Pennsylvania Homeowners Associations dues in bankruptcy: the Third Circuit Court of Appeal changed the rules
The operation and structure of Homeowners Associations in Pennsylvania are governed by the Pennsylvania Planned Community Act. Of foremost concern for most homeowners who live in these developments is the collection of annual dues. Pennsylvania law permitted homeowners associations and property owners association to maintain a special lien status, called a statutory lien. The Planned Community Act stats that a homeowners association could foreclose upon the property with this lien.
This lien status became problematic if a home owner filed a chapter thirteen bankruptcy, especially when the home owners were trying to save their home through the chapter thirteen bankruptcy and catch up on mortgage arrears. Homeowners associations often sought judgments against homeowners, which can be discharged through the bankruptcy, and the statutory lien status, which cannot be discharged through the bankruptcy.
The Third Circuit Court of Appeals addressed this situation in the case of In re Kelly Makowka, decided on June 9, 2014. The sea change of this case: statutory liens of homeowners and property owners associations are now dischargeable in the chapter 13 bankruptcy for dues more than three years old.
Other issues surrounding homeowners associations and the bankruptcy of property owners remain unresolved, even in the wake of the Makowka case. However, the court has provided some much needed certainty when addressing the dues obligations of the homeowner.
If you want to discuss your bankruptcy and homeowners association situation, experienced attorney Scott M. Amori of Amori & Associates would be glad to help. Please contact Attorney Scott M. Amori for a no obligation consultation at (570) 421-1406.