HOMEOWNERS ASSOCIATION LIENS AND BANKRUPTCY

In most situations, if the homeowners association (HOA) has a lien that existed before filing the bankruptcy petition, the lien stays on (survives) the bankruptcy even though the discharge forgives and wipes out of the debtor’s personal obligation.  Thus, if the property is later foreclosed or sold (by owner or by foreclosure sale), if there are sufficient sale funds, the HOA lien would be paid in whole or part from the sale.  

But if there is no lien, the HOA past due obligation is an unsecured debt.  The past due unsecured (no lien) HOA dues that existed before filing the bankruptcy petition are discharged (forgiven) in a Chapter 7 bankruptcy. 

However, you are on the hook (you personally owe) for the post-petition HOA debt.  See Are HOA Dues Dischargeable in Bankruptcy?.

Homeowners association (HOA) dues are usually unsecured debt until a lien is filed.  Once the lien is filed, the debt becomes secured. If there is a pre-petition lien on file, then the HOA dues are like a second mortgage (or trust deed)…they are discharged (forgiven) but the lien remains and survives.  

This article is based on California law.  HOA dues are “automatic” liens in some states.

See also What is a Lien?

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