By Beverlee Gordon and Terin Reeder-Atkins
According to the Department of Financial Protection & Innovation (“DFPI”), “routine HOA assessments” do not constitute a “consumer credit transaction” as defined under the California Debt Collection Licensing Act (“DCLA”). The collection of routine HOA assessments is not considered a collection of “consumer debt.”
While the DFPI does not define what constitutes “routine HOA assessments,” its comments on its website suggests that collecting HOA assessments does not require a debt collection license under the California Debt Collection Licensing Act (“DCLA”). The DFPI is a department under the Business, Consumer Services & Housing Agency established to protect consumers from unfair, deceptive, or abusive practices committed by unlicensed financial services.
The DFPI has a Frequently Asked Questions (“FAQ”) section on their website that specifically addresses routine HOA assessments.
Q: “Has any person/activity been determined to not be in the business of debt collection?”
A: “The Department has determined that routine HOA assessments do not constitute a “consumer credit transaction” as defined under the DCLA, and therefore do not constitute “consumer debt” under the Act. Since the collection of routine HOA assessments is not considered to be collection of “consumer debt,” such activity would not constitute being engaged in the business of debt collection and does not require licensure under the DCLA.”
Now that we have written clarification directly from the DFPI, we can now confidently and affirmatively state that according to the DFPI:
1) Collection of routine HOA assessments does not require a license and
2) HOA assessments are NOT considered a “consumer credit transaction.”
Read more on the Debt Collection Licensee from DFPI HERE.
About our Guest Authors
Beverlee Gordon is the Director of Operations and founder of A.S.A.P. Collection Services, a collection service that specializes in California Common Interest Developments, Homeowner Associations, Property Owner Associations, and Commercial & Industrial CIDs.
Terin Reeder-Atkins is the Director of Client Relations and currently serves on the CAI Bay-Cen Chapter’s Legislative Support Committee.