“I tuned in to the tail end of your call last week on WFTL regarding the Wolf v. Carpenter, Hazlewood, Delgado & Bolen, LLP case and your optimism about the Supreme Court considering the petition for certiorari. Regarding the issue of homeowners refusing to pay their dues, why shouldn’t the HOA have the ability to access the owner’s credit report, just like any other creditor would for a debtor?”
Let’s be honest, especially in California, the Homeowners’ Association (HOA) system is seriously flawed. People’s satisfaction with HOAs is at an all-time low, yet more unsuspecting people are getting involved in them than ever before. What’s concerning is that virtually anyone can become a Director, Officer, or Community Manager in an HOA without any legal requirement for licensing, credentials, training, or certification. Those uneducated humans make mistakes, and often.
The U.S. Supreme Court is being asked to decide whether a standard HOA assessment qualifies as a “credit transaction” under the Fair Credit Reporting Act (FCRA), giving HOAs the right to access a homeowner’s credit report.
There’s a significant division among different circuits when it comes to defining what constitutes a “credit” transaction. Back in 1984, the Ninth Circuit ruled that any transaction involving deferred payment should be considered “credit.” On the other hand, the Second, D.C., and Seventh Circuits have all asserted that if payment happens substantially at the same time as the performance of a service or goods delivery, it shouldn’t be considered a “credit transaction,” even if some payments are deferred.
The central question here is whether all transactions involving deferred payment, regardless of the timing of payment in relation to performance, should be labeled as “credit transactions” according to the FCRA.
According to the petition, “Within the Ninth Circuit alone, there ‘are likely millions of homeowners… subject to homeowner association assessments.’ [Pet. App. 3a]. And although the Ninth Circuit Panel did not rule on whether HOA assessments are credit transactions, it affirmed the District Court’s holding that they are. By affirming that ruling, the Ninth Circuit not only remains out of step with a thirty-year doctrinal trend, but it also undermines the privacy of millions of homeowners.”
This case isn’t just about homeowners who are behind on their assessment payments; it affects all homeowners who pay their assessments on time or even prepay them. If deferred payments like assessments are deemed credit transactions, it will continue to grant HOAs the authority to access the credit reports of their members. Can you really trust your HOA to maintain the confidentiality of your HOA records? Do you believe your HOA will provide accurate records when you request them? Do you think your HOA’s Community Manager and governing body genuinely prioritize the privacy protection of their members? I have my doubts, as their actions consistently fail to align with their promises, time and time again.
Given the utmost importance of homeowner privacy, and unless there’s a case of overdue payments, I believe HOAs should not have the authority to access the credit reports of homeowners.
Finally, I suggest checking out attorney Eric Glazer’s blog titled “Florida HOA & Condo Blog…Why can’t we be friends?” available at www.hoa-condoblog.com. Regardless of your state of residence, you’ll find valuable information to assist homeowners and trustees in navigating the ever-growing challenges in the world of HOAs.
