Florida condominium owners may find themselves in a situation where they must file for bankruptcy. Oftentimes, owners want to know what will happen regarding their Condominium Owner Association (COA) assessments or fees, especially if they have fallen behind on payments. There are some important laws pertaining to these dues that every condominium owner should know.
If you own a condominium and must file for bankruptcy, condominium assessment liens can be removed if you are unable to pay them. According to the U.S. Bankruptcy Court, this means that the condominium fees would not need to be paid if the first mortgage amount surpasses the value of your property.
In the past, some Condominium Associations have argued against this, stating that its statutory lien should receive priority, because any first mortgagee gaining title from foreclosure is only required to pay either 1% of the original mortgage debt or a year’s worth assessments (the lesser of the two).
Since then, the court has rejected these arguments, citing Florida Statues, Section 718.116(1)9b. The law states it: “does not give the Association any lien rights (against a foreclosing lender for outstanding delinquencies). It merely gives it the right to assert liability for past-due assessments against the mortgage holder if the mortgage holder acquired title through foreclosure.”
While typically most debts listed in a bankruptcy petition, including condominium assessments and fees are dischargeable, there are certain types of debt that are not dischargeable. According to Section 523 of the 2005 Bankruptcy Reform Act, post-bankruptcy condominium or cooperative owner’s association fees are not dischargeable. This means that condominium owners would owe any assessments or fees owed after their bankruptcy petition is filed.
Condominium owners face “post-petition debt,” which is subject to collection. If you fail to pay your assessments that have accumulated after your bankruptcy filing, your COA can request the court to lift the automatic stay, allowing them to collect that post-petition debt.
If you have any questions on this topic or are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Source: http://rpmshomes.com/happens-condo-owner-declares-bankruptcy/
