Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.
Q: I went into foreclosure several years ago on my Weston condominium because I was not able to afford the mortgage and condo dues and stopped paying both. About a year ago, I went through a Chapter 7 bankruptcy and moved to a new home I am renting. I recently got a letter from my former association saying I owe money for unpaid dues. Do I? – Les
A: Yes. When you borrow money from a lender to buy a home, you sign both a mortgage and a promissory note. The promissory note is your promise to pay the bank back the money you borrowed and the mortgage lien allows the bank to take back the home as payment toward the note if you stop paying.
A typical Chapter 7 bankruptcy will relieve you of paying back the money you borrowed for the home, but it will not disturb the mortgage lien against the property. This means that after the bankruptcy is complete, you still owe the condo dues until your lender finishes the foreclosure action.
While the bankruptcy will have erased all the back payments you owe the association, you still will rack up new payments after the bankruptcy since you still own the property. You also still have all the other responsibilities of ownership, such as property taxes and liability for negligence.
If you are abandoning a property in bankruptcy, you need to make sure the bank takes back ownership as soon as possible to avoid further problems. Talk to your lender about the importance of wrapping up the case quickly -- or consider filing a motion with the court to push the case to a conclusion.
The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.
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