Q: We have a judgment against us in our credit file that was the result of miscommunication from the title/settlement company to the homeowners association who placed the amount due with an attorney. Here’s what happened:
We had purchased a rental property and the tenants agreed to be responsible for the homeowner’s association (HOA) fees – which they did not pay. The HOA did not have our correct address because the title/settlement did not give it to them. Instead, they gave the HOA our rental address as our home address.
The tenant didn’t tell us that they hadn’t paid the HOA fees and by the time we found out, the matter had already gone to the court. We immediately paid off the amount due, but we’ve been left with this judgment against us.
What do you advise us to do to let the credit bureaus know that we were innocent victims in this case? We realized too late that we never should have allowed the tenant to pay the HOA on their own, but now what?
The title/settlement company says it is not to blame for not giving the HOA our home address and advising them that this was the correct address to send important information. On all the paperwork we signed we gave our home address and not the rental address.
Do you think that we should just write letters to the big three credit reporting bureaus and advise them that we are contesting this judgment? Your advice greatly appreciated.
A: You’ve already recognized that you have made one serious mistake: You relied on your tenants to do something that directly affected your credit — that’s something a landlord should never do.
But you made a second, and more costly, error — you never checked to see that the HOA fees had been paid, until it was way too late. The day you signed on the dotted line to purchase the rental property, you should have stopped by or called the office of the HOA, or been in contact with the property manager to introduce yourself, ask what sort of information they needed and made sure that any communication would be sent to you at the address of your choice.
You could have also provided your email and telephone number for any problems or issues the association or property managers might have had with you or your tenants.
Its one thing if the tenant fails to pay you rent. Hopefully you have the wherewithal to withstand the financial drain while you pursue your legal options, including eviction.
But I’d never put a tenant in the position of paying a monthly assessment fee or a monthly HOA fee, unless I was checking regularly to make sure those payments had been made.
You can write a letter to the credit reporting bureaus, but I’m afraid it isn’t going to help all that much. You may want to check with an attorney, but if you paid the amount owed in full, the judgment should be released or should show as satisfied on your credit report history. Please make sure you understand whether the judgment is showing on your credit history as a judgment outstanding or that there was a judgment against you but it has now been paid.
If the judgment is still showing outstanding, you need to make sure the collection attorney files the right paperwork with the court to show that the judgment has been satisfied.
You’ll have to rebuild your credit slowly over the next few years to get rid of the effect of the judgment, but if you pay all your bills on time and maintain a good credit history, you’ll be okay.
Sept. 14, 2007.
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