The Advantages of Judicial Foreclosure in Collecting Delinquent Association Assessments

Four Methods Of Response Associations in California have four basic options in dealing with delinquent assessments: Inaction, small claims court, non-judicial foreclosure, or judicial foreclosure. Inaction: The drawbacks of inaction are self-evident. Until the association pursues the debt, most often it will not be collected. Small claims court: This method involves no attorneys, and is quick. However, the association can only pursue claims of $2,500 to $5,000 twice a year. Also, small claims court can be unpredictable, and the results are not appealable if the judge (often a volunteer) gives the plaintiff association a bad decision. On the other hand, the defendant debtor can appeal. Non-judicial foreclosure: This method involves no attorneys. The association takes away the debtor’s property, without court supervision. The foreclosure process involves various notices to the owner and waiting periods, and concludes with the association owning the property. The Association cannot pursue any deficit if the property does not have enough equity to cover the debt. Judicial foreclosure: This method involves filing a lawsuit. In this lawsuit, the association pursues both ownership of the property (judicial foreclosure) and an award of money damages. Advantages Of Judicial Foreclosure The advantages of the judicial foreclosure process are numerous and substantial: 1)   In a declining or flat real estate market, the threat of foreclosure is less significant – many properties are “upside down” with no equity, so members have less reason to pay. 2)   In the current economy and real estate market, the association often should not take over ownership, but with non-judicial foreclosure that is the only option. If the association decides not to take the property,...