Cutting Your Losses: When to Stop Paying Homeowners Association Fees and Insurance on Surrendered Property

Surrendering your property due to bankruptcy or foreclosure is a gut-wrenching and slow process. The foreclosure process used to be quicker, but today’s economy has slowed it tremendously. Thus, you may surrender your home months before the foreclosure process is complete and the deed is transferred to the bank.

Some homeowners move out of the house right away and some stay in the house until they are forced to leave. It is wise to give written notice when you decide to move out. Oftentimes banks and mortgage lenders would prefer someone in the house taking care of the property. If you decide to stay, definitely keep up to date with your homeowners insurance and any association fees. Continue to maintain your property and pay utility bills until you officially move out. Pay the insurance until you move out and the home is officially through the foreclosure process (and you have received written notice of this).

Those homeowners who leave the house right after surrendering the home sometimes think they can stop paying HOA fees and insurance when they move out. This is not true. Your homeowners insurance protects your home structurally, but also protects you from liability. It would be unwise to cancel it before you are officially taken off the deed or receive paperwork from your mortgage company that states they have officially completed the foreclosure process. Keeping the insurance will protect you from any harm to the home or to any person who is injured on your property. The insurance company and your mortgage company should be available to discuss this with you.

Whether you leave your home right away or when you are forced to leave, homeowners association fees need to be paid until your name is no longer on the deed. By law, these fees are payable by whomever’s name is on the deed, and will pile up quickly if left unpaid. If your foreclosure is connected to a bankruptcy, the timing of stopping these fees is particularly important so you do not incur charges that might not be covered by the bankruptcy.

The surrender of a home due to foreclosure and/or bankruptcy can be a difficult and overwhelming event. A licensed Florida attorney can counsel you about when fees and insurance should officially cease. SmithLaw has advised many on these matters, helping clients protect themselves from liability or extra charges.

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