Chapter 13 Bankruptcy Can Strip HOA Lien

Chapter 13 bankruptcy can strip a second mortgage from a primary residence if the house is worth less than the first mortgage so that the second mortgage is not secured by any equity. Many homeowners who fall behind in their mortgage payments also have past due HOA fees and assessments. Florida law permits HOAs to place impose a lien upon a property to secure payment. Are HOA liens subject to mortgage stripping in Chapter 13, or are HOA liens given the same priority and protection as first mortgages?

HOA liens can be stripped from a primary residence in Chapter 13 bankruptcy where there property is worth less than the first mortgage. There was a case in 2010 in south Florida which treated HOA liens like second mortgages. The court said that a Chapter 13 plan can treat an HOA lien as a general unsecured debt (such as credit cards) where the home’s value fell below the current balance of the first mortgage. In re: Gonzales Case No. 07-14968