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Foreclosure rates for residential properties continue to drop. Black Knight Financial Services reported that in 2016, the national foreclosure rate dropped by 30 percent. The first quarter of 2017 reports the lowest rate of foreclosure activity since 2006.

As the inventory of foreclosed properties lessens, housing markets will see an increase in value. Owners should start to see home values on the rise.

While foreclosure rates nationwide are the lowest they have been in 11 years, foreclosures in New Jersey remain among the top ten highest in the country. Continue Reading Foreclosure an Effective Method to Recoup Unpaid Condo Assessments

According to a September report from RealtyTrac, nationwide foreclosure rates have dropped 24% from a year ago. For the first time since the real estate crisis foreclosure timelines have also decreased. Experts suggest the reduction in timelines is the best indication of a full market recovery because it shows states are clearing the backlog of foreclosures.

Unfortunately this improvement has not carried over to New Jersey which still ranks #2 for the highest foreclosure rates. Continue Reading Foreclosures—New Jersey Recovery Still Slow

Many people do not realize that Condominium Associations can foreclose units in the same manner as a mortgagee, pursuant to N.JS.A. 46:8B-21.

The Complaint to Foreclose is filed in the County where the unit is located. A copy of the filed Complaint is then served upon the unit owner via personal service. The unit owner will have 35 days to file an Answer to the Association’s Complaint. In the event the Unit Owner fails to file an Answer, the Association can proceed with filing a Request to Enter Default.

Continue Reading Foreclosing Association Liens

Once association counsel obtains a personal Judgment against the unit owner for failure to pay maintenance fees, late fees, attorneys’ fees and costs, and other charges, we look for ways to collect on the Judgment. If delinquent unit owner rents his unit, one method of collecting on the Judgment is by levying the rental income.

The process starts by association counsel requesting tenant information from management and the board; we need information such as the names of the tenants, copies of any leases management may have on file, license plate numbers of the vehicles driven by the tenants, etc. Once we obtain this information, we file an Execution against Goods and Chattels. A judge will review and sign the Execution against Goods and Chattels, authorizing a Court officer to levy the rent in an amount up to the Judgment amount, plus Court officer commissions and other Court costs. Once the Order is signed, the case is assigned to a Court officer. The Court officer will then serve the tenant with the Execution against Goods and Chattels, which mandates that the tenant must pay his/her rent to the Court Officer, rather than to the delinquent unit owner.

At that point, the tenant will pay the rent to the Court Officer. The Court officer will notify association counsel that the rents have been levied. Association counsel then files a Motion to turn over funds that were levied. The Motion places the unit owner on notice that his/her rental income is about to be turned over to the association.

Once the Order to turnover funds is entered, it is served upon the Court officer, who will then forward the monies to association counsel. This process continues until the Judgment amount, plus court officer commissions and court costs are satisfied.

Once association counsel obtains a personal Judgment against a unit owner for failure to pay maintenance fees, late fees, attorneys’ fees and costs, and other charges, we look for ways to collect on the Judgment. One method of collecting on the Judgment is by garnishing the unit owner’s wages.

The process starts by conducting an employment search. Once we find that a unit owner is employed, we file a Notice of Application for Wage Execution, Order, Certification and Execution against Earnings pursuant to 15 U.S.C. 1673 and N.J.S.A. 2A:17-56. After a judge signs the Order allowing for the wage execution, the case is assigned to a Court officer. The Court officer then takes the Order and serves the unit owner’s employer with a copy of the Order. The Order has specific instructions to the employer mandating him/her to garnish the unit owner’s wages. In no event shall more than 10% of the unit owner’s gross salary be withheld.

The employer is ordered to deduct a certain amount from the earnings and to pay that sum over to the Court officer. Once the Court officer receives the monies, he/she forwards the check to association counsel, and this process continues until the Judgment amount, plus Court officer commissions, is paid in full.

Many times, once a unit owner notices that his/her wages are being garnished, they contact association counsel to pay off the Judgment amount, so that the association will put a stop on the wage garnishment process. Either way, we find the wage garnishment process to be an effective method of collecting on Judgments.

Once association counsel obtains a personal Judgment against a unit owner for failure to pay maintenance fees, late fees, attorneys’ fees and costs, and other charges, we look for ways to collect on the Judgment. One method of collecting on the Judgment is by levying a unit owner’s bank accounts.

The process starts by association counsel conducting a bank account search. If the search reveals that a unit owner has a bank account, it will also provide the balance of the bank account. If the balance on the account is worth pursuing, we file an Execution against Goods and Chattels. A judge will review and sign the Execution against Goods and Chattels, authorizing a Court officer to levy on the bank account of the unit owner in an amount up to the Judgment amount, plus Court officer commissions and other Court costs. Once the Order is signed, the case is assigned to a Court officer.

The Court officer will then serve the bank with the Execution against Goods and Chattels. At that point, the bank freezes the account in the amount set forth in the Execution, or in a lesser amount if there is only a lesser amount in the bank account. The Court officer will then notify association counsel that the funds have been levied. Association counsel then files a Motion to turn over funds that were levied. The Motion places the unit owner on notice that the funds in his/her bank account are about to be turned over to the association. Once the Order to turn over funds is entered, it is served upon the Court officer, who will then forward the monies to association counsel.

Sometimes we are fortunate that a bank account has a balance high enough to satisfy the Judgment, however, more often than not, the balance at a particular time is not high enough to satisfy Judgment, so the bank account must be levied several times. We find that levying bank accounts is an effective way to collect on Judgments.

May is a month of collection opportunities for associations.  Most associations suspend pool privileges for those unit owners who are delinquent in paying their assessments.  Therefore, associations tend to experience a surge of unit owners seeking to remit payments prior to Memorial Day weekend, when most pools open. 

Associations should provide their attorney with a current delinquency report, so collection letters can be sent to the delinquent owners; this should prompt a quick response from unit owners who want to utilize the pool facilities this summer.  It is important for Boards to seize these collection opportunities to bring cash flow to their Association.

Tax Season is a great time for associations to collect their delinquent assessments.  Often times, delinquent unit owners seek to pay off their arrears with their tax reimbursement checks.  It is important that associations provide their attorney with an updated delinquency report to pursue, so the attorney can commence collection efforts.  Boards should seize the opportunity to reduce their delinquencies and bring money in for their association.

For many associations, a good portion of the Board meetings are spent reviewing the ever-growing delinquency report. Boards are faced with different variables when dealing with their delinquency report. For example, a large delinquent account could be a vacant unit that has had a mortgage foreclosure pending for over two years. Another delinquent account could be an owner-occupied unit where the owner is unemployed and is not paying any of his/her bills. There are also smaller delinquent accounts where the unit owner encountered hard times over a six to nine-month period and requested a payment plan to address his/her arrears, but does not always adhere to the payment arrangement. Boards are left in the difficult position of making the decisions of choosing the best method of collecting on these delinquency accounts.

If the balance on an account is less than $15,000.00, we usually recommend that a lawsuit be filed in the Special Civil Part of the Superior Court, as judgment can be obtained in a relatively quick and efficient manner. Once a judgment is obtained, there are various methods of collecting on this judgment, e.g., wage garnishment, bank levy, rent levy, or car levy. The best method of collection will depend upon the specific variables of a given case. For example, if a unit owner is living in the unit and is unemployed, the Board may seek to pursue a bank levy or a car levy. If a unit owner has left a unit vacant and is living in state with employment, the Board may seek to pursue a wage garnishment. Associations may utilize multiple methods of collecting on the judgment at the same time. To learn more about these collection methods, please refer to my previous blogs.