QUESTION
Can a business association turn off electricity to suite who refuses to pay their portion of electricity as stated in CC&Rs?
Asked on Jul 09th, 2015 on Real Estate - California
More details to this question:
In San Jose, CA, we are an association who has one business suite in our business condominiums who refuses to pay their portion of PG&E. All the condominiums share one PG&E bill every month and it is split based on software that calculates usage. Each suite is individually owned and part of an association who share common areas. The delinquent owner rents the property out but refuses to pay electricity and has never disputed or objected to billing. Our CC&R state that each owner is responsible to pay a portion of their PG&E based on usage calculated by a software. We want to legally shut off the suites electricity because they have failed to pay for over 2 years.
1 ANSWER
No! Cutting off the electricity is like changing the locks. It is a constructive eviction. You don't have any right to evict the owner's tenant. The tenant could sue you for a lot of money, and probably win.
Your CC&Rs provide for holding a hearing to assess penalties for failing to pay. Your CC&Rs might provide for a late payment charge. If not, do it as a penalty assessment after a hearing. Your annual reports to members are supposed to include a policy on how the Board will enforce assessments. Follow it.
If the delinquent member fails to pay PG&E bills and late payment penalty assessments, then have a lawyer record a lien on the property and send the delinquent member a copy of the bill so he knows that has been added to the lien and assessments. Then have the lawyer start foreclosure on the unit. The attorney fees get added to what gets paid to you from the foreclosure sale. If you're the only bidder, then hire a good broker to sell the unit.
If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Or even better, hire me to collect the PG&E reimbursements and some penalty assessments.
Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need.
Dana Sack
Answered on Jul 10th, 2015 at 12:31 PM