If you are struggling to meet your financial obligations and you live in a condo or are part of a homeowners association, you need to be careful with respect to any dues or assessments—the bankruptcy may extinguish your personal liability, but the homeowners’ association or condo association may still be able to enforce a lien on the property. Here’s how it works.
If you file a liquidation proceeding under Chapter 7, any HOA or condo dues owing at the time of the petition can be discharged—you won’t have to pay them. But the discharge is only with respect to your obligation to pay the debt. The lien remains and the lienholder has the right to enforce the lien—to foreclose on the property to collect the amount due. If you don’t keep the house and it goes to a foreclosure sale, or is sold to a new buyer, the lienholder will typically collect the amount due at the time of closing or out of the proceeds of the foreclosure sale.
In addition, any fees, assessments or dues accruing after the bankruptcy filing are not discharged. Again, the HOA or condo association may choose to place a lien on the property, hoping to collect out of the proceeds of a foreclosure or other sale. But the lienholder may instead opt to enforce the lien against you.
If you opt not to stay in the house, the HOA or condo association will have little recourse. However, if you do stay in the home, you will want to make arrangements to pay any past due assessments, fees or dues, as the lien that attaches to them will remain in force.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
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