Grinnell & Howell, No. 14-56927 (9th Cir. 2017), found that a pre-lien letter sent to a homeowner on behalf of an as- sociation raised a plausible claim under the Fair Debt Collection Practices Act (“FDCPA”).
The pre-lien letter at issue stated in part that, “Failure to pay your assessment ac- count within thirty-five (35) days from the date of this letter will result in a lien being recorded against your property.” It further advised the homeowner that, “Un- less you notify this office within 30 days of receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume this debt is valid.”
The FDCPA requires a debt collector to send the debtor a written notice that in- forms the debtor of the amount of the debt, to whom the debt is owed, a right to dispute the debt within 30 days of receipt of the letter, and a right to obtain verifi- cation of the debt. If the debtor notifies the debt collector in writing within the 30 period that the debt is disputed, the debt collector must cease collection activities until it has obtained verification of the debt and mailed a copy of such verifica- tion to the debtor.
Fair Debt Collection Practices Act: E
arly last year, the United States District Court of Appeals for our Ninth Circuit in Mashiri v. Epsten
In the case at hand, the homeowner sued the law firm which sent the pre-lien letter, alleg- ing that the language of the letter conflicted with her FDCA right to 30 days in which to dispute the debt. Te District Court dis- missed the plaintiff’s FDCPA complaint, concluding that the pre-lien letter satisfac- torily explained her right to dispute the debt and therefore did not improperly threaten to record a lien.
Te Court of Appeal reversed the District Court, finding that the letter’s demand for payment within 35 days of the date of the letter was inconsistent with the debtor’s right to dispute the debt within 30 days of receipt of the letter, constituting a plausible violation of the FDCPA. Te Court of Ap- peal also found that in threatening to record a lien unless payment was received within 35 days, the law firm had failed to effectively explain that disputing the debt would cease all collection activity (including recordation of a lien) until verification of the debt was provided to the debtor. Finally, the Court held that the law firm was acting as a debt collector attempting to collect a debt, mak- ing it subject to the full scope of the FD- CPA.
Association boards should consult with their attorneys to ensure that the pre-lien letters sent to delinquent homeowners comply with the FDCPA and all other applicable laws.
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Does Your Pre-Lien Letter Comply?
This article was written and submitted by Jacqueline Pagano, Esq. of Feldsott Lee Pagano & Canfield.
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