** Originally Published on: Sep 15, 2011 **
We have compiled a list of common legal terms to assist managers and board members with understanding the terminology used when discussing the collection of unpaid assessments.
Assessment: The fee an owner is required to pay to the association, typically monthly, quarterly, semi-annually, or annually for such services as maintenance, repairs, insurance, reserves, etc.
Contempt Citation: A court order demanding an owner, under penalty of contempt of court, to answer interrogatories in the event he/she fails to initially answer. This order must be served on the owner personally and requires the owner to either answer the interrogatories or appear in court to explain failure to do so to the judge.
County Court Lawsuit: A lawsuit filed by the association against an owner for an amount due of less than $25,000.00, including assessments, interest, late charges, attorney’s fees and court costs.
Dues: Same as assessment.
Garnishment: A court order requiring a third party (e.g., the owner’s employer or bank) to turn over a portion of wages if employer or money held by a bank, which belong to the owner, to the association to pay the judgment against the owner.
Interrogatories: A set of written questions issued by the court directing an owner to provide information concerning assets of the owner.
Judgment: The dollar amount the court determines the owner owes to the association following (1) the owner’s failure to file an answer or (2) trial. This amount generally includes past due assessments, late charges, interest, attorney fees and court costs as of the date the judgment is entered. The judgment does not include additional assessments, late fees, or attorney fees added after the date judgment is entered.
Judicial Foreclosure: A court action that allows an association to foreclose and sell an owner’s home in an attempt to obtain payment of the unpaid assessments.
Lien: An encumbrance of the association against the property of an owner to secure the payment of unpaid assessments in the event of a refinance or sale of the property. The lien is recorded with the County Clerk and Recorder’s Office where the property is located.
Personal Service: When an owner is given personal notice that a lawsuit has been filed against him/her by being provided with a copy of the complaint and summons by either a private process server or the sheriff.
Public Trustee Foreclosure: A non-judicial process that allows a mortgage company to proceed to auction the house of an owner who has defaulted on his/her mortgage. This process is not available to associations.
Receivership: A lawsuit which results in the court placing the owner’s property under the control of a third party who collects rent from a tenant to pay unpaid assessments. For more information on the receivership process, see our article “Receivership: An Alternative Collection Method.”
Return Date: The date an owner must file his/her answer or appear in court in response to being served with a County Court lawsuit. This typically is approximately 30 days following personal service of the lawsuit.