My Homeowners Association and Condo Fees Go Away in Bankruptcy—Right?

Wed, Oct 10, 2012

Bankruptcy

Wrong. Sadly, many homeowners are under the impression that their homeowners association fees or condominium association fees will easily go away with bankruptcy. This is simply not true. Your commitment to the homeowners association or condominium association continues until you both mutually end it.

Many people buy a home with a homeowners association or condominium association in an effort to obtain enhanced security, better utilities, more amenities, or better maintenance. Some are not interested in that, but the property comes with it—so they pay it. Unfortunately, both of these scenarios still mean you are stuck with your fees until the deed is transferred into someone else’s name—whether you still live there or not. That should be a reminder to consider these types of fees and associations carefully when first purchasing a home or condominium.

Keep in mind too, that many homeowners associations and condominium associations are struggling as well in this financially challenged economy. They are often not getting the money they need from struggling homeowners to keep up with the benefits promised by the association. Therefore, they are getting tougher on homeowners who still owe them.

The bottom line is that the agreement with the association is binding until you no longer are on the deed to your property. This might happen the quickest during a short sale –after you go through the potentially long short sale process, of course. You will eventually be removed from the deed during a foreclosure or a bankruptcy, but that can take a long time depending on your lender.

Attorney Christopher D. Smith advises his SmithLaw clients to consider these types of association fees carefully during their bankruptcy decisions. The timing of a bankruptcy is important when there are fees of this nature, since you might be able to get rid of previously owed fees—but might end up still owing future fees until you are removed.

Image credit: Some rights reserved by roger4336

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