In the recent case of In re Coonfield, 517 B.R. 239 (Bankr. E.D. Wash. 9.25.14), the court held that while the debtors could not require a lender to take title to real property, they did not need to divest themselves of the property in order rid themselves of liability for the ongoing HOA assessments. The debtors in this case filed a Chapter 13 case in July of 2014. Their plan provided that title to their condominium be transferred to Bank of America which held the note and did not provide to any post-petition payments to the homeowners association (HOA). Both Bank of America and the HOA objected to the plan.
The lender objected to the provision that required it to take title and the HOA objected to the provision that did not require the debtors to make the post-petition fees per 11 U.S.C. Section 523(a)(16). The court held that where a lender was not willing to accept transfer of title to real property, the debtors could not force a transfer through their Chapter 13 plan. However, the court held that the debtors were not required to pay the post-petition HOA fees. The court found that the liability for the HOA fees arose prepetition and the post-petition obligation was merely the “contingent, unmatured” portion of that obligation. Accordingly, the court ruled that the HOA’s claim for ongoing assessments was a prepetition, dischargeable claim.
In Maryland, Judge Mannes in the case of In re Khan, 504 B.R. 409 (Bankr. D. Md. 2014) has held that the discharge order a debtor receives in a Chapter 13 case includes his obligation for condo fees in a case where the debtor’s plan provided for the surrender of his condominium. The condominium association’s lien on the property however, continues after the discharge.
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