In re de Guillen

Facts: An owner falls behind on homeowners’ association (HOA) dues owed on their unit. The HOA records a notice of lien against the unit. Later, the HOA records an amendment to the notice. Both the notice and the amendment include unpaid assessments and interest accruing after the date of the notice. The HOA sues the owner to foreclose on the lien and is awarded a money judgment. Multiple years pass in which the owner does not pay post-judgement assessments and the HOA does not foreclose. The owner files for chapter 13 bankruptcy protection. The HOA files a proof of claim for all amounts stated in the notice and amendment plus post-judgment assessments as a secured lien on the owner’s unit. The bankruptcy court allows only the amount of the money judgment plus interest as the secured claim amount with the remainder of the unpaid HOA claim as unsecured.

Claim: The HOA claims they are entitled to a secured claim for the entire amount of delinquent assessments since both the notice and the amendment include unpaid assessments and interest accruing after the date of the notice.

Counterclaim: The owner claims the HOA’s recorded notice of lien for delinquent homeowners’ assessments cannot secure amounts of assessments which become delinquent after recording the lien since a HOA must record another notice of lien to collect any future assessments.

Holding: The Bankruptcy court of appeals holds the HOA’s recorded notice of lien did not secure amounts of assessments becoming delinquent after the recording of the lien since a HOA needs to record another notice of lien to enforce collection of future delinquent assessments. [In re de Guillen, (April 5th, 2021) _BR_]

Read the case text here.