Real Property Law

Debt Collection Licensing Act Requirements Do Not Apply to Collection of Routine HOA Assessments

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By Dennis Burke, Esq.

Dennis Burke

The California Debt Collection Licensing Act (“DCLA”) was enacted by the 2020 passage of California SB 908. One aspect of the DCLA requires persons engaged in the business of collection of consumer debt to apply for and obtain a debt collector license from the California Department of Financial Protection & Innovation (“Department”).

Most recently, a review of the Department website shows the Department apparently made a determination regarding application of the DCLA to collection of some homeowner association assessments.  The Department’s website contains the following statement:

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. (FAQ #10,

Based on the above statement from the Department’s website, collection of routine HOA assessments does not require licensure under the DCLA. This will remove some of the uncertainty regarding the potential need to seek and obtain a debt collector license for those entities engaged in common interest developer assessment collection efforts. There are still a myriad of other debt collection statutes, over and above the DCLA, that potentially apply to and regulate entities involved in assessment collection efforts. The above statement from the Department’s website only applies to the DCLA and does not preclude application of those other debt collection statutes, such as the Federal Fair Debt Collection Practices Act or the California Rosenthal Fair Debt Collection Practices Act.

The Department website does not appear to have any information as to what the Department considers a “routine HOA assessment.” The implication is that collection of non-routine assessments would not be exempt. Nor does it appear that the Department has issued any guidance on whether collection of other typical homeowner association charges (e.g., transfer fees, user fees, cable charges, water bills, pool key charges and special assessments) might trigger licensure. It remains to be seen whether the Department will interpret and apply the DCLA in a way that recognizes that unpaid homeowner association charges over and above routine assessments are not really consumer credit transactions/consumer debts.

About the Author: DENNIS M. BURKE has been a member of the California State Bar since 1994.  Mr. Burke is the President and a Senior Shareholder of Fiore Racobs & Powers. He received his preparatory education at the University of California, Los Angeles, where he graduated with a Bachelor of Arts (B.A.) degree. He obtained his legal education at King Hall, University of California Davis, where he received the degree of Juris Doctor (J.D.) in 1994. 

Mr. Burke is a past member of the Board of Directors for the Inland Empire Chapter of the Community Associations Institute, and he is the past Chair of its Legislative Action Committee and liaison to the CAI California Legislative Action Committee. He is a frequent contributor to the CAI newsletter and speaker at CAI seminars and programs, including CAI’s ABC’s of Community Association Law course. Mr. Burke is a member of the Common Interest Development-HOA Practice Area Committee, a subcommittee of the Real Property Law Section (California Lawyers Association). He is a member of the Riverside County Bar Association and former member of the Leo A. Deegan Inn of Court.

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