Is An HOA Obligated To Pay the Mortgage on a Property It Foreclosed On?
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A homeowner association's ability to foreclose on a property for failing to pay assessments is a potent tool in collections.
Policy for Collecting Delinquent Dues
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It is a rare condominium or homeowner association that has yet to face the challenge of the pecuniary consequences of delinquent assessments.
Prior to the economic downturn that began in 2008, there were many portfolio managers, myself included, who managed associations that had never experienced the financially crippling effects of numerous delinquencies. Because they were so rare and infrequent, there was a tendency toward leniency and inconsistency, and legal action was rare.
But when your neighbors cannot pay their association dues, the balance radically shifts and those who can pay must pay extra just to keep the grass mowed, refuse removed and roofs from leaking. In harder hit associations, reserves are compromised to fund basic monthly operating costs.
Why Do I Have To Pay For A Resale Package?
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Why Do I Have To Pay For A Resale Package?
We have many homeowners who think that because they pay assessments every month they should not have to pay for a resale package. They are of the opinion that it is a bunch of pages all put together that just sits and waits for us to “push the button” when they place their order.
I would like to clarify why it is essential that management companies prepare these documents individually for each owner. First, it is a legal document required by law in many states as it protects the buyer from purchasing into a community association without first obtaining “full disclosure”. It contains a disclosure statement that includes the legal or pending legal status of litigation involving the association. It contains up-to-the-minute information about the assessments owed, outstanding special assessments and even pending assessments as required in many states. It provides the association’s financial status and any outstanding loans owed by the association. It also provides any covenants restrictions or violations on the unit. All of these questions are answered and are entered in real time by a staff member when the order is placed. The document is not static; it requires keen oversight as the questions are researched and completed.
Bankruptcy Court Rules that "Absent" Owner in Chapter 7 Must Pay, So Long as They Remain Owner
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In a recent decision, our firm successfully defended an Association’s ability to collect post-petition assessments in a Chapter 7 bankruptcy case. The decision reaffirmed the 2005 amendments to the Bankruptcy Code. Following these Amendments, a debtor remains liable for post-petition assessments, so long as he or she holds “mere” legal title ownership.
In In re Brown, Bankruptcy Judge Donald Steckroth held that a debtor remained liable for post-petition association assessments in a Chapter 7 proceeding. This liability remained, even after the unit was abandoned by the Trustee and the debtor did not live at the unit, so long as the debtor held legal title.
The matter was brought before the Court on the debtor’s motion to compel the Association to release monies levied in a bank account, post-petition, after the bankruptcy case was closed. As background, the Association had received a state court judgment for only
Bankruptcy and Collections: What you need to know
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Bankruptcy and Collections: What you need to know
Winter is fast approaching and you may be wondering how your association is going to pay its bills if there is another bad winter. Your delinquencies may be up and you see no hope in collecting all the money that is due. Then the delinquent homeowner who was paying files bankruptcy. Your frustration turns to anger, because the other members of your association are demanding services. What hope is there to collect an account once a bankruptcy is filed?
An individual homeowner can file two types of bankruptcy. A Chapter 7 Bankruptcy eliminates the homeowner’s responsibility to pay pre-petition balances. A Chapter 13 Bankruptcy requires the homeowner to repay the pre-petition debts to the association – albeit during a longer period of time. When either type of bankruptcy is filed, the association is not allowed to attempt to collect any debt from the homeowner without first obtaining authorization from the Bankruptcy Court.
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