Sometimes owners in a community don’t pay their assessments. Often, the Board of Directors must file a lawsuit to collect the delinquent assessments. The lawsuit is filed in small claims court or the civil court in the county where the property is located. Typically, owners do not respond to the lawsuit and the Association receives a “default judgment.” But a judgment is only as good as the Association’s ability to collect the judgment. For a more detailed overview of collections, click here. Once a judgment is secured, there are several avenues the Association may pursue. Here are some of those options:
1. Garnish Wages or Bank Accounts
At anytime after the judgment is entered in the court records, the Association’s attorney may issue garnishments. Items that are subject to garnishment include: bank accounts, wages, certain personal property, rental income or income tax returns.
The “writ of garnishment” is sent to the individual or entity that holds an interest in the owner’s assets or property. For example, writs are sent to banks where the owner has an account or to the owner’s employer.
There are some assets or income that are exempt from garnishment, such as social security or disability income. In those cases, the owner may challenge the garnishment and a judge will then determine what is exempt and what is subject to the garnishment.
2. Debtor Examinations
Once the judgment has been entered in the court records, the Association may obtain an order requiring the owner to appear at the court house. On the stated day and time, the Association’s attorney may ask questions of the owner related to their finances, bank accounts, assets, or any other information relevant to collecting the judgment. The information gathered from the debtor exam is then used to issue garnishments or take other collection action to pay off the judgment.
3. Execution on Vehicles
In some cases, a delinquent owner may own cars, boats or other vehicles that are owned free and clear. In those circumstances, the property may be taken by the sheriff, sold at auction, and the amount received is credited toward the Association’s judgment amount. The Association’s attorney can determine if such assets are available.
4. Settlement
The threat of garnishment may be enough to cause the owner to voluntarily pay the amount of the judgment or make regular payments until the judgment is satisfied. In those cases, the Association may want to enter into a formal settlement agreement which includes all of the costs and fees that were incurred after the judgment was entered. This avoids having to file a “supplemental” judgment to collect those fees and costs.