HOAs, Condos and Bankruptcy in Maryland
Homeowners associations and condominiums normally charge monthly or quarterly dues to homeowners in their territory. These dues attach to the property as well as to the homeowner(s), and they are important in bankruptcy as well. The key statutes are the Maryland Condominium Act, the Maryland Contract Lien Act, and 11 U.S.C. 523(a)(16).
The homeowner(s) are personally liable for unpaid HOA/condominium fees. That means that the association can file a complaint in court, serve the homeowner or homeowners with a summons, and get a money judgment against them. That judgment may include legal fees, late fees, and/or interest as authorized in the bylaws of the HOA or condominium. The association can then collect on that money judgment by garnishing wages or bank accounts subject to the exemptions under Maryland law. This is similar to any other debt under Maryland law.
HOA and condominium associations also have another tool to collect unpaid dues. The Maryland Contract Lien Act allows the association to file a lien on the real estate for unpaid dues.
The association must first send a notice of intent to create a lien, normally posted on the property or personally served to the homeowner. Thirty days later, the association can file a lien with the Circuit Court of that county for any delinquent dues. The dues can be accelerated through the end of the association’s fiscal year if the association’s bylaws allow it. This lien must be paid before the house can be sold, and it allows the association to foreclose on the house if it chooses to do so.
The discharge order in bankruptcy discharges the personal liability for dues accrued before the bankruptcy petition was filed (the “pre-petition" dues). The homeowner is still personally liable for dues after the bankruptcy petition, until the property is sold or foreclosed upon.
More reading on bankruptcy and HOA/condo fees: http://www.bankruptcylawnetwork.com/i-still-owe-hoa-fees-after-i-filed-bankruptcy-and-surrendered-my-home/