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In Re Brown

2011 WL 1322311 (Bkrtcy. D. N.J. 2011) (Unpublished)

CONDOMINIUMS; BANKRUPTCY — A condominium association has the right to collect post-bankruptcy petition charges where a unit-owning debtor retains legal ownership in the condominium unit.

A residential condominium owner filed a Chapter 7 bankruptcy. Prior to filing, the owner “surrendered” the unit to the association “by turning over the keys and physically vacating the property.” The unit was vacant on the petition date and remained so. “It [was] undisputed that the Debtor did not sell the [unit] and never relinquished legal title to the property.”

After filing, the unit owner stopped making condominium payments, but did not list the condominium association as a creditor in her bankruptcy. Subsequently, the Trustee abandoned the unit and the automatic stay was vacated. The unit owner received a discharge and the case was closed. Almost a year later, the association sued, in state court, “to collect the unpaid post-petition condominium fees.” The unit owner sued “to reopen the bankruptcy case for the purpose of listing the association as a creditor and providing notice of her filing.” Apparently, her claim was that the association should have been included in her discharge.

The association obtained a state court judgment and then a levy on the unit owner’s checking account. The unit owner returned to the Bankruptcy Court “to compel the release of the levy, vacate the judgment, and for costs.”

The question presented was “whether a debtor in a no-asset bankruptcy case is responsible for post-petition condominium association fees where [the debtor] is not in possession of the property and the Chapter 7 Trustee abandoned the property, yet the Debtor nevertheless continues to hold legal title.” Prior to the Bankruptcy Abuse Prevention Consumer Protection Act of 2005, there was an exception to the dischargeability for post-petition fees where those fees pertained to the period when a debtor physically occupied the property. “The legislative history of the 2005 amendment [made] it clear that Congress intended to broaden the scope of protection for condominium associations.” Looking at a January, 2001 Bankruptcy Court out of the Northern District of California decision, this Court, though “sympathetic to [the unit owner’s] circumstances,” found “it ha[d] no alternative but to interpret and enforce the statutes written by Congress.” According to the Court, the 2005 amendment intended to preserve a condominium association’s right to collect post-petition charges where a debtor retains a legal ownership interest in a condominium unit.

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