Many times, banks will delay foreclosure where the property has a homeowner association (“HOA”). The banks know that, according to Oregon law, their mortgage takes precedence over the claims of the HOA for dues and assessments. So, what is the HOA to do when they need money to run their association and neither the bank nor the homeowner will pay? Suppose the homeowner has left the home with no intention of returning?
In these cases the HOA will often sue the homeowner. Even a homeowner who has filed bankruptcy . . . why?
The reason lies in a little known provision of the bankruptcy code which changed in 2005. The banking lobby managed to achieve “bankruptcy reform” the end result of which is that HOA dues incurred after you filed your bankruptcy case, are nondischargeable. Recent case law has reinforced this concept, even when the homeowner leaves their home.
How can you get around this? The question is tricky and depends on your specific situation . . . but there are a few ways that homeowners can protect themselves, or at least minimize the damage.