[CLBS] interesting decision on Condo dues in the chapter 13 context. Dischargeable after all?

[Patrick Geile]

This summary was prepared by the fed bar association.  A great reason to join idaho's chapter to get this and other great materials.


Ninth Circuit


Goudelock v. Sixty-01 Ass'n of Apartment Owners

895 F.3d 633 (9th Cir. 2018)



In Goudelock, the Ninth Circuit reversed the district court's affirmance of the bankruptcy court's summary judgment and held that post-petition condominium association assessments are dischargeable in a chapter 13 under §1328(a).



Debtor purchased a condominium in 2001 which was subject to CC&Rs that required payment of monthly assessments as a personal obligation and provided for a lien on the property for unpaid assessments. In March of 2011, Debtor moved out of her condo, filed a chapter 13, and proposed to surrender the property through her plan. After confirmation, the unit sat unoccupied until the secured lender foreclosed on February 26, 2015. Debtor completed her plan payments and received a discharge under §1328(a) on July 24, 2015. The condominium association ("CA") filed an adversary complaint seeking a determination that Debtor's personal obligation to pay post-petition assessments until the lender foreclosed was not dischargeable.



The bankruptcy court granted summary judgment in favor of the CA on the basis that the assessments "arose at the time of their assessment and were an incidence of legal ownership of the burdened property." The district court affirmed.



The Ninth Circuit reversed and held that under the "fair contemplation" test discussed in In re SNTL Corp., 571 F.3d 826 (9th Cir. 2009), Debtor's obligation to pay assessments arose as a contingent, unmatured debt when she purchased the condo. The Ninth Circuit reasoned that although §523(a)(16) provides that assessments which become due and payable post-petition are non-dischargeable, Congress specifically excluded this section from the exceptions to discharge under §1328(a). As a result, Debtor's in personam obligation to pay both pre- and post-petition assessments was discharged. Consistent with the Fifth Amendment, the in rem lien was not discharged.




Patrick J. Geile
Foley Freeman PLLC
(208) 947-1563
) 481-9113
www.fedbar.org<http://www.fedbar.org/>

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