While many of a debts will be discharged upon filing for bankruptcy, borrowers will still be responsible for paying some debts – including homeowner association (HOA) fees. This is because the borrower will still hold the deed to the property and, therefore, will be liable for paying all dues associated with it. However, just because you are responsible for paying HOA fees in the event of a bankruptcy does not always mean that you necessarily should pay them, as this will depend the specific nature of your bankruptcy case, as well as whether or not you still live in or are renting out the property in question.
If you are still living in or renting out the property, it will be crucial that you pay all necessary HOA fees because failing to do so can allow the homeowners association itself to initiate its own foreclosure proceedings against the property. These cases are typically much more difficult to fight against, as the HOA only needs to prove the following in its foreclosure cases:
- HOA fees have not been paid in the past.
- The homeowner in default has been notified of his failure to pay these fees.
- To date, the defaulted HOA fees remain outstanding.
Should an HOA foreclosure case lead to a sale of the property, the HOA will likely recover some portion of the outstanding fees from the sale of the home. However, the question of who is responsible for paying these fees in the event of a short sale can be a point of argument between the potential buyer, the HOA, the seller and the lenders, as each party will likely want to pass off these fees to another. Yet, because all parties involved generally want to close a short sale of a foreclosed home quickly – and because all parties are aware that the seller/former owner has filed for bankruptcy, it is often the case that the former homeowner can pass this buck and get another party to agree to pay these fees.