HOA Foreclosire

[Lilyat108x]

Hearing is upcoming regarding HOA foreclosing. If they foreclose, can they come after me for money too or does the foreclosure satisfy that? The house was discharged in a ch 7 and I also have an LP from the bank. I am in Fl.

[bcohen]

Sadly, a Chapter 7 filing only discharges your personal responsibility for the mortgage(s) and for HOA dues and fees which arose before the filing date. It does not remove a HOA lien already placed upon the property, nor does it absolve you of responsibility for HOA dues/fees/special assessments going forward. The HOA can legally go after you for dues/fees/special assessments which accrued after your bankruptcy filing date, and could file a lawsuit if they so choose. They could also tack on late fees, collection fees, and attorney fees.

Most HOA's understand that a former homeowner who has surrendered their home in bankruptcy does not have the means to pay, and instead place a lien on the property so that the mortgage lender or purchaser at foreclosure sale will pay the debt in order to obtain clear title. However, some HOA's are real A-holes, and will go after the former owner, file a lawsuit, obtain a judgment, and seek to garnish wages and bank accounts.

It is for this reason that we recommend people who live in an HOA, and are planning to surrender their home DO NOT FILE FOR BANKRUPTCY UNTIL AFTER THE FORECLOSURE SALE IS COMPLETE. In that case, there cannot be any more HOA charges going forward, since the deed has changed to someone else's name (or possibly the mortgage lender itself as a REO) so any and all HOA charges can be discharged in the bankruptcy.

[justbroke]

bcohen pretty much sums of the state of HOA foreclosure in Florida. I hope that you maintained your payments. Are you still in the home?

[Lilyat108x]

I am in the home but HOA is foreclosing fast. I haven't maintained the fees. I tried to pay them right after the bk and they would not accept my payments and would return them and even wanted to charge me for payment plan for $350. On top of that they kept tacking on fees for things like monitoring my BK and different lawyers tacked on more fees. I just hope they foreclose and that's it.

[nioka]

I am in the home but HOA is foreclosing fast. I haven't maintained the fees. I tried to pay them right after the bk and they would not accept my payments and would return them and even wanted to charge me for payment plan for $350. On top of that they kept tacking on fees for things like monitoring my BK and different lawyers tacked on more fees. I just hope they foreclose and that's it.

I am curious why the HOA would not accept these payments. If this person's debt was discharged after bankruptcy wouldn't that zero out the HOA debt? If that is true then how can this HOA refuse payment?

If the goal of bankruptcy is to give the debtor a fresh start then how is permitting HOA's the right to act as described here allowed?

[bcohen]

I am curious why the HOA would not accept these payments. If this person's debt was discharged after bankruptcy wouldn't that zero out the HOA debt? If that is true then how can this HOA refuse payment?

If the goal of bankruptcy is to give the debtor a fresh start then how is permitting HOA's the right to act as described here allowed?

It's not allowed, however the HOA is banking on the fact that a newly-discharged debtor has little or no money available to fight back in court. In the OP's case, they are hoping for the HOA to foreclose so they can move on and be done with it.

[justbroke]

A Florida HOA is a secured creditor and they should have accepted the payments, for the reasons I list below.

The balance is not zeroed out. The HOA dues/assessments is a debt that "runs with the land". While they can foreclose on the land, they also enjoy the right to go after you personally to collect. Smart Florida HOAs would, upon learning that a member has filed bankruptcy, start a NEW association account and use that new account for purposes of pursuing the debtor personally. (You could also use that as a defense strategy as to why the HOA was wrong to not accept post-petition payments.)

If you want to fight them, go to the foreclosure hearing. Bring proof that you tried to pay. Bring proof that they wouldn't accept payments. Bring proof that you were in bankruptcy. Bring proof that you escrowed the money. Demand that the HOA not be allowed to tax attorney fees since they denied your desire to pay the "post-petition" assessments/dues. Remind the Judge, and HOA, that a bankruptcy debtor is liable for HOA dues that became due after filing and that was what you were trying to do! Demand that any accrued interest likewise be removed for post-petition dues.

If you don't have all those things to fight them, then they will easily win the foreclosure suit and you could be personally responsible for the non-discharged amounts plus attorney fees (for the non-discharged amounts).


Now, if you had pre-petition dues that were in arrears, you are in a pickle. They do have the right to foreclose for the pre-petition dues.

[nioka]

Justbroke,

You stated,

"Now, if you had pre-petition dues that were in arrears, you are in a pickle. They do have the right to foreclose for the pre-petition dues."

I am confused on this point. If the pre-filing HOA dues/fees/fines were discharged how could the HOA do this?

In my case I will wait until either the HOA or bank forecloses. If the bank forecloses but drags their feet I plan to stay here until eviction. However, I did plan to pay the post bankruptcy HOA dues to avoid any further issues. (Cheap rent). I am under the impression that all pre-filing HOA dues/fees/fines would be discharged. Confused.

[LadyInTheRed]

"Now, if you had pre-petition dues that were in arrears, you are in a pickle. They do have the right to foreclose for the pre-petition dues."

I am confused on this point. If the pre-filing HOA dues/fees/fines were discharged how could the HOA do this?

Your personal liability for the pre petition HOA dues will be discharged. But, the HOA still has a lien against the property for those dues.

[justbroke]

Your personal liability for the pre petition HOA dues will be discharged. But, the HOA still has a lien against the property for those dues.

What she said!

[bcohen]

Your personal liability for the pre petition HOA dues will be discharged. But, the HOA still has a lien against the property for those dues.

Note that this reply is based on the OP's state of residence, which is Florida. In Florida, HOA dues become a statutory lien against the property as soon as they become due. Thus, although filing for bankruptcy discharges personal liability for the debt, the HOA's statutory lien survives, and the HOA can foreclose on its lien once the automatic stay ends.

In most states, however, HOA dues do not create a statutory lien. Instead, a HOA must file a lawsuit against the delinquent homeowner and obtain a judgment, which is then recorded as a lien against the property. Thus, if the homeowner files for bankruptcy before the lawsuit is filed, or before the judgment is awarded, then the automatic stay ends the lawsuit, and the delinquent HOA dues/fees are treated as any other unsecured creditor in the bankruptcy.

[tobee43]

We do the same thing here bcohen in fl. I mean go through the same process although it's usually for the reason to push the banks to move on vacant homes, certainly not ones occupied. The subordinate lien status does help the hoas , at least in the in the past. However recent laws are beginning to relinquish many of these powers.

Op I have no answers why ur hoa will not work with u on paying them unless it up in the thousands. I know what we have had to do to increase fees and costs and it is no easy task so u must have one powerful hoa.

[justbroke]

In most states, however, HOA dues do not create a statutory lien. Instead, a HOA must file a lawsuit against the delinquent homeowner and obtain a judgment, which is then recorded as a lien against the property. Thus, if the homeowner files for bankruptcy before the lawsuit is filed, or before the judgment is awarded, then the automatic stay ends the lawsuit, and the delinquent HOA dues/fees are treated as any other unsecured creditor in the bankruptcy.

This is a problem wherever an HOA has a lien. There are several other States that give HOAs a statutory lien as well. HOAs in other States file a Lien in accordance with the CC&Rs established for that HOA. These liens are filed before any foreclosure lawsuit (you can't file for foreclosure if there is no security pledged).

As such, we can always say that if there is a lien recorded, or one that is statutory, this creates a secured debt against the land, and that will always be problematic if you are staying.