Judgments/Liens

Started by PaulaM4 • 9 replies • 2091 views

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PaulaM4 (New York)
Posts: 14

Posted:

Can anyone provide input on how we (brand new board members) research the difference between Liens and Judgments and what the best way to take homeowners in arrears to court is? We understand the process to be: delinquent homeowner gets letter from Mgmt on behalf of the Board, for either one or two months for which no payment is made; a ten day demand letter can be sent by management, referring the homeowner to a lawyer, the lawyer goes to small claims court, with a letter from Management saying the homeowner is in arrears for $_ (homeowner is given court date notice by lawyer), if it is not adjourned, the lien or judgment is entered against them, then what? A lien is put on the property for when it's sold and a judgment does exactly what?

BradP (Kansas)
Posts: 2,640

Posted:

Paula:

First your documents and also the laws in your state will dictate exactly what you can do. I am not versed on New York law but I do know some states only a lawyer can file a lien. In Kansas we can file it without a lawyer, which is a lot less cost.

First of all our documents give us the ability and authority to levy late fees and lien againt the property. We start with the invoice, after 60 days we send out a reminder with a late fee warning...6 months out they give a lien warning letter and 30 days after that we file a lien. The bad thing about a lien is it isn't an immediate collection, the hope is that the threat and fees associated with it will make people pay. We do not require a lawyer to file it and since we aren't a huge association and our dues are small we do it ourselves. I have heard of people using collection agencies, going to small claims court, etc...each has its pluses and minuses.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We set a 6 months behind lien policy. Over a year and special circumstances, we would explore the foreclosure option. However, the foreclosure process should be used as a stop bleeding measure as that is all it does.

A lien is a judgement. So is a small claims court decision. However, a lien prevents the owner from selling their property until they pay it off. A small claims - court judgement doesn't prevent them from selling and leaving without ever paying. A judgement does NOT equal money. It just means the court recognized money is owed.

I wouldn't pursue the small claims judgement as it doesn't do much for the HOA accept pay for the lawyer to do something. A lien is the better option and doesn't always require a lawyer. However, the legal costs are part of the lien.

Establishing a good payment plan for those in the rears may be a good idea prior to going with a lien. I set up a plan which owners could pay half that month's assessments and try to catch up the next month. As long as they were paying something we wouldn't lien. If they wouldn't pay anything then at 6 months it was a lien. That was also the break even point it made sense to lien.

Former HOA President

PetunkaM (Florida)
Posts: 1,009

Posted:

‘Can anyone provide input on how we (brand new board members) research the difference between Liens and Judgments and what the best way to take homeowners in arrears to court is?’

Paula,

Judgment is made against the person whereas the lien is made against the property. Judgment is a court order. It comes first. It is followed by a lien which can be against a person’s personal property, wages, bank accounts or real property. In Florida, Judgment should/ must be filed with the Secretary of state.

A lien is just a document preventing the property sale. And, it is only recorded in the county where the deed is recorded. A lien is easier to file and in many states it does not require an attorney, but specific state laws must be followed.

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By MelissaP1 on 10/05/2011 8:16 PM
We set a 6 months behind lien policy. Over a year and special circumstances, we would explore the foreclosure option. However, the foreclosure process should be used as a stop bleeding measure as that is all it does.

A lien is a judgement. So is a small claims court decision. However, a lien prevents the owner from selling their property until they pay it off. A small claims - court judgement doesn't prevent them from selling and leaving without ever paying. A judgement does NOT equal money. It just means the court recognized money is owed.

I wouldn't pursue the small claims judgement as it doesn't do much for the HOA accept pay for the lawyer to do something. A lien is the better option and doesn't always require a lawyer. However, the legal costs are part of the lien.

Establishing a good payment plan for those in the rears may be a good idea prior to going with a lien. I set up a plan which owners could pay half that month's assessments and try to catch up the next month. As long as they were paying something we wouldn't lien. If they wouldn't pay anything then at 6 months it was a lien. That was also the break even point it made sense to lien.

Depending on your state you don't need a lawyer to go to small claims, in Kansas lawyers in small claims are frowned upon. A small claims judgement allows you to do a couple of different things, you can lien their property with it or you can try to garnish wages. A court judgement isn't a bad thing, it is just different and has different options associated with it.

CharlesB17
Posts: 112

Posted:

In Florida, an attorney is required to file a lien or judgement. Filing a lien in Florida with out an attorney is considered practicing law without a license. Liens can with stand Foreclosures and If the property sells, insures you will get paid by the previous owner or the new owner, in most cases. Especially if a title search is done. I personally like the lien process better. A judgement is usually the result of a small claims verdict.
Lien is on property and allows you to proceed to foreclosure, and a judgement is against a person. Our attorney suggests to lien and foreclose on a case by case basis.

BradP (Kansas)
Posts: 2,640

Posted:

I think every state is different in its processes and would recommend checking your state statutues or even consulting your legal counsel. Here in Kansas we do not need to be a lawyer to file a lien, however, our lien is inferior to the bank mortgage and in the event of a foreclosure we possibly would get nothing. The new owners are not required to pay that lien.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

As a corporation that the HOA is, a lawyer usually does have represent it in court. The HOA BOD can assign someone to represent them if they feel comfortable with that option. However, you have to keep in mind that a HOA is NOT one entity but represents the WHOLE. It may not take a lawyer to file the suit or lien, but if you go into the court in front of a judge that may require the lawyer.

Liens are the better option. It holds the owner to the property. It's not speedy but it does keep accumulating over time. A lawsuit judgement doesn't equal money either. It can take 7 years of non-payment before it has to be renewed. That means the owner can sell, move out, and not pay for over 7 years if ever. That's because who's going to be on your board 7 years from now to remember what happened in the case and to go renew it? Atleast with a lien, you know a title company is going to find the lien when the house sells. That won't take as much memory if processed correctly.

Former HOA President

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By MelissaP1 on 10/06/2011 10:14 AM
As a corporation that the HOA is, a lawyer usually does have represent it in court. The HOA BOD can assign someone to represent them if they feel comfortable with that option. However, you have to keep in mind that a HOA is NOT one entity but represents the WHOLE. It may not take a lawyer to file the suit or lien, but if you go into the court in front of a judge that may require the lawyer.

Liens are the better option. It holds the owner to the property. It's not speedy but it does keep accumulating over time. A lawsuit judgement doesn't equal money either. It can take 7 years of non-payment before it has to be renewed. That means the owner can sell, move out, and not pay for over 7 years if ever. That's because who's going to be on your board 7 years from now to remember what happened in the case and to go renew it? Atleast with a lien, you know a title company is going to find the lien when the house sells. That won't take as much memory if processed correctly.

Kansas does not require a lawyer for small claims for corporations, they highly frown upon any lawyers in small claims...muddies up the process. As a corporation one of your officers can represent you in small claims court and that is the preferred method per the courts

PamelaB2 (Missouri)
Posts: 16

Posted:

I agree with those who say to check your governing your documents and also the laws in your state which "will dictate exactly what you can do… and state laws must be followed…”

Example in Oklahoma they don’t have a specific HOA regulatory agency…. However, that makes it much harder to be sure to stay within the law and not get yourself in trouble. It is extremely time-consuming to try to look at the individual statutes. (One state north of them we have different laws, just as ours are different from KS.)

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