Small Claims Courts

Started by DebR • 12 replies • 1329 views

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DebR (Washington)
Posts: 3

Posted:

Hi, I am new as an HOA board member, and asking for input on this forum. Our Board of Directors would like some input on a homeowner who lives in another state, but owns & rents a house in our community. This person has not paid their annual dues, but has been notified several times as per our CCR's, By-Laws, etc. We have found in the past that taking members/or starting to take members to small claims has worked. Below is a statement from our County District Court:

"A small claims case must be filed in the county of the defendant's residence, or in a traffic accident, the county where the accident occurred or the defendant resides."

We are looking at this 2 different ways:

1)This person may live in another state, but the resident in question is in the state & county of the HOA.

2)If this person lives in another state other than the resident in question, we might have to go another route to get the dues owed.

We have not had difficulty with this particular person before, only with a person residing outside of the Country & renting their property.

Thank you

NpS (Pennsylvania)
Posts: 4,216

Posted:

The "general" rule about residence has some exceptions. Here's the one that I think applies to your situation:

RCW 3.66.040
Venue—Civil action.
(6) An action against a nonresident of this state, including an action arising under the provisions of chapter 19.190 RCW, may be brought in any district where service of process may be had, or in which the cause of action or some part thereof arose, or in which the plaintiff or one of them resides.

3.66.040(6) allows you to bring the action in the district "in which the cause of action or some part thereof arose." I would say that the "cause of action" occurred in the district where the unit is located.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

If the County District Court rules are inconsistent with the Washington State rules that I quoted, then the state rule should overrule the local rule.

Sikubali jukumu. Read all posts at your own risk.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It is best to file a lien than go to court. They can not sell till paid off. A court judgement does not do that. Plus your HOA should have a set timeline in place before taking action. Ours is 6 months behind we lien. 1 year behind we consider foreclosure. Establishing that will help in proceeding without being like picking on one person.

Former HOA President

AllisonD (Florida)
Posts: 449

Posted:

A court judgment does more than a lien. With a judgment you can garnish wages, get the sheriff's office to sell property (car, motorcycle, boat etc) or they can get an Order directing the tenants to pay the rent to the association until its paid off. With a lien, you may be dead before those folks decide to sell their house.

SheliaH (Indiana)
Posts: 6,964

Posted:

We had a similar situation. Our attorney told us about a process (I believe it's called domesticating or something like that) where you sue someone in your state and then have the judgement filed in the person's home state. As I recall, I think it enables you to take additional action to grab the house because you've now served the person in that state (otherwise, he/she could claim they weren't properly served).

However, this procedure is expensive, the procedures vary by state, and as you've probably guessed by now, it STILL doesn't guarantee you'll collect any money. It may help gum up the person's credit in that state which could prompt some sort of settlement.

I understand wanting to use small claims court because that's cheaper and you don't necessarily need an attorney, but with this person being out of state, you may need to consider if the costs of chasing after him/her are worth the collection. You could add court costs and attorneys fees to the lawsuit. You may want to go to the small claims court in your area and ask about its procedures first and then consult with the association attorney to see what your best option might be. While you're at it, ask about garnishing the rent - interrupting the rental flow might get the homeowner's attention, but you may need the tenant's cooperation to pull it off (if you don't get it, you're back where you started.)

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

However, this procedure is expensive, the procedures vary by state, and as you've probably guessed by now, it STILL doesn't guarantee you'll collect any money. It may help gum up the person's credit in that state which could prompt some sort of settlement.

I understand wanting to use small claims court because that's cheaper and you don't necessarily need an attorney, but with this person being out of state, you may need to consider if the costs of chasing after him/her are worth the collection. You could add court costs and attorneys fees to the lawsuit. You may want to go to the small claims court in your area and ask about its procedures first and then consult with the association attorney to see what your best option might be. While you're at it, ask about garnishing the rent - interrupting the rental flow might get the homeowner's attention, but you may need the tenant's cooperation to pull it off (if you don't get it, you're back where you started.)

2 choices.

1. Personal judgment. Small claims court. Can garnish wages, sell vehicles, etc. after you get judgment, but not an action against the real estate itself. Can get judgment recognized without much difficulty in another state - but you'll need local legal assistance to get stuff sold - that can be very tricky.

2. Lien. County court. Can go against real estate, but not personal property. The state of WA allows non-judicial foreclosures, so that process might not be all that bad. Should discuss with counsel.

Even if you go to small claims court, state law might require that you be represented by a lawyer if you're a corporation.

Don't know much about garnishing rent, so can't speak to it.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

CORRECTED:

Quote:

Posted By SheliaH on 07/19/2016 7:06 PM
We had a similar situation. Our attorney told us about a process (I believe it's called domesticating or something like that) where you sue someone in your state and then have the judgement filed in the person's home state. As I recall, I think it enables you to take additional action to grab the house because you've now served the person in that state (otherwise, he/she could claim they weren't properly served).

