Don’t Be Afraid To Recover Across State Lines
Collecting
Against Prior Owners During the market crash of 2008 and the aftermath that followed, many associations obtained money judgments against owners who stopped paying their assessments knowing the foreclosure of their home by the first mortgage was imminent. Many times, once the foreclosures were processed, those former owners left California looking to rebuild their lives elsewhere. Sometimes, those former owners already lived out of state and had invested in California properties within your associations.
By Austin B. Baillio, Esq.
14 The Law Journal Summer 2022 | cacm.org
Either way, with the former owners now out of state, associations holding money judgments against them could believe that the judgments are uncollectible. After all, foreclosing the assessment lien isn’t an option because they don’t own the property anymore, and the former owners are out of state beyond the association’s reach. Time to let the judgments die, right?
Not necessarily. Don’t give up hope yet. If you know where your former owners moved to, you may breathe some life back into those money judgments through a process called domestication. Never heard of domestication before? Well, it goes something like this: The Constitution of the United States requires a state to enforce a valid judgment for the payment of money if it was rendered in another state. Once a valid judgment has been rendered, it must be accorded full faith and credit by every other court within the United States. So, under the Full Faith and Credit Clause of the United States Constitution, if you can transfer your California judgment to a different state, that “sister state” must treat your California judgment as if it were entered in that state. This transfer process is commonly referred to as domestication.
