House Passes Bankruptcy Bill

On April 14, 2005, I reported on passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

President Bush has issued a news release commending Congress and indicating that he will be signing the bill.

The bill contains language that would clarify that community associations, including homeowner associations and commercial condominiums are entitled to post-petition assessments as long as the debtor owns the property. Specifically, it would expand the bankruptcy exemption contained in 11 U.S.C. 523(a)(16) to read as follows:

for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor's interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or posessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case. . . .

I will be posting a short FAQ about the law and how it affects community associations once the President signs it.