Comparing Collection Methods for Delinquent

Homeowner Association Assessments



Michael T. Chulak and Associates represents homeowner associations throughout California in collecting delinquent assessments. No initial fee or deposit is required. While our collection procedures rarely require us to proceed to foreclosure, our firm uses both the judicial foreclosure process and the non-judicial foreclosure process when it becomes necessary. Only a law firm can foreclose judicially. Lien services may not use the courts and are required to foreclose non-judicially. The judicial foreclosure process is often superior because a deficiency judgment is possible to obtain and a lawsuit tends to force the debtor into an early resolution. See our No Initial Fee Assessment Collections.



 

Judicial Foreclosure

Nonjudicial Foreclosure

Remedy:
After recording an assessment lien, the association files a complaint and obtains an order for sale and a money judgment.  The judgment can be collected by sale of the home, wage garnishment, bank account levy, rent levy or other methods.

Remedy:
After recording an assessment lien, the association records a Notice of Default.  Private trustee sells the home by trustee’s sale at a public auction.


Time:
Obtaining a judgment takes four to six months after filing suit if no response is filed by the debtor.  If the debtor responds to the complaint, the matter will be set for trial.

Time:
After recording the Notice of Default, the trustee's sale takes approximately four additional months.  If the debtor obtains a temporary restraining order, the matter will be set for a hearing. The average additional delay is six weeks.

Advantages:
Maximizes the opportunity to collect from all available resources of the debtor.  These matters almost never go to trial.  Procedure allows time for negotiations, stipulated payment plans and/or the sale of the property.  Other methods of collection are also available.  Deficiency judgment is available.  A judgment will generally prevent debtor from buying another home until debt is fully paid.

Advantages:
Sometimes the debtor will pay or agree to a payment plan after the recording of the Notice of Default.  This may save some costs for the debtor.

Disadvantages:
It may be necessary for the association to keep the first trust deed current during the process.

Disadvantages:
Recovery is limited to the sale of the home, thus nonjudicial foreclosure makes sense only if there is sufficient equity in the debtor's property.  Deficiencies are not available.  Sometimes it is difficult for a subsequent buyer to obtain title insurance.   It may be necessary for the association to keep the first trust deed lender current during the process.

Small Claims Court

Superior Court Suit

Remedy:
The association files a complaint and obtains a money judgment which is collectible as with other judgments.  Court appearances require a member of the association to attend.  An attorney may not appear for the association except in appeals.

Remedy:
The Association files a complaint and obtains a money judgment which is collectible as with other judgments.  The association is represented by attorney.

Time:
Obtaining a judgment takes one to two months depending on the court's calendar and ability to serve debtor.

Time:
Obtaining a judgment takes approximately one year depending on the court's calendar and ability to serve debtor.

Advantages:
Quick and inexpensive.  A judgment can be collected by wage garnishment, bank account levy, rent levy or other methods.

Advantages:
Debtors generally require a lawyer to respond to such suits.  This creates pressure to pay or enter into a stipulated payment plan.  Unlike small claims court, the claim permitted is unlimited in amount.  Judgment can be collected by wage garnishment, bank account levy, rent levy or other methods.

Disadvantages:
Associations are limited to two claims which exceed $2,500 each year.  The maximum judgment is $5,000.   The association must represent itself and is generally given only seven to eight minutes to argue its case.  An attorney may not represent an association except in appeals.  Most losing debtors appeal their cases to Superior Court causing delay and additional costs.  Judgments cannot be collected by foreclosure sale.

Disadvantages:
More expensive than small claims court. Also takes longer to get to trial.  Judgment cannot be collected by foreclosure sale.

See our: No Initial Fee Assessment Collections
and Legal Services Retainer Agreement. Note:  Debtor's bankruptcy stays all actions.  See attorney for details.

 

Eleven Ways to Collect a Personal Judgment

 

Illegal Debt Collection Procedures

Wrongful HOA Collections - Foreclosures




All contents ©2017 MTCLaw.com. All rights reserved.