Why am I still responsible for taxes and HOA dues on a foreclosure after filing?

[bvolvo]

I have been in Chpt 13 for 2 yrs now. We gave back our vacation home in the deal. We keep getting harassed by the HOA and county for past due bills. I asked my atty about this, and he said that unfortunately I am still responsible for these fees since they were incurred after the Chapt 13....??? We gave the house back when we filed! The bank has not foreclosed on the house yet. How can I be responsible for it when the judge never approved me for any of these on going fees? It was no where in our papers as an approved monthly expense, but what IS in the papers is that we are surrendering the house. Anyone else run into this? Did you ask the trustee to "revamp" your monthy expenses to allow for this? So confused

[IHateToBeEmo]

Your bankruptcy attorney should have informed you that you are still liable for the HOA fees, starting after you filed and until the property is out of your name.

As far as your taxes, I'm pretty sure they'll bug you to death but ultimately you won't owe them because whoever the next owner is will have to pay the back taxes.

[DeadManCrawling]

This is a common oversight among filers and attorneys.

HOA's have tremendous power over their residents, and this is one good example. Yes, you are responsible until the home is in new owner's hands.

I will share our similar story, briefly, and you can perhaps use it to research a little more.

Our house has been in foreclosure for about 4 years. We have not paid the HOA or taxes or any county fees during this time. When we filed BK, the HOA, as a creditor, was informed. We called their management company and explained that we would not longer be paying, that we had nothing to attack for in court, no assets, no cars, no garnishable income. It was all very polite.

In the end, the HOA placed a lien against the house. In order for the next owner to get clear title, they (or the selling bank), will have to pay the HOA fees, including interest and legal fees. It might have been kindness on the part of the HOA, or the realization that suing us would be a waste of time and money, since there was nothing to gain.

The bank (BoA) has paid the tax bill yearly. This is typical, since not paying them would result in BoA losing the property entirely. The county also has a lien against the house and will be paid by the new owners or BoA exactly the same as the above scenario.

Legally, we are technically on the hook. But, in our case, it just made more sense for everyone involved to collect from the new owners when the place finally sells.

An interesting change in Florida law gives HOA's (in condo associations, and perhaps regular neighborhoods) a way to fast-track the foreclosure process, take ownership of the property and rent it out. I am not sure if they own it outright or must satisfy the mortgage, ultimately.

Just some food for thought, and our personal experience. We are in Florida Middle District, and there are no doubt different laws where you are, but maybe something in our tale can help or give you some research inspiration.

Best wishes,

-dmc

[despritfreya]

1) Post petition HOA dues/fees/assessments are your responsibility until the property is foreclosed. A line item for this expense should have been included on Schedule J with a notation that you will pay it until the property is foreclosed. If it was not, your attny screwed up as this is “Bk 101".

2) Real estate property taxes normally run with the land and, therefore, are not your personal responsibility. You need to find out if such taxes "run with the land" for the county in which the property is located.

Des.

[bvolvo]

Thank you all for this information! In doing more research, I have found that this is a wide spread issue all around the country. I can see the business sense in it - why should a bank take back the property and all the associated monthly debt (in my case the HOA and leasehold fees are far higher than the taxes/ins which they are paying to date come to find out) when it can just sit there? I can just see a lawsuit brewing in the financial industry though....mortgage lenders (of which I am one) have a seasoning requirement after the house placed in foreclosure has sold....it is generally 3 yrs. What if the bank refuses to foreclose, or refuses to move on things for 10 yrs? This could get very tricky in the near future. It places an undue pressue on the debtors and no, my attorney never added those sees to my schedule. Dumb attorney - no wonder he got out of BK law right after we were approved and handed us off to someone else. Oy vey.

[catleg]

Bottom line is the banks want to pretend they are solvent, and recognizing the losses from foreclosures would spoil that party (and prevent them from paying bonuses and dividends).

[HHM]

This is what I term the "foreclosure gap" (TM)

In drafting the various laws, no one ever contemplated that a secured party (the mortgage investor) would not foreclose. As such, there is no remedy for a homeowner who is in default with a secured party that refuses or delays foreclosure. The homeowner cannot force a foreclosure, and in most states (probably all) the deeded owner of the property remains liable for HOA dues and property taxes that come due AFTER the filing of a bankruptcy petition. Although you attorney should have at least informed you about this eventuality, there was nothing that could be done about it.