Wholly commercial or industrial projects may be common interest developments too, with the same monthly and special assessments as residential developments, but they are governed by a different set of code sections. The assessment collections process for these CIDs is often times less onerous than for other CIDs. This article will highlight a few of the important differences to consider.
Some of the differences are found in the rules for communication with members that are often imposed in the assessment collection process. For example, in a commercial or industrial CID the prelien letter does not need to offer IDR, ADR, or a meeting with the board. Also, the FDCPA (Fair Debt Collection Practices Act) disclosure is not required: It only applies to consumer obligations.
There are other differences that deal with the actual process of the collections. For instance, there is no requirement to serve the board vote to foreclose. Also, with a commercial or industrial CID, there is no 90 day right of redemption as there is in a foreclosure that falls under the Davis-Stirling Act.
Finally, one of the most important differences that separate commercial and industrial CIDs from other common interest developments is the fact that collections can be commenced at any level of delinquency. This is in contrast to the Davis-Stirling Act that states that the delinquency must reach $1,800 before foreclosure may begin (or 12 months).
It is also important to note that all of the differences outlined above only apply to commercial or industrial common interest developments that are not mixed use. Meaning, they must be 100% commercial or industrial use with no residences. If the development contains any residences at all, the Davis-Stirling Act applies instead. Note: The laws pertaining to commercial and industrial CIDs commence at Civil Code section 6500.
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