With the new legislative session comes the desire to recreate a COVID era restriction and make it permanent. Hence, we have SB22-086. If signed into law as currently written, SB22-086 would greatly limit an association’s ability to collect delinquent assessments.

The two main ways associations can collect involuntarily are through either a bank garnishment or a wage garnishment. Although most SB22-086 does not impact associations, Section 6 of the bill sneaks in an “exemption for money in depository accounts”. If this bill becomes law, a bank garnishment would only be able to capture funds if the homeowner had more than $2,500 in their bank account.

This exemption was originally created during the COVID lockdown period. It was designed, at that time, to temporarily protect people with less than $4,000 in their accounts from being subject to a bank garnishment. SB22-086 would make this protection permanent; however, the exclusion was lowered from the first $4,000 to the first $2,500 in the person’s bank account.

The first-hand negative effects of the exemption were already experienced during lockdown. Bank garnishments essentially stopped for all associations because most homeowners simply did not have enough funds in their account to make it a viable option.

SB22-086 does not state that bank garnishments would never be an option, but an owner would have to have more than $2,500 (plus the cost of the bank garnishment and service) in the owner’s bank account before the association would realistically see any of the funds. For some associations, SB22-086 will render collections via bank garnishment ineffective.

SB22-086 was introduced by Faith Winter and Matt Gray on January 20th and has been assigned to the Senate Finance Committee. Follow SB22-086 on our Legislative Tracker for updates.

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