Our Clients Ask Us: Owner Abandoned Property

Q: We had an owner file for Bankruptcy, then walk away from the property. When we sent the owner a statement for maintenance fees, the response was that the owner abandoned the property and gave it back to the bank. Is the owner responsible for post-petition fees in this situation?

ANSWER: Yes. While the filing of a bankruptcy petition and subsequent discharge granted by the bankruptcy court operates to absolve the owner from liability for pre-petition debt, it does not prevent the owner from being assessed post-petition maintenance fees, attorney fees, late fees, interest or assessments. If the owner does not pay post-petition assessments, we will collect against them similarly for those post-petition assessments, the same as we would against an owner who never filed for bankruptcy.

Remind the titled owner that they are responsible for ongoing assessments for as long as the property remains titled to their name. The fact that the owner “surrendered” the property through the bankruptcy has no bearing on the title status of the property. This simply means that through their bankruptcy petition, the owner did not wish to reaffirm the mortgage debt and that the bankruptcy trustee was free to take hold of the property if there was any equity, to be liquidated for the benefit of creditors. The Association has the option of obtaining a personal judgment for post-petition fees in this case.

More on Community Associations