I Filed Bankruptcy, My HOA Is Suing Me…
I Filed Bankruptcy, My HOA Is Suing Me…
Can My HOA Sue Me After I Filed Bankruptcy?
HOA lawsuits to collect delinquent HOA assessments (HOA dues) are on the rise. Most attorneys agree on the reason for this.
It used to be that if you didn’t pay your HOA dues, your HOA would simply record a lien against your property and threaten foreclosure. This would prompt you to bring your HOA account current.
Nowadays, many people are simply walking away from their homes. Either their homes are underwater (they owe more than their home is worth) or they just simply cannot afford to make the payments on their home.
When a homeowner walks away from their home, they typically stop making payments to their HOA. This results in HOAs not brining in as much money as they are used to bringing in and difficulty funding HOA operations.
If your home is underwater, it doesn’t make much sense for your HOA to foreclose on your home. So your HOA is forced to file a lawsuit against you seeking a judgment for the unpaid HOA dues, leaving you aaking, “can my HOA sue me after I filed bankruptcy?”
Many people whose homes are underwater, file a bankruptcy to avoid liability on their 2nd mortgage or simply because they have suffered financial misfortunes and need to get out of debt and get a fresh start.
When you file bankruptcy, your liability for HOA fees incurred up until the date of your bankruptcy filing is usually eliminated. However, you remain liable for HOA fees after bankruptcy for so long as you own your property.
When dealing with the subject of HOA fees and bankruptcy, I have come across many clients and professionals who are misinformed as to the current state of the law. It used to be that you were only liable for HOA dues after bankruptcy if you maintained possession of your home or rented it out. However, the law changed in 2005. The current law provides that you are liable for HOA fees as long as you are the owner of your property.
So even if you filed bankruptcy and gave up your property (walked away from it), you are still liable for HOA dues until either you sell your property or your lender completes the foreclosure. You are responsible for HOA dues for as long as you are the legal owner of your property. If your lender drags its fees and does not complete a foreclosure sale for 12 months, you are liable for all HOA dues incurred during that entire 12 months.
The moral of the story is that if you are giving up your property, don’t think that just because you file for bankruptcy your liability for HOA fees will be guaranteed to be over. You must be proactive to make sure you get your name off title, either through a sale, short sale, foreclosure, or deed in lieu transferring title back to the bank. As long as you are on title, you are responsible for HOA fees.
As long as you remain on title to your property, you are responsible for HOA fees after bankruptcy.
What happens if they come after you for missing HOA dues and you simply do not have the money to pay it? My lawyer is lazy and does not answer my questions… he told me to stop bugging him.
I’m assuming your HOA is coming after you for HOA fees accruing after your bankruptcy was filed, since coming after you for HOA fees incurred before you filed bankruptcy would be illegal. With regard to HOA fees after bankruptcy, unfortunately the Bankruptcy code, at Section 523(a)(16), makes it crystal clear that you are liable for HOA dues after bankruptcy as long as you are on title to your property or as long as you maintain a possessory interest in the property. I always advise my clients if they are letting go of a home to get off title in order to avoid liability for HOA fees. If you were the owner of a home that was subject to HOA fees after bankruptcy, your best option would be to contact the HOA or its lawyers and reach a settlement or payment plan. Mark
After an unsuccessful re-fi with my creditor and a lien by the HOA. I’m in that post-bankruptcy stage – finalized in Nov 2010. Without any contact since then, I just received notice that the HOA is coming after post assessments for 2 years. I’m arranging to make payments. What’s the reality of getting my name off the deed?
Generally speaking, your lender will need to foreclose in order for your name to be removed from the deed and the HOA obligation to cease. Assuming you surrendered this can take quite some time and in some cases, banks simply aren’t foreclosing. See this article from today: http://www.nationalbankruptcyforum.com/chapter-7-bankruptcy/first-circuit-lender-not-obligated-to-foreclose-on-home-surrendered-in-bankruptcy/
You can talk to the lender and see if they will accept a deed from you transferring the property back to the lender. Unfortunately, sometimes lenders prefer to sit and wait a while before foreclosing, which means you remain on title and liable for HOA fees as long as you are on title. Another option is to sell, or do a short sale. That way you can get your name of title and end your liability for HOA fees. Mark