Who has to pay the HOA and Property Taxes after bankruptcy?

You’ve decided to file bankruptcy and some of the debts are past-due HOA fees and delinquent property taxes. Who’s responsible for these debts?

HOA Dues

HOA dues are a personal debt (in all but the most unusual of cases) and are the obligation of the home owner at the time the dues were incurred. This includes fees and penalties (even for things like weeds and parking). So once you’ve filed bankruptcy and received the discharge, any HOA dues that were due at that time you filed are discharged as well and no longer your debt. But the same is NOT true for any HOA dues that are incurred AFTER you file the petition. These will remain your personal obligation until you’re no longer the owner of the house. So that means, once you file bankruptcy, if you’re planning on keeping the property, start paying the HOA dues or you’ll be incurring additional debt. If you’re not planning on keeping the property, make sure the ownership of the property changes quickly after you file. You don’t necessarily need to vacate the property but you do need the legal ownership to get out of your name.

Property Taxes

Unlike HOA dues, property taxes “run with the land” which means that the CURRENT owner of the property is responsible to pay the taxes and could lose the property to a tax foreclosure if the taxes are not brought current. So if you’re the current owner of the property, no matter what your bankruptcy status, you’re going to be obligated to pay the property taxes if you want to keep the property. The tax sale can’t happen while the bankruptcy is active but the property tax debt won’t be discharged with the rest of the debts. If you’re not planning to keep the property then don’t worry about the property tax, it will transfer with the property to the next owner.

By: Evan A. Nielsen