Central District Consumer Bankruptcy Attorney's Association

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delsps

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David:
How does abandonment change anything? The debtor still has an equitable or legal interest in the property so the HOA dues continue to accrue post petition per 523(a)(16). I think the liability doesn't end until the forclosure or the debtor does a deed in leiu. I even thought of tendering and recording a deed to the trustee as soon as he indicates interest in administering the asset. It still doesn't work! The DEBTOR is liable for the HOA dues as long as the Debtor OR the Trustee has an interest in the property, so the transfer to the trustee changes nothing.
Since by far most HOAs arent pursuing this, I am just as happy to keep my mouth shut, but at least some HOAs are getting decent representation and pursuing these things, my client's case in point.
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law

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You cannot protect them. You must earn them the liability is coming.
D
Sent from my iPhone
On Dec 17, 2009, at 10:02 PM, Catherine Christiansen wrote:
So how do we protect our client who surrendered the property on the Statement of Intentions and moved out from HOA's later sueing them?
Law Office of Catherine Christiansen
1077 E Pacific Coast Hwy #210
Seal Beach, CA, 90740
Tel: (562) 361-8721
Fax: (562) 490-8572
attorneychristiansen@gmail.com
This e-mail is private and confidential and is intended solely for therecipient(s) named or otherwise identified herein. If you are notnamed or otherwise identified as an intended recipient, please deletethis e-mail message and any copies thereof and immediately notify theLaw Offices of Catherine Christiansen by e-mail or by telephone (562)608-8368.

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So how do we protect our client who surrendered the property on the Statement of Intentions and moved out from HOA's later sueing them?
Law Office of Catherine Christiansen
1077 E Pacific Coast Hwy #210
Seal Beach, CA, 90740
Tel: (562) 361-8721
Fax: (562) 490-8572
attorneychristiansen@gmail.com
This e-mail is private and confidential and is intended solely for therecipient(s) named or otherwise identified herein. If you are notnamed or otherwise identified as an intended recipient, please deletethis e-mail message and any copies thereof and immediately notify theLaw Offices of Catherine Christiansen by e-mail or by telephone (562)608-8368.

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First, my doctor is single. I don't know, nor do I care about his preferences in the bedroom.
Dennis: I didn't do an exhaustive check of his records, but I ABSOLUTELY asked him if he has been putting money in and taking money out of his "retirement" accounts as if they were just savings. He swears that the has NEVER taken ANY money out of any retirement accounts. He has two jobs. One is as a staff ER doctor for a well known hospital where he has worked for over 15 years. While there he has contributed the max allowable to his pension which is matched by the hospital, and is, according to what I see, an ERISA qualified pension (not property of the estate). His current pension value there is about $1.5 million.
His second job is an ER doctor, through his medical comapny (MC). The medical company bills that hospital, and the MC contributes to his SEP IRA (exempt up to $1,090,000 per section 522), and he takes a salary from that MC as well. He has caused the MC SEP IRA to invest well, very well, and that has worked its way up to about $800,000.
I understand the issue re using IRAs like a piggy bank, but if the evidence bears out the story (no real activity in these accounts for over a decade other than making allowed contributions and investments), isn't my premise good law? The ERISA qualified pensions aren't property of the estate to begin with, and the SEP IRAsa are just exempt (section 522).
For everyone with a gold digging sister (or brother) out there, it might interest you that while single, as far as I can tell, the client works about 120 hours a week, and that expalins his being single. He also appears to be a miser that would make Ebeneezer Scroodge look like Mike Tyson with an entourage of 20 after a prize fight win. He also is being sued for malpractice, just maybe because he doesn't appear to SLEEP. Other than that, he's a real catch!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law

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David:
You are right, its an admin claim. Unfortunately, when the trustee abandoned the house, there was no estate to administer and the case ended up being "no asset". That is exactly the problem.
I think Dennis is right. We need to close the loophole in the Code. If the debtors aren't living there, aren't collecting rent there, and state intent to abandon in the initial filing, there should be no right to recover for HOA, and exclusive remedy is with the estate as an admin claim.
Thanks for the input, guys.
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law

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It's just the goofy way the statute is written. You are right David, on most fronts you would think this is the estate running up a bill, but the statute holds the debtor liable.
Closinga case constitutes abandonment. After abandonment, all of the liability goes back to the debtor. Remember a few years ago when I told about capital gains taxes. Had a trustee take rents from a property for 2 years, never made a payment. Then abandoned the property to the debtor. After foreclosure the debtor had to pay all of the capital gains taxes, cause property was abandoned. I objected, but Judge Z approved the abandonment and let the trustee keep the rents.
If congress had not made this exception to discharge, we could argue the contract liability was discharged, but Congress decided to screw debtors in favor of Hoa's.
dennis

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Trustee has quasi-judicial immunity, no action here. The code section says debtor is liable not trustee. Debtor eats it.
We have to get Nacba to lobby to get this fixed. I will take a change in the law.
dennis

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My client filed Chapter 7 two years ago. She had 10 or more rentals and wanted to walk from all of them as they all had non-purch junior liens. The Chapter 7 Trustee listened to an idiot realtor who told him one of the properties had bunches of equity. We told the trustee his realtor was full of it, but if he wanted to try to sell: "knock yourself out". Trustee got B of A to agree to not move for relief while the property was marketed.
My client gets her discharge after a few months and goes on her merry way, happy to have closed the "Carlton Sheets You can get rich buying real estate" chapter in her life.
18 Months go by. As expected, there were no buyers for the house. Not one single offer, actually. B of A finally wakes up and moves for relief, which is granted, unoppposed. Trustee files a no asset report, almost two years after the petition date.
The property is in a gated community and has $400/month HOA dues. Client calls yesterday and says the HOA sued her for over $6K in back HOA dues, all post-petition. I pop open section 523, and am rather stunned to read the actual language of (a)(16) closely, for the first time. I always thought the debtor had to LIVE in the property (or benefit from it, by say collecting rents) for the post petition obligation to survive. That appears clearly wrong. Post petition HOA dues are non dischargeable "for as long as the debtor OR the trustee has a legal, equitable, or possessory ownership interest in the property". 11 USC 523(a)(16).
WOW!
First, does anyone have any brilliant ideas on what this client can do, if anything. I am stumped.
Second, I am uncertain what to tell clients about this in the future. Move immediately to compel the trustee to abandon? That doesn't change the debtor's "legal equitable or possessory" rights? Encourage the lender to hurry up with the MFR and forclosure? I don't even know how I could do that.
For now I'll just tell clients that if they have these properties there is a chance they can get hit with these fees down the road, I guess. This is, after all, the only time that this has happened to any of my clients, and there are hundreds of cases where this could have come up. Still, this seems to me to be a trap for the unwary.
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law

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