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Real Estate – Homeowner Dues – Foreclosed Home 

A Fairfax Circuit Court says a homeowners’ association wins its suit for dues on defendant’s former home, that he accrued after he petitioned for chapter 7 bankruptcy relief but before the home was sold by foreclosure at public auction, during which time he owned the home but neither rented it out nor lived in it.

The Homeowners Association Act declaration in this case is binding on the parties pursuant to Va. Code § 55-515(A). Defendant asserts the post-petition HOA dues should be dischargeable in bankruptcy, while plaintiff association claims the dues are non-dischargeable debts. Both parties rely on the rationale of In re Rivera, 256 B.R. 828 (Bankr. M.D. Fla. 2000). The court finds the association’s arguments unpersuasive as the three lines of cases that Rivera discusses have been superseded by a 2005 amendment to 11 U.S.C. § 523(a)(16). Defendant is not discharged from his post-petition HOA dues if the association can prove that three requirements are met. First, the dues must constitute HOA, condominium or cooperative housing dues. Second the dues must become due or payable after the order for relief, to wit, upon a debtor commencing a voluntary case under the Bankruptcy Code by filing a petition. Third, these dues must accrue while defendant holds a legal, equitable or possessory ownership interest in the home. Congress clearly intended legal, equitable or possessory interest as a broad definition of ownership. The prior version of the statute only prohibited discharging dues that arose while the debtor was asserting a type of “possessory interest.”

Here, the association has clearly satisfied the first requirement, as the dues in question are HOA dues. It has met the second requirement as all the claimed dues arose after the bankruptcy court’s order for relief was entered May 17, 2007. Finally, defendant had record title of the home until it was sold at public auction March 7, 2008, so he had a cognizable legal interest in the home until that date.

Defendant is responsible for the HOA dues accrued between May 17, 2007 and March 7, 2008.

The court grants the association judgment of $1,666.89 for the HOA dues, and $1,054 in attorney’s fees.

Brambleton Cmty. Ass’n v. Than (Klein, J.) No. CL 2009-9174, Oct. 14, 2009; Fairfax Cir.Ct.; Mary N. Peacock for HOA. VLW 009-8-247, 5 pp.

VLW 009-8-247

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