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Does the bank have to pay off liens like hoa dues after a bankruptcy and before they can get the property back.

Banning, CA |

We were current in our dues at the time of bankruptcy. The HOA and lender knew when it was discharged. We have no money to pay and why would a HOA incur all the fees knowing there would not be a payoff unless they were told that the mortgage holder was responsible?

Attorney Answers 4

Posted

I assume that the property was foreclosed upon, since you don't indicate one way or another. HOA fees incurred prior to filing of your bankruptcy case are dischargeable. HOA fees incurred after the day of your filing until sale of property are your responsibility and not part of the bankrutpcy case. There may be other issues involved here if for example, the HOA placed a lien against the property before your bankruptcy case was filed and you in fact you are trying to keep ownership of the property. As a bankruptcy attorney, it's important for us to explain this to any debtor with HOA fees.

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Michael J Corbin

Michael J Corbin

Posted

HOA fees incurred prior to bankruptcy filing ARE dischargable, as this attorney stated. BUT, if they filed a lien prior to filing, that will not be removed because of the bankruptcy - they will still have the lien.

Asker

Posted

Michael- Couldn't the lien from the HOA be stripped in CH 13, similar to a second mortgage?

Posted

HOA fees are not dischargeable in a bankruptcy, and you are generally personally liable for them if they remain unpaid to the time of foreclosure. I'm sorry, I think it's ridiculous, but that's the way it is. I am assuming the house was foreclosed after the bankruptcy. You could either ignore them, and let them come after you for money you likely don't have, or you can make some kind of deal with them. Unless there is something I don't know, I don't think you have many other options.

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Robert A. Stumpf

Robert A. Stumpf

Posted

To be clear, I should have said above "YOUR" HOA fees were not dischargeable, because they were current at the petition date.

Posted

HOA dues are treated like property taxes, and taxes will typically have a priority right to be collected after a foreclosure. The question "why would an HOA incur fees" is sort of beside the point, as a quasi-tax authority, HOAs typically get paid by the owner to retain the property, or by the new owner in the event of a foreclosure.

Hope this perspective helps!

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Posted

Morgage holder will not be responsible for the HOA dues incurred by you as most mortgage holders place themselves in a priority position above the HOA. Once the holder forecloses and becomes the owener it will continue to be liable.
If the property has not been foreclosed upon (and banks are reluctant to foreclose on condos because of the HOA issue) recommend you rent it out and use the rent to pay off the HOA.
You will continue to be liable for all HOA dues incurred after the date the Chapter 7 was fied.

Legal disclaimer: Disclaimer: This answer does not constitute legal advice. I am admitted in California and Pakistan only and make no attempt to opine on matters of law that are not relevant to California or Pakistan. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

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