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Winning Collections

By Christine L. Khano, Esq.

Community Associations Institute – Georgia Chapter

First Quarter Magazine 2022

“Sttttrrike! You’re out!” These are words no one ever wants to hear—whether as a baseball player in the batter’s box or as a community association collecting on a judgment. So what can an association do to set itself up for a win when collecting on a judgment against a homeowner? Like with team sports, achieving a “W” in collections requires clear communication, staying alert, and commitment to a shared goal.

No team can win without clear communication. With collections, the community association team consists of the association’s board of directors (the “Board”), the property manager (the “Manager”), and the collection firm (the “Firm”). Once a judgment is obtained, collection firms will begin to search for assets to garnish. A garnishment is a judicial procedure by which any creditor like the association may collect on an existing judgment against a debtor by filing a separate legal action against any person or entity which owes money to the debtor. A garnishment is most often filed against financial institution or an employer but can be filed against any person or entity the association believes that person or entity owes money to the homeowner (e.g. a tenant that owes rent to a landlord). While the Firm often takes the lead, the Board and Manager should communicate with its team members if it has useful information.

Since Boards and Managers have a closer relationship to the homeowners in the community, they are in the best position to obtain and communicate the personal details of a delinquent homeowner’s life.  A board member might catch a homeowner saying, “Sorry, I’m running late for work! I have to make it across town to EMPLOYMENT, INC.,” or the Manager might recall receiving emails from a homeowner’s business account. Has the homeowner previously paid by personal check? Has the homeowner provided a copy of the lease to the property management company? Has the owner ever complained about her association notices or payment coupons not being sent to his/her current residence? “I rent the property. I bought a house in Gwinnett two years ago. Please forward my notices this address.” This is all valuable information that should be communicated to the Firm because it may identify potential employment, banking, and rental information and lead to a successful garnishment or identify in which other counties to record the Writ of Fieri Facias (a fancy name for FiFa or judgment lien), which may lead to a future closing payoff.

Likewise, any team hoping to achieve a win, be it in sports or community association, needs to stay alert. For collecting on a judgment, it means staying informed on the evolving law. For example, Georgia’s garnishment law underwent some revisions starting in January 1, 2021, but some team members may still be unaware of the changes and/or not capitalizing on those changes that benefit the association’s collection strategy. The burden falls on the Firms to educate not only its teammates but also the garnishment clerks and judges, whom may be uninformed of the changes and attempt to push back.

For illustration, the revised garnishment law expressly provides that the judgment balance may now include all unrecovered filing and service fees for previous garnishment actions based on the same judgment. That’s huge! Before, associations were left attempting to collect such fees as part of its post-judgment balance through a subsequent lawsuit or agreement. Currently, associations have the opportunity to collect them as part of the judgment balance.

Additionally, the  2021 revisions illuminate what was a murky subject—whether creditors could use continuing garnishments—traditionally used to capture wages of employees—to capture payments of independent contractors. The answer is yes. As written, the revised garnishment code indicates a creditor may file a garnishment against an employer of or a person or entity “under periodic obligations for payments” to the defendant. The next time a party alleges the homeowner is an independent contractor and his/her pay is not subject to garnishment know the association has legal grounds to contest. This is excellent news given that continuing garnishments’ duration has been extended from six months to three years. Staying alert as to the evolving law pays off.

In addition to clear communications and the need to stay alert, the community association team must be committed to the shared goal—collecting on the judgment. Too often associations obtain the judgment and stop short. They are afraid they have incurred too much in collection costs. While a valid concern, this is where clear communication to the Firm is required. The Firm can help the Board strategize an appropriate collection method but only when the Board communicates its expectations and sets its priorities. The new garnishment revisions should help cut down on filing and service costs or at least provide a method of recovery for them. Nevertheless, the key to a strong team and achieving a win is still clear communication, staying alert, and commitment to shared goal.

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