What Happens To My Homeowner’s Association (HOA) Dues In Bankruptcy?

HOA dues are a bit of a different type of creditor in bankruptcy. They are generally a statutory lien against the property, so they cannot be avoided and must be paid if the property is to be kept. In a Chapter 13 case, they are generally treated as a “cure and maintain”, where you maintain current HOA payments upon the filing of the case and any arrears are included in the Chapter 13 plan and paid by the trustee over the life of the plan. In Chapter 7 cases where you want to keep the property, HOA dues are substantially unaffected. They must be paid in order to keep the property long-term. Accumulated arrears can be discharged from personal liability, but they remain against the property and the association does have the right to foreclose if they remain unpaid.

Where they are different is in the situation where you elect to surrender the property. Surrendering a property in bankruptcy does not automatically transfer title to the property to the primary lender. It simply states that your intent is to allow the lender to obtain title to the property, through a foreclosure, quitclaim deed or other method of transferring title. Any HOA arrears accumulated at the time of filing will remain against the property and your personal liability will be discharged at the end of the bankruptcy. However, any HOA dues that arise after the filing of the bankruptcy and before the title is transferred are your personal liability along with being a statutory lien against the property. If it takes a year from the filing of the bankruptcy for the mortgage company to obtain title to the property, then you are again liable for 12 monthly HOA payments post-filing. There are ways to mitigate this that your attorney can advise of you.

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