AZ HOA gone wild !

[idainc]

Saga continues. I file to reopen case and HOA Atty responds by claiming that although the letter and statements were an undeniable demand for cash payment - “overdue balance” “amount due” they were really asserting the HOA’s lien rights on the property. 6 WEEKS after the property loans were discharged and 9 months into a trustee sale process.
I indicated in our filing we were surrendering the property. Gimme a break. There is truly no bottom to these bottom feeders.
Gee, threaten me with a lien after the loans are discharged. You’d be the third in line.

Waiting for judge to set a hearing date.

[idainc]

Judge re-opens case a hearing date set.

Had a thought and a question for the group. HOA bill is claimed to be "just in case we wanted to keep the house" pay this bill to avoid a lien. The lien would have both pre and post petition debt. Would placing a lien on the property that includes both types of debt in and of itself be a discharge violaiton ? SInce it would have both tyoes and lets say if we hit the lottery and paid off the house and paid off the lien - we would technically be being forced to pay discharged debt.

Just a thought. But I contend that under any circumstances you cannot send me a bil for discharged debts of any type ever.

[keepinitreal]

I agree that if they put a lien on your property that includes the pre-petition debt, they're breaking the law.

[idainc]

Or put another way -

Some more research suggests that HOA fees are a secured interest in the property. Once included in or discharged in a BK, the property owner no longer has a liability for pre-petition debt to them. Therefore, the only way for the HOA to ever recoup the fees is to record alien. They can never directly bill the homeowner for pre-petition fees - ever. The only way for them to get their pre-petition money is to get a lien.

My HOA never recorded a lien. They sent me a bill that included both pre-petitionand post-petition debt. And BTW they never reconciled my account to zero as of the day of filing so I have never to this day been presented with a bill for post petition debt.

[doni49]

Sounds like a hum dinger! Take'em to the cleaners!

[Azatty]

Unfortunately, recordation of the Declaration that created the HOA is record notice and perfection of the lien. In re Reece, 274 B.R 515 (Bankr.D.Ariz. 2001). The lien existed the moment you bought the house. The other problem is that a statutory lien isn't avoided in bankruptcy, so it passes through unaffected. The HOA can commence an in rem proceeding to foreclose its lien without violating the discharge injunction. If it's a judicial foreclosure, you will be named as a party because you have an ownership interest in the property. However, the HOA most likely isn't suing you personally for the pre petition debt. Postpetition assessments are different--any that become due after the filing date are not discharged per 11U.S.C. 523(a), so you can be sued for those assessments.

[researchnerd]

In other words, kids, don't ever buy a home with an HOA attached. I've done it before but will never do it again.

[idainc]

The house was sold by the trustee for a surplus and the HOA is in an automatic second position and will apparently be paid in full up to the date of sale.

The discharge states that a creditor cannot send a bill for discharged pre-petition debt. It does state that they can act to enforce a lien or move on secured property.

I am confirming with the sale trustee that the HOA will be paid due to their second position. The cause for my action is that the HOA sent me a bill after discharge for the full amount of all pre-petition and post-petition debt including attorney’s fees. It is unmistakable as a bill - including a perforated payment coupon and envelope and uses all the hallmark language of a bill. And it is unmistakable as including pre-petition discharged debt.

With regard to post petition assessment’s – the HOA never zeroed the account from the filing date and has never sent a bill. If they did or if I chose to send in a payment the monies would be credited to the oldest outstanding amounts first and those would be pre-petition according to their ledger.

[BROKEDED]

Sounds like more money in the bank. With our management company, I have online access to look at homeowner accounts. We had a foreclosure turned ch7. They broke their account down to basically show them as two owners with two bills...pre-file and post-file. This happened AFTER you first posted and was the first BK that I knew of in our neighborhood. I called juuuuust to make sure our MC knew not to bill them for old Dues. We're a very small neighborhood and with a judgement like that, I'd probably have to go into hiding.

[Azatty]

If the bill came AFTER the trustee's sale, then I'd say you're in a very good position. However, if the bill came before the sale, I think the HOA would have an argument that the bill was the amount necessary to prevent them from exercising their rights against the collateral. Good luck with the case, though. I'd love to see certain attorneys get sanctioned over this.

[idainc]

If the bill came AFTER the trustee's sale, then I'd say you're in a very good position. However, if the bill came before the sale, I think the HOA would have an argument that the bill was the amount necessary to prevent them from exercising their rights against the collateral. Good luck with the case, though. I'd love to see certain attorneys get sanctioned over this.

The bill came before the sale which was initially annouced in January. In reality though any lien rights the HOA has were superfluous. They would either collect as the #2 with a surplus or have all their rights extinguished in a trustee sale without a surplus. I cant imagine in what possible scenario would they ever be able to forclose or get paid through a lien.

To quote the discharge - " However, a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against
the debtor's property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case. "..

It allows them to enforce their lien. NOT send me a bill that contains pre-petition debt. Put the lien on the property and I'll deal with it then. But given that we opted to surrender the property and were discharged of the debts on the property other than the lottery or a huge inheritance there is no event that woul dhave prevented the trustee sale. In fact if one of theose highlyunlikely events came to pass I would have advised the BK trustee and the estate would have been re-opened and all debts of all kinds paid off.

The letter we received was a one size fits all -lets say we own the property outright or planned to keep the property type letter and not at all tailored to this circumstance.


Many thanks for your considered reponses.

[idainc]

If the bill came AFTER the trustee's sale, then I'd say you're in a very good position. However, if the bill came before the sale, I think the HOA would have an argument that the bill was the amount necessary to prevent them from exercising their rights against the collateral. Good luck with the case, though. I'd love to see certain attorneys get sanctioned over this.

Hearing in PHX today and we won again. Damages + sanctions. Judge felt it was a public policy issue and she needed to send the HOA a strong message to clean up their act. And yes Azatty - your guess was right.

[tcreegan]

Hi idainc,

Want to thank you for persisting and getting case heard and ruled against the HOA. This creates a precedence for others to follow suit (no pun intended )

Some HOAs deem themselves omnipotent, need a good dose of reality.

Thanks for keeping us posted and congratulations on winning the verdict!!

Tom in Colo

[BROKEDED]

Hearing in PHX today and we won again. Damages + sanctions. Judge felt it was a public policy issue and she needed to send the HOA a strong message to clean up their act. And yes Azatty - your guess was right.

Holy crap!!! Would it be beneath you to call them and ask if they'd like to send you another bill?!? You know, just to rub a little salt in the wound. I hate to be nosey...ok not really...so uh...how did you come out on THIS judgement?

[RichM]

Hearing in PHX today and we won again. Damages + sanctions. Judge felt it was a public policy issue and she needed to send the HOA a strong message to clean up their act. And yes Azatty - your guess was right.

Wow! You're my new hero, I think. Nice going!

-Rich