{"id":604,"date":"2012-06-22T17:00:40","date_gmt":"2012-06-22T17:00:40","guid":{"rendered":"http:\/\/www.westcoastbk.com\/blog\/?p=604"},"modified":"2012-09-12T06:14:12","modified_gmt":"2012-09-12T06:14:12","slug":"hoa-special-assessments-and-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.westcoastbk.com\/blog\/2012\/06\/hoa-special-assessments-and-bankruptcy\/","title":{"rendered":"HOA Special Assessments and Bankruptcy"},"content":{"rendered":"

By Ryan C. Wood<\/a><\/p>\n

The issue of how homeowner\u2019s association dues are treated when the homeowner files bankruptcy is for the most part settled law.\u00a0 HOA dues due pre-filing are dischargeable.\u00a0 HOA dues that are due post-filing are not dischargeable.\u00a0 Section 523(a)(16) makes sure of this in a Chapter 7 case and provisions of the bankruptcy code in a Chapter 13 do the same.\u00a0 If you stay you must pay.\u00a0 The obligation to pay post-petitions is a covenant that runs with the land.<\/p>\n

What about a special assessment of $20,000 for painting the complex or repairing a fence surrounding the association? \u00a0Was it assessed pre-petition as a lump sum just like the dischargeable HOA dues were assessed pre-filing?\u00a0 Was there a lien recorded to secure the special assessment?\u00a0 Was an installment agreement entered into to pay the $20,000 over year?\u00a0 Some of the installment payments were due pre-filing and some of the installment payments are due post-filing.<\/p>\n

If the special assessment was assessed pre-filing and in a lump sum without a lien being recorded it should be dischargeable just like dischargeable HOA dues that were unpaid before filing bankruptcy<\/a>.\u00a0 The issue of whether post-petition HOA dues are dischargeable has been litigated and lost.\u00a0 The post-petition dues must be paid.\u00a0 There are issues whether the dues are dischargeable if you are not occupying the home and not collecting rent though.<\/p>\n

The biggest issue with attempting to discharge a special assessment is most likely a timing issue.\u00a0 If you attempt to discharge a special assessment in a Chapter 7 bankruptcy<\/a> case and the special assessment was assessed a couple months before filing the Chapter 7 there are issues under section 523 and the HOA could file an adversary complaint alleging fraud and other causes of action.\u00a0 In a Chapter 13 case a HOA could argue that the covenant to pay runs with the land and to stay you need to pay the special assessment just like you will need to pay the post-petition HOA dues in a Chapter 13 case.<\/p>\n

A larger concern is how your neighbors will treat you.\u00a0 If you live in a homeowner\u2019s association and discharge some of your unpaid dues word will get around.\u00a0 If you also discharge a $20,000 special assessment and continue to live there your neighbors will most likely hate you forever.\u00a0 They will be stuck with paying for your portion of the repaired fence of repainting of the association while you will not.\u00a0 The long-term effect of discharging the special assessment may far outweigh the financial benefit in the short-term.\u00a0 Like all legal matters, it depends upon the circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"

Can HOA special assessments be discharged when filing bankruptcy? Timing is everything like most bankruptcy issues. If the special assessment was assessed well before filing bankruptcy and no lien was recorded securing the special assessment then it should be dischargeable just like pre-filing HOA dues that are unpaid. Be careful though. A diligent HOA will have some arguments for why the special assessment should not be discharged in a Chapter 7 and Chapter 13 bankruptcy case.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[57],"tags":[],"_links":{"self":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/604"}],"collection":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/comments?post=604"}],"version-history":[{"count":4,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/604\/revisions"}],"predecessor-version":[{"id":689,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/604\/revisions\/689"}],"wp:attachment":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/media?parent=604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/categories?post=604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/tags?post=604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}