Goudelock v. Sixty-01 Association of Apartment Owners
Facts: A property owner buys a condominium unit secured by a mortgage and subject to monthly homeowners’ association (HOA) assessments. The owner experiences financial difficulties and stops paying the HOA assessments. The owner files for Chapter 13 bankruptcy. The assessments continue to accrue on a monthly basis. The HOA initiates foreclose on the property and the mortgage lender pays the outstanding HOA assessments accrued before the owner filed for bankruptcy and forecloses on the unit instead.
Claim: The HOA seeks the unpaid assessments accrued between the owner’s bankruptcy filing and the unit’s foreclosure, claiming the debt is not dischargeable since it was created when the assessment was levied when the owner was still in possession.
Counterclaim: The owner claims the HOA assessments are dischargeable since they are an unmatured debt created at the time of the owner’s purchase of the condominium and matured each time an HOA assessment was due.
Holding: A California court of appeals holds the HOA may not collect money for unpaid assessments due after an owner’s bankruptcy filing since they are an unmatured debt created at the time of the owner’s purchase of the condominium, maturing each time an HOA assessment was due and thus are dischargeable in the owner’s Chapter 13 bankruptcy. [Goudelock v. Sixty-01 Association of Apartment Owners (February 6, 2018)_CA5th_]
Editor’s note—Only debts incurred prior to a bankruptcy filing are dischargeable.