60/40 Contingency Cases
We are excited to announce a new feature to our monthly Special Client Letter. In addition to the specific work being done on the collection accounts for your Community, we want to highlight recent cutting-edge issues related to our collection practice, whether that be a new development in the law, a new member to our growing team or one of the unique parts of our practice at Nagle & Zaller that we have to offer your Community.
This month we want to highlight an option that is available for the prior owner accounts that our office may be handling for your Community. A prior owner account is one where title has divested from a delinquent homeowner and there is a new record owner responsible for the assessments (other than the delinquent assessments incurred by the prior owner). Most accounts become a prior owner account when the lender forecloses, and the property is purchased at a foreclosure sale by the mortgage holder or third-party purchaser. At this stage of the collection process, since you are now attempting to collect from a prior owner, our office is happy to discuss with the Board whether the account should be converted to a 60/40 contingency basis. A 60/40 contingency basis means that our office will not invoice the Community for any further legal fees or costs associated with our attempts to collect on that account. We will continue to work the account and include updates on our efforts in our monthly status report. However, any money that is received through our further efforts will result in sixty (60) percent delivered to the Board and the remaining forty (40) percent being retained by Nagle & Zaller (to cover our costs of collection). Generally, most Board’s will write the debt off as uncollectible at the time the account is converted to a 60/40 contingency after consultation with the Community’s accountant. The prior owner account may be converted to a 60/40 contingency basis as long as there are no outstanding legal fees owed to Nagle & Zaller on that particular delinquent account and after a contingency fee agreement is executed by the firm and the Community as requested by ethical rules.
Please contact the managing attorney for collections, Laura Curry, at [email protected] or 410-740-8100 ext. 102 if you would like our office to review your active prior owner accounts for a recommendation of whether they should be converted to contingency at no charge to the Community or send us a list of accounts that you would like us to prepare the contingency fee agreement for and we will get that returned to you promptly for your review and execution.