A bankruptcy judge in Tennessee sided with a local flood victim over Bank of America in a decision that could affect disaster victims who are unable to escape paying homeowners association fees even after leaving their homes, entering foreclosure and filing for bankruptcy, according to The Tennessean.
Judge George Paine II ruled that Bank of America, the nation's largest mortgage lender, consented to the sale of Sheryl Lynn Pigg's Bellevue condo through its inaction. Pigg lost almost everything in the the massive Nashville flood of 2010, the newspaper reports, leading her to declare bankruptcy to start fresh and to rid herself of her debts. However, after leaving her home she discovered she was still being charged for homeowners association fees.
Paine ruled that Pigg had been unjustly left in limbo by Bank of America, who began foreclosure proceedings but did not finalize it, causing the plaintiff to be unfairly burdened with the homeowners association fees. In a memorandum opinion he asked that Pigg's bankruptcy be reopened so a trustee can sell the condo and use the proceeds to settle the homeowners association bill and then Bank of America, reported the news source.
Debtors have not always been responsible for homeowners association payments after declaring bankruptcy. However, the policy changed as result of a slew of tweaks to the U.S. Bankruptcy Code in 2005, making the petitioners liable for homeowners association fees as long as they still legally own the home, even if they have abandoned it.
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