Stay, Not Pay? The Goudelock Decision’s Impact on Owners, HOAs, and Foreclosing Lenders
Katrina E. Solomatina
Katrina E. Solomatina is a real estate attorney with Hopkins & Carley, a premier Silicon Valley law firm. Katrina advises on various aspects of real estate, including: purchase and sale agreements, commercial leases, compliance with Davis-Stirling Common Interest Development Act, construction agreements, licenses, easements, title issues, project financing and title insurance, due diligence, and land use and permitting. Katrina is a frequent speaker and writer on real estate topics.*
Bankrupt property owners may benefit from the recent Ninth Circuit ruling in Goudelock v. Sixty-01 Ass’n of Apartment Owners ("Goudelock"),1 which shifts post-petition burdens of homeownership to creditors and lienholders in Chapter 13 filings as to post-petition homeowner association ("HOA") assessments. In 1994, Congress reformed the bankruptcy code to make it clear that owners who filed Chapter 7 bankruptcy petitions must pay HOA assessments that come due after the filing of the petition in bankruptcy. This was often referred to as "you stay, you pay." Congress failed, however, to clarify if that obligation extended to owners who file for Chapter 13 bankruptcy protection.