This is a question often asked by former homeowners who were responsible for making homeowners association (HOA) or condominium payments on a monthly or yearly basis. These fees are often associated with the maintenance and upkeep of the “common” areas in a neighborhood community or condominium/apartment complex. So can these fees be included in a bankruptcy? Using my favorite answer from law school…it depends!
Prepetition (before the filing of bankruptcy) HOA fees and penalties can be discharged in your bankruptcy. However, Section 523(a)(16) prevents debtors from escaping personal liability for postpetition (after filing) HOA dues so long as they own or occupy the property. Surrender and abandonment of the property does not rid the debtor of liability as the property’s owner if the lender does not exercise its state law rights to the property. And there’s nothing a debtor can do to force the lender to act. (In re Madeline Rosa, 2013 WL 3380166 (Bankr. D. Hawaii 7/8/13).)
So what does this mean? Essentially, until the lender (usually the bank) takes possession of the property, the homeowner is still liable for the postpetition HOA fees. The simple “surrender” of the property does not transfer title. Please speak with one of our experienced bankruptcy attorneys today to better understand your rights when it comes to HOA fees and bankruptcy.