HOAleader.com - Tip of the Week - January 2, 2012
Published: Fri, 12/23/11
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Get a Judgment. No, Get a Lien. Which is Better?
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In this week's tip, we answer a question vexing an
HOAleader.com reader. Our reader reports that his new
homeowner association management company wants to change
the wording in the HOA's 10-day demand letter so the HOA
would get an automatic judgment, not a lien, when a home
owner doesn't pay.
What's a lien, and what's a judgment? "A lien is a manner
by which to collect against a property, and a judgment is
a manner by which to collect against a person," explains
James R. McCormick Jr., a partner at Peters & Freedman
LLP in Encinitas, Calif., who represents associations.
The management company is probably interested in getting
a judgment because it's enforceable without having to take
another step. If an HOA files a lien against a property,
it must then file a lawsuit to foreclose on the lien,
which takes time and costs money.
The drawback of a personal judgment, however, is that it's
not secured by anything; a lien is secured by the property
against which it's filed. "You can get your judgment, but
how are you going to collect it?" asks Jenny Key, Austin,
Texas-based vice president of RealManage, a San Rafael,
Calif., association management firm that oversees
properties in Arizona, California, Colorado, Florida,
Louisiana, Nevada, and Texas.
"The advice we give our boards when they ask us about
personal judgments is that we're not in favor of them,"
says Key. "Boards are taking a secured obligation and
turning it into an unsecured obligation, and collection
rates are fairly low on personal judgments. You also have
to pay a bill collector, whose fees typically include
keeping 50 percent or whatever of what you're seeking to
collect. It seems like a much safer strategy to keep
the lien.
"It's true that a judgment will affect an owner's credit,
which some boards feel is the way to go," concedes Key.
"Board members see new cars in an owner's driveway and
think if they hit the owner's credit, he'll pay. But many
delinquent owners are probably already getting dinged on
their credit. There may be a little personal humiliation
there--maybe the owner won't get that Best Buy card
approved--but does it really make owners pay? I've not
seen personal judgments have much success in making
people pay."
Learn about the twists on the laws of liens and judgments
in different states in our new article:
http://www.hoaleader.com/members/663.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Keys at HOAs? They're So Early 2000s!
In this week's tip, we sing the praises of keyless entry systems.
Click here to read full article:
< http://www.hoaleader.com/public/662.cfm >
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Hiring HOA Vendors: Is a Delinquent Owner's Employer Off Limits?
This week's tip will help you determine whether you should raise
red flags about hiring a company at which a delinquent owner
works.
Click here to read full article:
< http://www.hoaleader.com/public/660.cfm >
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Should Your HOA Board Refuse to Hire a Delinquent Owner's
Employer? Discussion Forum Follow-Up
An HOAleader.com reader asks: "One of our residents moved out of
his house, but it's still in his name, and he owes $2,000 in back
dues plus attorneys' fees. This person submitted a bid to do the
snow removal. Some board members decided that since he is only
the vice president of the snow removal company, they hired the
company to perform our snow removal. Three people voted against
the hiring, and four people voted to hire the company. I say this
is 100 percent wrong, but I need something to support my feelings
about this hiring."
Click here to read full article:
< http://www.hoaleader.com/members/659.cfm >
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HOAs: HUD's Keeping an Eye on You
In this week's tip, we give you fair warning that the U.S.
Department of Housing and Urban Development is actively pursuing
HOAs for fair housing violations.
Click here to read full article:
< http://www.hoaleader.com/public/658.cfm >
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Is HUD Stepping Up Fair Housing Enforcement Against HOAs?
On Oct. 18, 2011, the U.S. Department of Housing and Urban
Development (HUD) announced it was charging a Philadelphia
condominium association with violating the Fair Housing Act for
refusing to revise its "no pets" policy as a reasonable
accommodation for condominium residents with disabilities who
required assistance animals.
Click here to read full article:
< http://www.hoaleader.com/members/657.cfm >
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