Five Delinquent Homeowners You Will Meet in Court (and One You Won't)

When homeowners become delinquent in their assessment payments, their accounts are usually turned over to the association’s law firm for collection. Generally, these delinquent owners fall into one of six categories.

The “Judgment Proof” Owner

This is an owner who is retired and/or on disability with no plans of ever working again. They do not own a vehicle that has at least $3,000.00 in equity ($6,000 if the owner or spouse is elderly or disabled). In fact, they usually have no assets at all. Quite often they believe they are “judgment proof”. However, they may not understand that despite the slim chance of collecting the amounts owed, the association still has options for collection. When a Judgment Proof Owner’s home holds equity, the association may chose to foreclose their assessment lien. Furthermore, if the Judgment Proof Owner owns other property, the association will want to obtain judgment and place a judgment lien on the other property. Once a judgment lien is in place, the association may choose to foreclose that lien or hold onto the lien in hopes of being paid through a future sale.

The Obstinate Owner

There are some owners who just do not believe they should pay the assessments.  Despite their generally flawed argument, until a judge rules otherwise, they will not budge from their position. A common example is the owner who refuses to pay the assessments because he or she believes the association is not doing its job. Despite being provided with case law to the contrary, the owner will stick to this defense until the judge rules against him or her at trial. Occasionally, the association’s lawyer can get a favorable ruling without going to trial through a pre-trial motion.

The Combative Owner

Like the Obstinate Owner, the Combative Owners believe they are always right. Unlike the Obstinate Owner, even when they lose they believe they are right and will tell anyone who listens. Often they claim they will go to the press with the outrage they have experienced. However, if there was a trial and judgment entered, the press is reluctant to get involved. They also may threaten an appeal not realizing what is required to bring an appeal. Even if they file a proper appeal, they usually lose and are ordered to pay the additional attorney fees incurred defending against the appeal. Occasionally, they resort to acts of destruction or threats. Any acts or threats of destruction or injury should be taken seriously and reported to your local law enforcement agency immediately! The association’s attorney should make every effort to educate and calm the owner. .

The Misinformed Owner

A little knowledge can be a dangerous thing. It is unclear where the Misinformed Owners get their information, maybe the internet, a friend who has a brother who is an attorney, or Judge Judy.  Despite where the information came from, it is usually wrong. Again, they will not believe the association’s attorney; it is only when the judge rules against them that they begin to understand. 

The Missing Owner

This is the owner you will not meet in court. In some cases the the Missing Owner may have moved out of the unit.  However, it is not uncommon for the Missing Owner to just ignore the letters and legal pleadings. As long as they are served the Summons and Complaint, default judgment can enter. Sometimes, using copies of past assessment payments, a bank garnishment can be put in place and some, or all, of the past due assessments can be collected within a relatively short period of time. Other times, it may take months to track down the owner, their bank account, and/or their employer. The association’s board and manager may need to wait patiently while the association’s attorney attempts to track down the necessary information to collect from this owner. Unless the association or its attorney receives reliable information that the Missing Owner has left the country with no intention on returning or otherwise falls into the “Judgment Proof” category, the association should not quickly disregard and write off the Missing Owner’s debt.

The Innocent Owner

This is not the owner your attorney wants to see in Court. These are the owners whose payments were not applied correctly. They are the owners who were improperly fined because a board member misinterprets the governing documents, or worse, holds a grudge. These are the owners who, after being turned over to the association’s attorney, were able to sneak a check past the management company with a restrictive endorsement.  Maybe the last one is not so “innocent” but they may have a defense that will hold up at trial. It is up to the board, the management company, and the law firm to review each account throughout the collection process to avoid taking Innocent Owners to court. Otherwise the association will not only be left with the bill for its own attorney fees, but possibly the attorney fees of the Innocent Owner as well.