In Mashiri v. Epsten Grinnell & Howell, 2017 WL 127565, at *4 (9th Cir. 2017), the Court of Appeals for the Ninth Circuit weighed in on the split of authority amongst the circuit courts, finding that delinquent HOA assessments are “debts” under the FDCPA.
The contents of the May Notice plainly belie Epsten’s contention that it did not attempt to collect a debt. The May Notice requested payment of Mashiri’s homeowner’s assessment fee, stating: “This letter is to advise you that $598.00 is currently owing on your Association assessment account. Failure to pay your assessment account in full within thirty-five (35) days from the date of this letter will result in a lien being recorded against your property.” See supra at –––– (emphasis added). Mashiri’s obligation to pay the assessment fee relates to her household and arises from her membership in the HOA. The overdue assessment fee is a debt under § 1692a(5).
The Court of Appeals also clarified when mere enforcement of a security interest can also trigger the FDCPA.
In addition, Epsten’s interpretation of § 1692a(6) is incorrect. As we recently observed in Ho, “[i]f entities that enforce security interests engage in activities that constitute debt collection, they are debt collectors.” 840 F.3d at 622. Ho addressed whether a trustee’s communications—limited solely to pursuing non-judicial foreclosure—were debt collection activities for purposes of the FDCPA. Id. at 619–20, 623. In contrast to this case, the trustee sought to enforce a secured loan and sent a notice of default that did not request payment but instead “merely informed Ho that the foreclosure process had begun, explained the foreclosure timeline, apprised her of her rights and stated that she could contact [the lender] (not [the trustee] ) if she wished to make a payment.” Id. at 623. We held that where an entity is engaged solely in the enforcement of a security interest and not in debt collection, like the trustee and unlike Epsten, it is subject only to § 1692f(6) rather than the full scope of the FDCPA. See id. at 622 (“We do not hold that the FDCPA intended to exclude all entities whose principal purpose is to enforce security interests…. We hold only that the enforcement of security interests is not always debt collection.”). Because Epsten sent the May Notice as a debt collector attempting to collect payment of a debt—irrespective of whether it also sought to perfect the HOA’s security interest and preserve its right to record a lien in the future—it is subject to the full scope of the FDCPA, including § 1692g and § 1692e. See id. Epsten’s attempt to escape liability under § 1692g and § 1692e therefore fails.