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Collections Corner: Filing Of A Lawsuit

This month we are highlighting the process of filing a lawsuit to obtain a judgment against a delinquent homeowner. After a lien is filed, we generally send a lien notification letter to the delinquent homeowner advising him or her that a lien has been filed against the property and; further, if he or she fails to remit payment in full or contact our office to negotiate an agreeable payment arrangement, we will proceed with filing of lawsuit to obtain a judgment against the person, which is in addition to the lien against the property. Lawsuits of this nature are typically filed in the District Court (as long as the principal amount sought is under $30,000.00. If the amount sought is $30,000.00 or over then the lawsuit must be filed in Circuit Court). Further, we file the complaint under affidavit which means the accounting is signed under oath by the custodian of records for the Community, i.e., generally the management company.

Once a lawsuit is filed with the Court against the current or prior owner (hereinafter referred to collectively as "owner"), the owner must be personally served with the summons and complaint. Service can sometimes take time to complete if the owner evades service. After being served, however, we often see an increase in the communication between the delinquent homeowner and our office which allows us to work out payment terms and avoid a costly trial for the Community.

Under the Maryland Rules, the owner has the right to defend the lawsuit by filing what is known as a Notice of Intention to Defend ("NOI"). Once, an NOI is filed by the defendant, our office must prepare the case for trial and we will request a representative from management or the Board attend the trial to testify on behalf of the Community as to the amounts owed by the delinquent owner. In most cases, an NOI is not filed by the owner and most judges will grant the Community a judgment based upon the facts alleged in the lawsuit without requiring our office to appear in court. There are exceptions in particular counties and files where we are required to appear and provide "ex parte" (meaning only one of the parties to the lawsuit is required to appear at Court) proof of the debt even thought the owner has not filed an NOI.

Unlike in Maryland, we do not have the option to submit the lawsuit under affidavit in D.C., so at least one court appearance will be necessary before a judgment against the person is obtained. The same process with respect to obtaining a judgment against the delinquent owner is applicable in D.C. as it is in Maryland (i.e., filing a complaint and serving the same on the defendant) before the court will entertain a request for judgment entry.

Our office charges a flat fee (as opposed to hourly billing), for drafting the lawsuit and preparing the file for trial. However, if a court appearance or other attorney time is required after the lawsuit is filed, such time is invoiced based on that attorney's current hourly billing rate. The time between when a lawsuit is filed and a judgment is obtained can vary greatly depending on whether the defendant evades service attempts or if there are delays based on the court's schedule or other matters which are out of our control.

While the District Court environment remains pro-defendant in terms of judges using their discretion to reduce attorney's fees and/or refusing to award the full costs related to the account, it is still our position that obtaining a judgement against the delinquent owner personally is the most effective way to recover the amounts owed to the Community. A judgment allows us to proactively attempt to collect the amounts owed by involuntary collection means, i.e., bank or wage garnishment and/or levy of personal or real property, instead of waiting for the property to be sold or foreclosed upon which may result in no payment to the Community for various reasons. Our upcoming newsletters will address the process of collecting the money owned by a delinquent owner after a judgment is obtained, so please stay tuned. If you have any immediate questions, please contact the managing attorney of our collections department, Laura Curry, at [email protected] or 410-740-8100 ext. 102.

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Nagle & Zaller, P.C.
7226 Lee DeForest Dr.
Suite 102
Columbia, MD 21046

Phone: 443-535-6940
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