by The debtor was not personally liable for post-petition HOA dues despite the fact that title to the property remained in his name, where he had no “significant incidents of ownership” in the property. Hovious v. Bridgewater Homeowners Assn., No. 10-2917, Adv. Proc. 16-50195 (Bankr. S.D. Ind. Feb. 15, 2017).
In his 2010 chapter 13 bankruptcy petition, debtor, Daniel Lee Hovious, listed Bridgewater Homeowners Association as an unsecured creditor to which he owed 2009 HOA dues on his residence. He also stated his intention to surrender that property to the holder of the first mortgage. He ceased making HOA payments upon filing for bankruptcy. The court confirmed the plan and ultimately granted Mr. Hovious’s discharge.
Approximately four years post-discharge, Bridgewater sent Mr. Hovious a letter seeking payment of post-petition HOA fees. In response, Mr. Hovious filed an adversary complaint alleging violation of the discharge injunction.
Although Mr. Hovious surrendered the property, the mortgagee never foreclosed on it and title remained at all times in Mr. Hovious’s name. Bridgewater argued that the covenant for payment of HOA assessments runs with the land and, so long as title remained in Mr. Hovious’s name, he had personal liability for post-petition dues.
Noting that the issue was one of first impression, the court found that while Bridgewater’s actions may have violated the discharge injunction, such violation was based on a reasonable interpretation of current law and was not, therefore, willful. The court acknowledged that, under relevant law, HOA covenants to pay dues runs with the land, but it found that merely retaining title to the property was not enough to support personal liability for those dues. Rather, personal liability turned on the homeowner’s “incidents of occupancy.” In this case, the court found that, although Mr. Hovious used the address of the property for such things as voting and vehicle registration, he did not occupy the property or otherwise use it. The court was persuaded that Congress intended to permit discharge of dues under those circumstances, stating that in section 523(a)(16), “Congress indicated its intention that the § 1328(a) ‘super discharge’ cuts off obligations for post-petition homeowners association dues.”
The court entered judgment in favor of Mr. Hovious as to violation of the discharge injunction but declined to award damages.