“Stip” is common slang for “Stipulation.” A “Stipulation” is a legal term that generally identifies a written document that sets forth the agreed upon terms and conditions of a settlement between two parties to a lawsuit. In the realm of community association collection actions, that generally means a settlement between the delinquent owner and the association. These documents are alternately called a Stipulated Settlement Agreement, Stipulation for Entry of Judgment Upon Default, or any number of other things, depending mainly upon the whim or style of the document’s drafter.
When are Stips Used?
Stips can be utilized at any time after filing of a lawsuit. Stipulations can be drafted and sent by mail to all parties long before a case goes to trial, or can be quickly written up and signed on the courthouse steps minutes before trial. Once a lawsuit is filed, an official court record is created. All of the actions of the parties must be documented in writing in that court record in order to be binding and to create certainty as to what is supposed to happen and/or what the parties are supposed to do. If at any point in the lawsuit the parties come to an understanding and want to settle the case, the terms of that settlement should be set forth in a written Stipulation which is executed by both parties and filed with the court. If a settlement is reached where one or both parties are required to take some action(s) after settlement, it is crucial to memorialize those required actions in a Stipulation.
What Should a Stip Say?
There are a great number of subjects that should be covered in a Stipulation in order for it to effectively document the settlement of the parties. The goal in writing the Stipulation should be for it to paint a sufficient enough picture of the parties’ dispute, and their plan for resolving the dispute, so that a third party with no knowledge of the case can read it and have a solid understanding the matter. In the case of a Stipulation in a community association collection case, at a minimum it should address the following:
- Identify the names of the parties, and the location of the property
- Identify amount of money owed by the defendant as of the settlement date, and what that amount is made up of (assessments, interest, fees, etc.)
- Address whether the amount owed will increase over time (i.e. additional assessments will come due), especially if the Stipulation allows for a period of time to repay the amount owned
- State where and how any future payments are to be made
- State what happens when the delinquency and all fees, costs are paid in full (typically the case is dismissed)
- Provide for a remedy in the event that either party does do what the Stipulation says they will do (in our case that typically means that failure to make a payment under the Stip will cause a judgment to automatically enter against the delinquent owner)
- If possible, make it a term of the Stipulation that the owner will provide job or other asset information. This will facilitate collection in the future if they fail to fulfill the terms of the Stipulation.
- Contain a place for the signatures of all parties to the lawsuit
Why Should Your Association Use a Stip?
In the realm of collecting delinquent association dues, the benefits of using a Stipulation range from it simply being a CYA exercise to it being an effective psychological tool for bringing lawsuits to conclusion. As stated above, first and foremost a Stipulation serves the purpose of memorializing the settlement of a case and putting everyone on written notice of what their duties are going forward. In collection cases, the delinquent owner walks away from court with a piece of paper that tells them how much to pay, when to pay, and where to pay. I often tell them to stick the Stipulation on their refrigerator so they don’t forget. The written and signed memo of the parties’ agreement also helps prevent a party from coming back later and saying that it wasn’t what he or she agreed to. A Stipulation is important because it can be a shortcut to a money judgment in the event the delinquent owner fails to pay as promised. No trial will be necessary if the Stipulation is breached.
Aside from all of the above, the possibility of using a written Stipulation to conclude a case can be a very palatable option for a party that does not want to go to trial for one reason or another, whether that is fear or the sheer lack of a defensible case. The Stipulation allows a party to maintain some control over the terms of the settlement, rather than having the Judge dictate the outcome. Finally, preparing and entering into a Stipulation can be a significant cost-saving measure in comparison to paying the attorney fees that it takes to prepare and conduct a court trial.
Now you know what a “Stip” is, in case you hear that term thrown about by your lawyer or the opposing party in a lawsuit. And with this knowledge, perhaps next time you can be the first to suggest the use of a “Stip” when the time is ripe.