POST-JUDGMENT COLLECTIONS IN MARYLAND
One of the most common questions we receive from clients after we obtain a judgment against a delinquent owner is “How do we get our money?” This post answers that question and outlines the avenues available to collect on judgments.
After obtaining a judgment, the Association is required to wait thirty (30) days before taking any action to collect on the judgment. This time period is provided by the Courts to allow the owner to appeal and/or otherwise dispute the judgment. Once the thirty (30) days have passed (or any appeal has been decided), our office files a judgment lien in the Circuit Court for the County in which the judgment was obtained (usually where the Association is located). This judgment lien attaches to any real property owned by the delinquent owner in that County, including the property located in the Association. If the owner attempts to sell or refinance any real property in the County to which the judgment lien would have attached, the Association would be entitled to be paid in full the amounts secured by the judgment lien. If the owner is known to own property in another County in Maryland, our office can also file a judgment lien in that County, where the judgment lien would have the same effect upon property owned by the delinquent owner located in that County.
The judgment lien process is followed for every judgment. However, after filing a judgment lien, the post-judgment collection process may vary for each Association, and even from owner to owner within the same Association. The course of events depends on what information is already known about the owner’s assets, what types of assets are available to be attached to satisfy the judgment, and what is in the best interests of the Association. Because the attorney fees incurred to undertake post-judgment collection are no longer collectible from the delinquent owner, our office attempts to collect on judgments in the most economical way possible while still obtaining results.
Obtaining information about a delinquent owner’s assets is essential to collecting on a judgment successfully. Bank account information can often be obtained simply by looking at any prior checks received from the owner. Employment and/or tenant information may be contained in the owner’s file or it may be known personally by Board Members and/or Management.
If little or no asset information is known, our office can attempt to obtain asset information through a skip trace search, credit reports, and sometimes even a Google search. In addition, our office can send written Interrogatories in Aid of Execution. These Interrogatories are questions sent to the owner about the owner’s assets, which the owner is required to answer timely. If the foregoing methods prove to be unsuccessful, our office can request an Oral Exam, where the owner is required to attend court and answer questions under oath regarding the nature, value and location of his or her assets.
Once information is obtained regarding the owner’s assets, our office can continue collection action by attaching those assets to satisfy the judgment. The following is a list of tools available to collect upon a judgment:
- (1) Garnish the owner’s wages;
- (2) Garnish the owner’s bank account;
- (3) Garnish the owner’s rental income;
- (4) Seize and sell the owner’s personal property; and/or,
- (5) Seize and sell the owner’s real property.
- (1) Garnish the Owner’s Wages. To garnish an owner’s wages, our office obtains a Writ of Garnishment from the Court, which is served on the employer. The employer has thirty (30) days to file an answer to the Writ of Garnishment. The employer’s failure to respond can subject the employer to liability for sanctions for contempt of court. If the owner is employed by the employer, the employer is required to begin garnishing the owner’s wages in the statutory amount (up to 25% of the net take-home pay) and to send the garnishment payments to our office. If another garnishment is already in place for the owner, the Association’s garnishment will begin as soon as the prior judgment is satisfied.
- (2) Garnish the Owner’s Bank Account. To garnish an owner’s bank account, our office obtains a Writ of Garnishment from the Court, which is served on the financial institution. The financial institution has thirty (30) days to respond to the Writ of Garnishment and to state any assets of the owner that the financial institution is holding. The bank’s failure to respond can subject it to liability for sanctions for contempt of court. Any amounts on deposit in the owner’s accounts, up to the amount of the judgment, as set forth on the Writ of Garnishment, will be frozen and unavailable to the owner, pending a further order from the Court. Some funds can be claimed by the owner of the account as a “protected amount,” pursuant to statutorily permitted exemptions and, therefore, not subject to garnishment. After receiving a response from the financial institution that an account with assets on deposit is maintained by the owner with the financial institution, our office requests the Court to grant judgment as to the amounts held; if the court grants the judgment, the financial institution is directed by the Court to turn over the money withheld from the owner’s bank account and the money is sent to our office.
- (3) Garnish the Owner’s Rental Income. If the owner is renting his or her property, the Association is able to garnish that rental income up to the amount due to satisfy the judgment. To do so, our office obtains a Writ of Garnishment from the Court, which is served on the tenant(s) in the property. The tenant(s) have thirty (30) days to respond. The tenant(s)’ failure to respond can subject the tenant(s) to liability for sanctions for contempt of court, including requiring the tenant(s) to pay the amount required to satisfy the judgment. Unless the Court rules otherwise, the tenant(s) are required to send their rental payments directly to our office until the judgment is satisfied.
- (4) Seize the owner’s personal property. If it is in the best interest of the Association to do so, an owner’s personal property (e.g., cars, boats, RV’s, valuables) can be seized and sold at auction by the sheriff in the County where the personal property is located. To do so, our office obtains a Writ of Execution from the Court which directs the sheriff to levy upon (i.e., attach and remove the personal property or make it otherwise unavailable for the owner’s use and enjoyment) and advertise and sell it at public auction. The property may be released from levy only if/when the judgment is satisfied, the owner posts a bond, or the Court orders the property released.
- (5) Seize the owner’s real property. If it is in the best interest of the Association to do so, an owner’s real property, including but not limited to the real property in the Association itself, can be seized and sold at auction by the sheriff in the County where the real property is located. To do so, our office obtains a Writ of Execution from the Court which directs the sheriff to levy upon (i.e., attach and make the property unavailable for the owner’s use and enjoyment) and advertise and sell it at public auction. The property may be released from levy only if/when the judgment is satisfied, the owner posts a bond, or the Court orders the property released. This Writ of Execution process is generally not pursued without careful consideration by the Association, in consultation with our office.
If none of these remedies satisfies the judgment, or if it is in the best interests of the Association to do so, another option is to simply file the judgment lien and let it sit. Judgment liens in Maryland are good for twelve (12) years and may be renewed. It is possible that an owner who does not have assets to satisfy a judgment when it is first obtained might later come into possession of assets that could be attached to satisfy that judgment. In that sense, a judgment allowed to “sit” as a lien upon the owner’s property, real and personal, can be considered a long-term investment for the Association.
Once the judgment is paid in full (or otherwise settled), our office files a Satisfaction of Judgment with the Court. The Court marks the judgment as satisfied and the matter is resolved.