Bankruptcy: Homeowners' Association Assessments and the Chapter 13 Automatic Stay

  The United States Bankruptcy Court in Alexandria, Virginia, in the case of Montclair Property Owner’s Association, Inc. v. Reynard, ruled that a homeowner’s association may collect post-petition assessments from a Chapter 13 debtor’s property that is not property of the bankruptcy estate.

     In making its decision, the bankruptcy court noted that courts have taken different approaches with respect to the extent of the bankruptcy estate after confirmation of a Chapter 13 plan and, indeed, whether there is an estate after confirmation.  The bankruptcy court ruled, however, that Bankruptcy Code §1306(a) includes in the Chapter 13 estate all property acquired by the debtor after confirmation, including future earnings.  If the Chapter 13 estate did not have these assets, it could not pay pursuant to the plan.

     In this case, no relief from the automatic stay was necessary, as there was no judgment yet obtained to execute upon.  However, the court did rule that no relief from the automatic stay is necessary to collect post-petition homeowner’s assessments from property that is not property of the estate.  Collection activities may only be directed to property of the debtors, not property of the estate.  All post-confirmation earnings are property of the estate.