he must be shown to have knowledge of the right and an intent to waive or forgo it.”]

Therefore, before a waiver or rights can be deemed effective under California law, the party waiving their right must have knowledge of said rights, and intent to waive them. Additionally, the party seeking to enforce the waiver assumes the burden of proving the waiver is effective.

Have questions regarding the effectiveness of a contractual waiver or a related litigation? Contact Gholian Law’s Los Angeles HOA Dispute Attorneys for a free consultation and case evaluation TODAY.