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Our Clients Ask Us: Do owners have to continue to pay maintenance fees if their house is foreclosed upon after they walk away?

Question:  More often, owners in our Association are being told by financial planners or their attorneys to “walk away” from their properties because they owe more on the mortgage than the property is worth.  Does this mean that they have to continue to pay maintenance fees if their house is foreclosed upon after they walk away?

Answer:   

YES. Whoever has title to the property is responsible for paying the maintenance fees.   Even if the owners plan on walking away, they are legally obligated to pay the maintenance fees until title transfers.  Failure to do so may result in the association pursuing judgment against the owners, including, but not limited to, obtaining a judgment in the foreclosure to collect proceeds from a sheriff’s sale, or obtaining a personal judgment (either from a foreclosure action or municipal court action), which would allow the association to garnish wages and attach bank accounts.

Some types of bankruptcy may absolve the owners from personal liability for pre-petition fees; however, the association may pursue a judgment in a foreclosure in that case against the property only.

The association should notify the owners that they are still responsible for fees.   If the owners decide to rent the unit until the sheriff’s sale, then the association can move to appoint a Receiver to collect any rent from the tenant of the property.  This ensures that the owners do not benefit from non-payment.

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Ott & Associates Co., LPA

1300 E 9th St, Suite 1520
Cleveland, OH 44114

Ph: 216-771-2600
Fx: 216-830-8939

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