The Walking Debt: Collections Against a Deceased Owner
We’ve all heard the expression that “you can’t squeeze blood from a stone.” The same adage may apply when the sole owner of a property who is obligated to pay assessments dies. An association that is owed money cannot initiate or maintain a lawsuit against a dead person and the debts of the deceased are not transferred to his relatives. What can an association do when an owner’s obligation to pay assessments terminates at death but title lives on in the name of the deceased?
In Georgia, when a person dies without a will, or “intestate,” title to real property vests immediately in that person’s heirs at law. If an administrator is appointed, however, title vests in the administrator until distributed back to the proper heirs. When a person dies with a will, or “testate,” property vests in the personal representative named in the will until distributed to the beneficiaries. This is typically accomplished with a deed from the executor to the beneficiaries.
There are two scenarios where liability for assessments due after the death of the owner is certain. The first is when there is no will and no administrator is appointed, but the heirs are known. Those known heirs will be responsible for assessments due after the date of death of the owner. The second scenario is where there is an administered will and a deed conveys the property to the beneficiaries. Those beneficiaries named in the deed will be responsible for assessments due from the date of conveyance. Unfortunately, there are several other scenarios where liability is far less certain.
What can an association do when an owner’s obligation to pay assessments terminates at death but title lives on in the name of the deceased?
For instance, what happens when a homeowner dies and no heirs come forward to claim an interest or to present a will? What happens when there is a will, but the personal representative does not administer it or does not convey the property to the beneficiaries? What happens when the heirs or beneficiaries are determined in a properly administered estate, but they do not wish to inherit the property? These scenarios are common when a property has little or no equity at the time of death of the owner.
An association’s remedy to collect assessments due at the time of death by the decedent is generally limited to a claim against the estate . If an estate was opened with the filing of a probate case, the association may give notice of its claim for payment according to priority relative to other creditors. If no estate was opened, a creditor such as the association, can be appointed as administrator or offer a will for probate . There is also a provision for appointing the county administrator for the purpose of commencing a lawsuit against the estate
As interesting as these options may seem, the bottom line is that a living heir or beneficiary cannot be forced to take personal responsibility for property owned by the deceased. Moreover, it is unlikely that a person of means will die and not have anyone come forward claiming an interest in inheriting the deceased’s assets. Typically, if the deceased owned any valuable assets at the time of death, relatives will immediately act to protect the value of those assets and to preserve any inheritance they may be due. The owners who were not fulfilling their obligations during life are usually the ones who will not have any heirs or beneficiaries come forward to administer their estates after death. In those cases it will not be cost effective to pursue unwilling heirs or beneficiaries.
Without any realistic or practical options for collecting the sums owed from the estate of the deceased, the association is left only with its lien rights against the property itself. For associations subject to the Georgia Condominium Act or Georgia Property Owners’ Association Act, the most effective course of action may be to foreclose the association’s lien. Regardless of who may have an interest in inheriting the property, those rights can be foreclosed for unpaid assessments secured by the association’s lien. Although there will not be any personal liability attributed to anyone, the association can obtain possession of the property. This may be particularly prudent when there are relatives living at the property having no personal obligation to pay assessments. In that situation, the association may also seek to enforce other remedies such as water suspension, towing, and rent assignment when available. If no such remedies are available, simply waiting for the lender’s foreclosure may be the next best action.
Information regarding the deceased owner’s assets and family is key. Any contact made with any individual claiming to be related to the deceased owner should be documented. Obtaining copies of death certifications, court orders, and other documents verifying the details of the estate will provide critical insight regarding the viability of available options the association may have. Contact us to determine the best course of action.
Stephen Finamore is a partner in the Community Association practice group at Lueder, Larkin & Hunter, LLC. He graduated from Florida State University with a Bachelor Degree in Economics and Political Science with a minor in Business. He earned his Juris Doctorate Degree from Florida State University College of Law and is admitted to practice law in Florida and in Georgia.