However, this procedure is expensive, the procedures vary by state, and as you've probably guessed by now, it STILL doesn't guarantee you'll collect any money. It may help gum up the person's credit in that state which could prompt some sort of settlement.

I understand wanting to use small claims court because that's cheaper and you don't necessarily need an attorney, but with this person being out of state, you may need to consider if the costs of chasing after him/her are worth the collection. You could add court costs and attorneys fees to the lawsuit. You may want to go to the small claims court in your area and ask about its procedures first and then consult with the association attorney to see what your best option might be. While you're at it, ask about garnishing the rent - interrupting the rental flow might get the homeowner's attention, but you may need the tenant's cooperation to pull it off (if you don't get it, you're back where you started.)

Sikubali jukumu. Read all posts at your own risk.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Remember the HOA is NOT have the right to any member's Social Security number which makes it harder to take certain legal actions. Garnishing wages would be difficult without such information.

Yes, if your incorporated your HOA does have to have a lawyer represent you all in court. So can not avoid those expenses.

The lawsuit has to have a set amount when it goes to court. A lien progresses along. A lien stays and gather money till it is collected. A lawsuit there is a set amount to be filed which may leave you out of a few months of dues while waiting on the court process.

A lien can later be put into the foreclosure process for non-payment. Taking a house seems to be little more incentive to start paying. Plus with a lawsuit judgement the person can simply never pay the amount owed and walk away. Why? Because one has to pursue it and it also has a time limit it can be enforced. Considering your board most likely changes every 1 - 2 years, who is going to be there to pursue it?

Lawsuits are not necessarily cheaper plus you can not guarantee collecting the legal fees. A lien the cost of filing is put into the amount owed. They cost around $400 in some states. Each state the cost varies and may even be free. Court and lawyer fees add up quickly versus a one time file and waiting game.

Former HOA President

DanaT (Tennessee)
Posts: 214

Posted:

I can only tell you the process in Virginia. We are considered an "Open" State which means everything is Public. Anyone with a computer can go to the County Tax Asseres Website, type in an address and like magic, you will have the following information.

1. The year the Home was built.
2. Every person who has ever owned the home, how much they paid, how long they held the property and what their taxes were, year by year.

In Virginia, the case is always filed where the Home resides, not the owner. As far as the lien process goes, again, in Virginia, if I am reading this correctly, you need not even go through the Courts, as it is outlined in our Instruments.

"If you live in a private community setting (whether it is a condominium, townhouse, or single-family home) in Virginia you are likely responsible for paying dues and assessments to a homeowners’ association (HOA) or a condominium association (COA). If you fall behind in payments, in most cases the HOA or COA can get a lien on your home that could lead to a foreclosure. Most HOAs and COAs have the power to place a lien on your home if you become delinquent in paying the monthly dues and/or any special assessments (collectively referred to as assessments). Once you become delinquent on the assessments, a lien will usually automatically attach to your property".

"A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. If you default on the assessments, the HOA or COA can foreclose. In Virginia, an HOA or COA may foreclose its lien nonjudicially, which means the foreclosure takes place without court supervision (Va. Code Ann. § 55-516(I), § 55-79.84(I))".

You can read the full article here. Hope this may help. http://www.nolo.com/legal-encyclopedia/virginia-hoa-coa-foreclosures.html

DanaT (Tennessee)
Posts: 214

Posted:

CORRECTION: After reading the two Virginia Codes referenced above, once the proper paperwork is filed through the Court where the property is located, and if the proper procedure is followed, the Association can proceed with the sell of the property, without Court Proceedings. Most of the requirements involve letting the Owner know what is going to take place, if they refuse to pay their assessments.

http://law.justia.com/codes/virginia/2006/toc5500000/55-516.html

NpS (Pennsylvania)
Posts: 4,216

Posted:

The choice of how to proceed can be complex. Example from my state:

In PA, the HOA lien against the property is automatic on delinquencies. Nothing needs to be filed. However, unlike some states, PA is a judicial-foreclosure state - which means that you have to go through the courts before you can force a sale of the property. Adds a lot of expense.

For financial reasons, even though we have a lien on the property, it makes sense to go to district (small claims) court to get a personal judgment so that we can garnish, sell vehicles, etc.

In the OP's case, WA is a non-judicial foreclosure state. That could make a big difference re cost justification for going after the property vs going after the individual.

Sikubali jukumu. Read all posts at your own risk.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Keeping in mind that the OP lives in Washington State, they only need to be concerned with the statutes and court procedures for Washington.

Here is a link to
An Introduction to Small Claims Court from the Washington Courts.

Small Claims Court in Washington State a 2013 pdf document from the northwest justice project.

After reading the links provided within those sites, you can likely bring action against the owner. However, I strongly suggest consulting with an attorney versed in such actions to ensure all the i's are dotted and the t's crossed.

I would also encourage you to ensure that you have the correct mailing address for the individual. It's possible that they may have moved and are unaware of the issue. You also need to check to see if they are in the Military (which will limit the actions you may take).

Hope this helps,

Tim

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