David A. Casey, Attorney  

 365 Broadway, Suite 203 

El Cajon, California

Over 20 years family law experience.

(619) 447-6780

Attorney for more than 20 years

 Chapter 7 - Chapter 13 Bankruptcy

Map to Bankruptcy Law office Click here

 Chapter 13 - Chapter 7 Bankruptcy

Find out if you still owe HOA fees after bankruptcy.

We are a debt relief agency. We help people file for relief under the Bankruptcy Code.

Answer:  This is a very common question and the bankruptcy code that applies is strange.  First. the money you owe the HOA should be listed as a creditor. Hopefully, you disclose this information to your bankruptcy attorney. y

 Under the law a person surrendering a home, condominium,  townhome, any real property having HOA fees, can discharge whatever HOA fees that are owed prior to filing bankruptcy.  In other words, if you file bankruptcy, the amount owed for such fees at that time are discharged if the court grants you a Chapter 7 discharge of your debts.  Find Out If Your HOA Fees, San Diego Are Dischargeable in Bankruptcy

Under the same Bankruptcy Code 523(a)(16), you are still responsible for the HOA fees until the foreclosure takes place. The Code implies that until you no longer have legal, equitable or possessor ownership in the unit, you owe the fees. This can be fees on a home, condo or some other unit that has Home Owner Associations fees.  This applies even if you have moved out and are no longer living at the residence.  Thus, any HOA fees or costs including late fees you are still responsible for.    

Now let’s say the unit was foreclosed on and you still live in the unit. Since you are still living there you still would be responsible for the HOA fees.

All the following must be met:

1.      You are still responsible for all debt you have incurred involving the HOA fees until  the date of filing bankruptcy.  If the court grants the discharge, then the fees are dismissed.

2.      All HOA debt incurred after filing that you do not pay, you are still responsible for until:

a.      The Trustee of the bankruptcy court no longer has any interest in it.

b.      Your lender forecloses on the property (or you sell it):

c.      You are no longer in the unit.

d.      You no longer have the benefit of living in the unit.

e.      The lender has taken legal possession of the unit. (In other words, your name is no longer on the title).

Now some creditor advisors and attorneys may tell their client to sign the “title” back over to the lender. This is NOT a good idea since it may cause other adversary proceedings.

One question I have been frequently asked,  if  a debtor or a person who has an interest in real property in this situation was not informed of this before filing,  would this error make the attorney or advisor liable for the HOA debt?   First, all bankruptcy attorneys should inform their client about  HOA fees if they have interests in real property and that they will be responsible for the fees until the property/unit/home is foreclosed on or signed over to the lender.   It is considered to be malpractice not to inform the client unless the client did not disclose that they owned real property, but the since the law is clear about the person being responsible for the HOA fees the attorney is NOT responsible for the HOA debt.  Since the attorney’s action was not the cause of the debt of the HOA fees, I can not see the debtor being awarded any of the HOA fees. In other words, the debtor will still be responsible for the debt.  The only thing the attorney might be responsible for could be late fees and costs.

To avoid any confusion,  my office provides the debtor with a HOA statement regarding the debt so they are fully aware of bankruptcy laws and how the HOA fees are handled.   I believe that attorneys practicing in the field of consumer bankruptcy should advise their clients who will be surrendering their home or other real property that have HOA fees associated with the property.

I get calls all the time from debtors who have utilized the services of some other attorney only to discover at the end of their bankruptcy, that they were still personally liable for HOA fees. This is why I believe it is very important to discuss these issues with my clients who have any interest in real property.  Many times the debtor has moved out and believes that they are no longer responsible to the HOA for the fees that they owe.  For all intents and purposes, they made their intentions clear in the bankruptcy  proceeding that they were going to surrendering their property back to the bank/lender.  They only learned later on that they were still liable for the fees as the result of a change under the new bankruptcy code of 2005 [see 11 USC 523(a)16].  However, the new code section really has very little effect due to the nature of the priority of the underlying HOA lien.

The code section clearly states: The fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case.

The important part is that “for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest” this is what makes the debtor obligated to pay this debt.  

It does not matter that the bankruptcy has been filed and the debtor has moved out of the unit since the obligation (liability) continues until the property is foreclosed upon or sold.   Please also remember even after foreclosure, if one still resides in the property prior to eviction, the possessory interest would continue such liability. Bankruptcy code  523(a)16 at this time is not in conflict with 11 USC 365(p) regarding the assumption of leases. Why? Since HOA fees arise from executory contracts and not leases. 

Question:  Is there any way not to pay the debt to the HOA post filing bankruptcy?

There are some options that are available: 

   Bankruptcy Attorney David Casey (619) 447-6780

Just minutes from La Mesa, Chapter 7 & Chapter 7

"Attorney for over 20 years"