Another case wreaks havoc on an association’s ability to collect
from delinquent homeowners:
In re Coy.
In the case of
In re Coy, homeowner, Sean Phillip Coy, was delinquent. The Association recorded an
assessment lien against Coy’s property in the amount $823.92 and later brings suit
and obtains a money judgment and judgment to foreclose in the amount of
abstract (money) judgment for the amounts awarded was recorded. There was also a
Notice of Levy and
Notice of Writ of Sale recorded against the property. The homeowner, debtor, filed chapter 7
bankruptcy and sought to remove both the lien resulting from the abstract
(money) judgment and the lien from the Notice of Levy.
In order to remove a lien from one’s property there are certain requirements
that must be met. One such requirement is that the lien is a judicial
lien—i.e. A lien arising from an abstract judgment. In this instance
the court held the lien was a judgment lien. The
abstract of judgment lien was therefore removed.
What about the recorded Writ of Sale and Notice of Levy? The court also
found that those, too, were judicial liens, and they were removed.
What was the Association left with?
An $823.92 assessment lien. Imagine being limited to recovery of $823.92 when you are legally owed
This may sound complex or legally dull, but it has a significant consequence
for associations. When a homeowner becomes delinquent, the association
follows procedures to place a lien on the property for the delinquent
assessments. To collect under this lien, the association files suit for
foreclosure of lien and money judgment. Following judgment, the association
can seek to foreclose or otherwise collect under the money judgment.
This case, however, permits homeowners to file for bankruptcy and now eliminate
the association’s ability to foreclose or collect under the money
judgment. It also limits the amount of security to
only the amount listed on the Lien. This is yet another case that makes it harder for associations to collect
what they’re owed. It is becoming even more important to start your
collection efforts as soon as possible. It also may be necessary to amend
your existing liens if the debt has grown significantly since the original
lien was recorded.
If you have an old lien that you worry may not stand a bankruptcy,
contact your collection attorney to inquire about amending or supplementing the original lien to insure
the entire updated debt is secured.
In re Coy (2016) 2016 WL 3462961, *1.