Beware the HOA when walking away

01 Apr Beware the HOA when walking away

Homeowners in developments with a homeowners association may find themselves liable for dues incurred long after they walked away from the property. In California, those dues are a personal liability of the owner, unlike property taxes which stay with the property when a homeowner decides to let a property go to foreclosure.

In a departure from usual bankruptcy practice, even the filing of bankruptcy does not discharge a debtor’s liability for assessments that came due after the bankruptcy was filed. The 2005 amendments to the bankruptcy code made the debtor liable for as long as the debtor or the trustee had a legal, equitable or possessory interest in the property.

While not usually big dollars, this change to the law exposes the owner to suit by the HOA for the period ending when some other party takes title to the property. It now influences my advice on creating a timeline for surrendering property with impossible mortgage debt and filing bankruptcy.

See Mortgage Triage

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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