Foreclosure Vs. Money Judgment
Owners in a condominium or homeowners association must understand that non-payment of maintenance fees will result in either foreclosure or a personal judgment against them. Maintenance fees are the lifeline of community associations and these associations would not survive without them. When an owner does not pay his/her maintenance fees, he/she is a delinquent owner. The Board will then determine at what point the delinquency is referred to an attorney’s office for collection. Generally, the collection process begins with a collection letter. The Board should decide quickly thereafter, if payment is not made, what avenue of collection to take. There are two options: foreclosure or money judgment.
In the case of foreclosure, the end result is a sheriff’s sale and the unit is ultimately taken from the owner. The Association is rid of an owner who does not pay his/her maintenance fees. These non-paying owners are a financial drain on the community and not beneficial for the financial health and well being of the community.
In the case of a money judgment complaint, the Association will end up with a personal judgment against the owner. So long as the owner has a bank account, the Association may levy the account. If the owner is employed, the Association may also garnish the owner’s wages. However, if the owner is not employed and has no assets, there may be no way to collect on the judgment and, therefore, the Association has an owner who continues to not pay maintenance fees and a judgment it may not be able to collect. In that event, we can docket the judgment with the Superior Court which will remain on the debtor’s credit for twenty (20) years. These are all necessary considerations when making collection decisions.
