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HOA Dues After Trustee holds Property for 18 Months then

Posted: Thu Dec 17, 2009 11:30 am
by Yahoo Bot

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This sounds like an administrative claim against the estate, not a claim
against the debtor. Client should defend action by saying: not my liability
and perhaps ever cross-complaint against the Trustee. That may make
Trustees think twice about doing this in the future. I wonder if the
Trustee's bond can be used to pay this obligation? Nah, that's too much to
ask.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
jbsesq1965
Sent: Thursday, December 17, 2009 10:53 AM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] HOA Dues After Trustee holds Property for 18 Months then
Abandons
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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Message
This sounds like an
administrative claim against the estate, not a claim against the debtor.
Client should defend action by saying: not my liability and perhaps ever
cross-complaint against the Trustee. That may make Trustees think
twice about doing this in the future. I wonder if the Trustee's bond can
be used to pay this obligation? Nah, that's too much to
ask.

David A.
Tilem
Certified Bankruptcy
Specialist*
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