Bankruptcy
Click here to read a recent article about new developments in bankruptcy law written by Charles E. Maxwell and Mark E. Lines.
A New Jersey Superior Court, in The Glen, Section I Condominium Association v. June, 782 A.2d 430 (N.J. App. 2001), held that a homeowner is liable for assessments that accrued after the homeowner filed for bankruptcy. In June, the court held that assessments accruing after the discharge of the bankruptcy continue to accumulate so long as the homeowner retains possession of the home. The court also found that denying the homeowner use of the common elements of the association during the time he was delinquent in discharging his debt did not constitute an expulsion from the association that would have relieved him of paying assessments. This was recently codified into law with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Click here to read more about this new law.
A Florida bankruptcy court held, in In re Rivera, 256 B.R. 828 (M.D. Fla. 2000), that a chapter 7 bankruptcy does not discharge debts for assessment liens. In Rivera, a homeowner had a lien on his property for failure to pay assessments. The court held that the obligation to pay assessments is a covenant running with the property and such property right cannot be discharged in a chapter 7 proceeding.
In another case, a bankruptcy court in Virginia held in Reynard v. Montclair Property Owners Association, Inc., 250 B.R. 241 (E.D. Va. 2000), that an association did not need to seek relief from an automatic stay in a Chapter 13 proceeding because the assessments the association sought pertained to property outside the bankruptcy estate. The court held that the association could properly direct collection activities at any property not attached to the Chapter 13 estate to collect its assessments.
