You are here:

Bankruptcy Law/HOA and Bunkruptcy

Advertisement

Expert: - 12/1/2010


Question
Hello...just read your answer to someone's question regarding bankruptcy and HOA dues. I filed (Chapter 7) in August, had meeting with the trustee in September. I am surrendering the investment property. My understanding of your article is, unpaid HOA dues prior to filing are dischargeable. However, HOA dues after discharge are due and payable until the bank takes back the property or forecloses. How about the months in between the date filed and date of discharge? In my case, B of A is the holder of my mortgage. I have been told it may take over a year for the bank to take back the property. Am I able to lease the property and pay the HOA? My attorney is not aware of the laws regarding HOA. Thank you!

Answer

Leon Bayer
To begin with, I thank you for reading my other answers! So many people ask the same thing I I have already answered.

I LOVE your question!

You can tell your lawyer that you did the research on this question all by yourself, and that you now want this so-called lawyer to immediately do each of the following:

1.  Read Bankruptcy Code Section 523(a)(16).

2.  Stop representing clients in an area of law that the lawyer is not competent to handle, namely bankruptcy law, until such time as the lawyer has demonstrated expertise and a high degree of proficiency in the field. (Just imagine the disastrous consequences you could face of going to a doctor who is not adequately trained in the management of a serious medical case, but who proceeds to treat you anyway.)

3.  Pay YOU for doing the legal research that the lawyer should have done as a routine and necessary part of the fee charged for handling your case. I suggest you bill the lawyer around $185 for your time spent.

4.  Learn how to do the same simple research that every 1st year law student could have easily done to quickly answer this question - and if all else fails, ask a learned colleague.   

Now, I will reluctantly stop being sarcastic, and proceed to answer the other parts of your question.

Your liability to the HOA begins again the day after the date your case was filed, for all fees accruing after that date, until the time when you no longer own the unit. It has nothing to do with the date of your discharge or any other dates. The filing date is the key date.

A competent lawyer should have considered whether to file for you AFTER the bank has completed a foreclosure sale. Filing after the sale date could have relieved you from all legal liability for HOA fees. You are right about B of A being slow, along with many other lenders especially when HOA's are concerned. I have noticed the same thing. It's because the bank does not want to be stuck paying HOA fees as the owner until they are ready to market the property, (they would rather have you paying the HOA fees for as long as possible). In markets that are over saturated already with foreclosures, the delay in completing the foreclosure can be very long indeed as lenders wait for the backlog to clear.

You are legally entitled to rent out the property for as long as you still own it. I would find some very reliable person to rent it to, on a month to month basis, and tell the tenant that the property will be subject to a foreclosure sale at some point. To make up for the inconvenience of not knowing how long the tenant can stay there, you tell the tenant that they are getting the unit for a BIG, BIG discount off the going rate. That way, the tenant gets a good deal, you get money to pay the HOA, and maybe a little extra cash flow on top of that. Everybody wins.

Find out the foreclosure time frame under the laws of your state, so you and the tenant will know the minimum amount of time that you can rent it for, and depending how slow the bank is to foreclose, it can be much longer than that. Also keep the property properly insured.

Good luck!  

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

©2012 About.com, a part of The New York Times Company. All rights reserved.