Homeowners’ association (HOA) members have a fiduciary duty to their community. That is, they must act in the best interests of the other homeowners. Sometimes, that duty encompasses the difficult job of collecting unpaid HOA fees.
More often than not, HOAs will start with simple methods, such as calling homeowners or sending letters about delinquent payments. But when those strategies fail, HOAs can resort to other approaches. One example is garnishment.
What is garnishment?
Garnishment is the act of withholding or taking out money from a debtor’s earnings or assets in order to satisfy a debt which, in this case, is unpaid HOA dues.
For an HOA to garnish a delinquent payer, it must file a lawsuit and obtain a judgment from the court. If the homeowner still fails to pay what they owe, the judge may grant the HOA a judgment, which gives the HOA the power to collect the debt.
Garnishment is a relatively effective method of collection. There are three main types:
- Wage garnishment: A wage garnishment requires the homeowner’s employer to withhold a portion of an employee’s pay.
- Bank garnishment: In a bank garnishment, the bank must freeze the homeowner’s account and/or seize funds to pay the debt.
- Rent garnishment: If the homeowner rents out their home or unit, a rent garnishment requires the tenant to pay their rent directly to the court’s registry instead of the homeowner.
Garnishment can help HOAs recover owed funds quickly. It can also be especially beneficial if the homeowner lost their property to foreclosure but is still employed.
What are garnishment limits?
Garnishment limits set the maximum amount of earnings a creditor can garnish. In Connecticut, HOAs can garnish whichever is less of the two:
- 25 percent of the homeowner’s disposable earnings per week
- The amount by which their disposable income exceeds 40 times the federal minimum wage or the Connecticut minimum wage, whichever is higher
Note that disposable earnings are the wages left after their employer makes legally mandated deductions.
How can a lawyer help?
Obtaining a judgment can be difficult, and collecting on that judgment can be even more challenging. HOAs may have more luck recovering debt with an experienced legal professional guiding them along the way.
While legal action may seem extreme, it may be the only way to maintain the community’s overall financial health.