I am not an expert in bankruptcy law, but I have seen people file bankruptcy while owing HOA fees. Much like a mortgage, HOA fees don’t necessarily disappear with bankruptcy, but they do get dealt with. They are often reduced, and the person often makes staggered payments on them.
When I advise HOAs, I try to convince them not to put people in situations where they are filing for bankruptcy. You don’t want to be that HOA on the evening news, taking the house of an older widow because she couldn’t keep up with her payments. The HOA has other options for collections and how they hold debt as well.
As far as bankruptcy goes, in these cases, the house will become part of the bankruptcy estate. It will be held until all parties work out the details of the bankruptcy, including the payment arrangements. Foreclosure is stalled until it is released from the bankruptcy estate, but there’s not an automatic discharge. It is entirely dependent on the situation.
How Long Do You Generally Have To Respond To An HOA Request Or Warning And What Happens For Homeowners As Well As The HOA If Nothing Is Done?
This depends on the individual HOA, as well as on what their restrictions are and what their documents say.
First, it’s important to keep in mind that anything an HOA intends to enforce needs to be recorded on the county website. So, if an HOA is making up new rules and trying to enforce them and they are not recorded, they can be challenged.
Typically, though, if the request/warning has a fine or penalty, there can be a daily fine levied until the issue at hand is resolved.
Sometimes, in addition to HOA fees and fines, you can also have statutory fees and fines. For instance, let’s say there is a dispute between homeowners. If a homeowner brings a lawsuit against another homeowner for a violation of the deed restrictions of their property, and the homeowner being sued is found liable, they can be fined up to $200 a day starting back from the first day of the offense.
So, if they built something that is in violation of deed restrictions and it’s been up for a year, the judge can fine them $200 a day, backdated from the very first day. This is something that ought to be taken very seriously.