Todd Murphy Law practices all aspects of Real Estate Law in New Jersey.
- Closings
- Purchase
- Sale
- Refinance
- Loan Modification
- Easements and Variances
- Condominium and CoOp Charters
- Foreclosure Defense
Real Estate
Are Condo Association Dues Dischargeable in Bankruptcy?
In a word Yes. But read on.
Yes, is not the end of the question. Past-Due Condo Association Dues Are Dischargeable in Bankruptcy. BUT, you will continue to owe dues and fees that are incurred after the bankruptcy for as long as you remain in title to the house.
Many people are confused by the question: Are Condo Association Dues Dischargeable In Bankruptcy? Condominium association fees pose a special difficulty in Chapter 7 or Chapter 13 bankruptcy, given the deflated values of many condos in this real estate market, the intent of many condo owners to surrender and safely walk away from terribly underwater condominium properties through the tax-free and collection-free bankruptcy process, and the slowness new of mortgage-holding banks in foreclosing on surrender condominium properties in New Jersey.
The “special difficulty” is with regard to the condominium association fees and dues that come along with the ownership of such properties. First: a bankruptcy surrender of real estate does not “quitclaim” the property back to the mortgage-holding banks immediately. A New Jersey law-based foreclosure is required for the title to transfer from the individual filing the bankruptcy back to the bank after the bankruptcy. Second: while the bankruptcy discharges the filler’s obligation to pay all past-due fees and dues, it does not have any effect on all post-filing dues and fees that become due and owing and continue to become due and owing each and every month until the filer no longer holds title to the property.
Past-due association dues and fees are discharged by a bankruptcy just like any other unsecured debt. However, condominium associations (and homeowners’ associations in planned subdivision situations) have litigated the issue of continuing association fees aggressively in the bankruptcy courts, and they have largely come out ahead on this question.
What does all of this mean?
Even If Surrendering the Condo, Dues Must Be Paid from Date-of-Filing of the Bankruptcy Petition until the property is transferred to another owner or back to the bank.
A homeowner must continue to pay the association fees so long as they remain the titled owner of the property—even after a surrender of the property in bankruptcy.
It is worth repeating for clarity: Bankruptcy will discharge all association fees incurred prior to the date of the filing of the bankruptcy petition BUT the homeowner will be liable for association fees from the date of filing forward, on through the completion of a full foreclosure process by the note-holding bank. In New Jersey, this can mean several months to a year or more of continuing responsibility for these fees, even after a bankruptcy. This is because, until a full foreclosure process as required under New Jersey state law is completed, the surrendering homeowner remains the titled owner of the property.
A full foreclosure process includes a “redemption period” following the foreclosure Sheriff’s sale of the property, generally. If you are not in foreclosure at the time you file your Chapter 7 or Chapter 13 bankruptcy in New Jersey, you can expect to remain the titled owner of the property and to be required to pay ongoing association dues for at least 12 months from the date of filing of your bankruptcy petition. During that period of time after a bankruptcy, you are not required to make any mortgage payment or pay any property taxes, BUT you MUST make your ongoing association dues payments (and keep the property insured, if that insurance payment is not drawn from the association dues, for your own liability protection).
If you are a New Jersey resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced New Jersey bankruptcy attorney, please contact us at or click the button to schedule a free, initial consultation.
What Is The Sheriff Sale Process In New Jersey?
The Sheriff Sale Process in New Jersey takes place according to the local rules of each County Sheriff Department. Sales take place at each County Sheriff’s office according to each Sheriff’s Office Schedule. Most of the Counties maintain a list of real estate properties to be sold at auction on a searchable website. Traditional paper lists are available for review at all Sheriff’s Department offices during normal business hours.
All Sheriff’s sales are sold subject to a first mortgage if any, and any municipal, state, or federal liens, if any. A title search should be run on the property prior to bidding. The search will reveal all outstanding liens, which you would assume if you are the highest bidder.
Sheriff’s Sales are voice bid auction sales (no sealed bids). The attorney for the plaintiff will start the bidding at $100. The bidding will continue until the highest price is reached. The highest bidder will be the purchaser. The plaintiff’s attorney normally does not allow the bid to go for less than the judgment amount due his client. The plaintiff’s attorney will bid until he or she has reached the upset price (typically the amount owed on the first mortgage). The upset price of the total of the judgment due, interest, attorney’s fees, sheriff’s fees, advertising costs and commissions. The attorney will stop bidding once the price exceeds the upset price. The highest bidder will be the successful bidder.
The Plaintiff’s attorney may adjourn the sale as many times as is necessary for any reason or time period. Under NJSA 2A:17-36, the Sheriff has the discretionary right to make only two (2) adjournments of the sale, not exceeding two weeks maximum for each. The defendant or his attorney requesting the adjournment for a just cause requires a written letter and a fee before granting such adjournment.
If the property is placed in bankruptcy, the Sheriff cannot proceed with the sale until further orders from the Plaintiff’s attorney are received. The file is held in abeyance by the Court until the bankruptcy is dismissed or if there is a default of the defendant’s part.
The owners of the property may, at any time prior to the sale, try to save their home and/or property in several ways. They may try to reinstate the delinquent amount owed, pay the judgment in full or obtain another loan, etc. They may ask try to sell the property in order to pay the judgment and at the same time profit from any proceeds. The defendants have a ten-day redemption period after the sale during which time they may redeem the property or object to the sale through the Court. The bidder in this case would receive his 20% deposit back.
A Sheriff’s Sale Deed will be prepared and ready in approximately 30 days after the sale. The balance due on the sale must be paid no later than 30 days after the sale date in accordance with the conditions of sale. Lawful interest will be charged on the balance due from the 11th day after the sale until the remaining balance is paid.
It is the sole responsibility of the purchaser to record the deed and pay the fees in the County Clerk’s Office. It is also the sole responsibility of the purchaser to notify the owner that they have purchased the property and now hold the deed to the property.
If the defendant does not voluntarily leave the property, the purchaser must apply to the Court for a Writ of Possession. The Sheriff’s Office will serve the Writ upon the defendants which will advise the to vacate the premises within a particular period of time. If the defendant has not vacated by the stated date, the attorney for the purchaser must set a date to have a moving van sent to the property and have the defendants personal belongings removed and stored in a place of safe keeping. the costs of the moving and storage are the responsibility of the purchaser.
If you are considering purchasing a property at a Sheriff’s Sale, it is strongly recommended to retain an experienced NJ Foreclosure attorney for assistance.
