disclaimer stampThis website is not intended to be a legal advice resource. It is only meant to be used for educational reasons. Please don’t take any action or refrain from taking any action based on what you’ve read on this website. This website, article, or link may contain outdated, incorrect, or irrelevant information. It is your obligation to speak with an expert attorney who can apply current legislation or laws to your personal situation in a professional manner.

There is no attorney-client relationship formed by using this site or communicating with Law Office of D.L. Drain or any of our employees. Please read the complete disclaimer for additional information.

It is vital that you seek legal advice from a qualified attorney on your individual situation. It will almost certainly cost you less to seek advice before acting than it will to repair your mistakes.


Based on both federal bankruptcy and Arizona laws.

Homeowner Associations received special treatment in bankruptcy, based on both federal law and Arizona statutes.  First, there is contract law – read your Conditions, Covenants and Restrictions “CC&R’S” to determine your liability. Most likely you are personally liable for the dues/assessments and the dues/assessments are liens on your property.

Here is an example: You live in a condo in Phoenix. You pay $300 a month for HOA dues/assessments. Unfortunately, you are behind in your payments for the last 3 months. This means you owed $900, plus interest and fines (as provided by the CC&RS). You just received notice that the HOA has assessed a $1,500 special assessment for the repairs to the common area; to be paid in three installments of $500 each over the next 6 months. The first payment is due immediately.

Let’s start the discussion with the premise that you want to keep the condo.

Therefore, you need to make arrangements to pay the debt, including the fines provided by the CC&R’s. But, your neighbor just told you that you could file bankruptcy and eliminate those dues. This is partially true, but there are several twists and turns. Filing bankruptcy be a solution to your problem, but only a chapter 13. That type of bankruptcy will allow you to pay the HOA arrears over time, while you continue to pay all new dues/assessments current as they come due.

What your neighbor did not understand is that Arizona statutes provide that an automatic lien exists for any unpaid dues/assessments.

So even if the dues/assessment was due and payable before the date the bankruptcy was filed, the lien would still attach to the condo. Thus, your personal obligation may be discharged, but there will still be a lien on the condo. The lien only lasts for 3 years, but the HOA can foreclose on the lien at any point prior. So, if you want to keep the condo you have to pay the assessment, or risk a foreclosure.

Now we change the premise that you do not wish to keep the condo.

Depending on the CC&R’s both your and your property are “liable” for the debts so long as you own the condo. If you file a bankruptcy, the assessments, fines and interest that accrued before the filing of the bankruptcy will be discharged (the HOA cannot pursue you personally, but can foreclose on the condo). The problem is you still own the condo until the lender completes the foreclosure. So if you file for bankruptcy before the foreclosure is completed then under the bankruptcy law (11 U.S.C. 523(a)(16)) you are responsible for the new dues/assessments that arise after the date your bankruptcy was filed.

Therefore, it is best to file your bankruptcy after the foreclosure is complete and the condo is no longer in your name.

Back to the fact pattern above: if you intend on surrendering the condo, the first part of the special assessment will be discharged in your bankruptcy. But all the new dues/assessments, including the the next two installments of the special assessment, are still your responsibility. If you did not pay this before the foreclosure completes and legal title transfers, the HOA can sue you, and collect on any judgment obtained. It is best to talk to a good bankruptcy attorney with expertise in real estate matters (these are few and far between).