Lien Stripping Unpaid HOA Assessments and Fees
Posted: Mon Jan 28, 2013 2:36 pm
charsetndows-1252
I don't understand the "covenant running with the land" argument in this context. It's perfectly understandable in the Foster case, where the discussion is over postpetition assessments. But here it's irrelevant.
On Jan 28, 2013, at 2:04 PM, Stella Havkin wrote:
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> The problem is that the debtors are not willing to spend the money to appeal. In the meantime, a lot of our judges are ruling in line with Foster. I was going to appeal for my elderly debtor pro bono but the HOA settled with me for a much lesser amount and it was not worth appealing. Further, it is not just Foster that the judges are relying upon but also in the CCRs which often state that the HOA dues are covenants running with the land.
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> Sent from my Stella Havkin's iPad
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> On Jan 28, 2013, at 6:04 AM, Ramiro Flores Munoz wrote:
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>> In their article published in the most recent newsletter, Steven Fox and Daniel Park argue that an HOA lien cannot be stripped under 506. They are wrong.
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>> They argue that the HOA can prevail in a 506 motion under the theory that its rights to payment for the assessment liens are property rights and not contract rights. The problem with that argument: the nature of the lien under 506 is irrelevant (that's why a tax lien another type of non-consensual lien can be stripped via Lam motion). Under California law, when the HOA records a notice of delinquent assessment it creates a lien and gives the association a security interest in the lot or unit against which the assessment was imposed. What the HOA has is A LIEN in this situation. The lien dates from the time the lien is properly recorded. California follows the "first in time, first in right" system of lien priorities.
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>> The only important issues then are: 1) whether the rights to payments for prepetition assessments arise from a lien (the answer in CA is always yes); and 2) whether that lien is completely unsecured (the answer will depend on the facts of each particular case).
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>> I think the confusion over the "covenant running with the land" issue stems from a bad interpretation of the Foster case (I imagine a room full of HOA lawyers frantically taking notes and drooling over the possibility of opposing Lam motions during a lecture on Foster given by a non-bankruptcy lawyer that misunderstood the case). The problem for the HOA lawyer is that Foster primarily deals with the applicability of the discharge provisions of 1328(a) to postpetition assessments. It has nothing to do with the lien recorded to satisfy prepetition assessments.
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>> I know for a fact that many judges in the Central District routinely grant motions to strip HOA liens under 506. If you don't file your Lam motion to strip an HOA lien in a 13, you are doing a disservice to your client. And if your motion gets denied, you need to appeal. You'll win eventually.>>
>> Ramiro Flores Munoz
>> ________________________________
>> 415 W. Foothill Boulevard, Suite 202
>> Claremont, CA 91711
>> t. 909.908.6251
>> f. 888.674.9293
>>
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charsetndows-1252
I don't understand the "covenant running with the land" argument in this context. It's perfectly understandable in the Foster case, where the discussion is over postpetition assessments. But here it's irrelevant. On Jan 28, 2013, at 2:04 PM, Stella Havkin <havkinlaw@earthlink.net> wrote:
The problem is that the debtors are not willing to spend the money to appeal. In the meantime, a lot of our judges are ruling in line with Foster. I was going to appeal for my elderly debtor pro bono but the HOA settled with me for a much lesser amount and it was not worth appealing. Further, it is not just Foster that the judges are relying upon but also in the CCRs which often state that the HOA dues are covenants running with the land.Sent from my Stella Havkin's iPadOn Jan 28, 2013, at 6:04 AM, Ramiro Flores Munoz <rfloresmunoz@gmail.com> wrote:
In their article published in the most recent newsletter, Steven Fox and Daniel Park argue that an HOA lien cannot be stripped under 506. They are wrong. They argue that the HOA can prevail in a 506 motion under the theory that its rights to payment for the assessment liens are property rights and not contract rights. The problem with that argument: the nature of the lien under 506 is irrelevant (that's why a tax lien another type of non-consensual lien can be stripped via Lam motion). Under California law, when the HOA records a notice of delinquent assessment it creates a lien and gives the association a security interest in the lot or unit against which the assessment was imposed. What the HOA has is A LIEN in this situation. The lien dates from the time the lien is properly recorded. California follows the "first in time, first in right" system of lien priorities. The only important issues then are: 1) whether the rights to payments for prepetition assessments arise from a lien (the answer in CA is always yes); and 2) whether that lien is completely unsecured (the answer will depend on the facts of each particular case).I think the confusion over the "covenant running with the land" issue stems from a bad interpretation of the
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