The owner of a unit in our association has been breaking rules left and right, but he has also been in bankruptcy proceeding for 3 years now. Can the association still apply violation fines to the unit?

ANSWERS

The short answer is no. The association can apply to the bankruptcy court for relief from the stay and then take all appropriate action against the owner for post petition fines and assessments. Also, he is responsible for post petition association fees.

Kenneth D. Roth, Esq.
Marchetti Law, P.C.
900 N.Kings Highway, Suite 306
Cherry Hill, NJ 08034
kroth@marchettilawfirm.com
Tel: 856-824-1001
Fax: 267-219-4838

The automatic stay in bankruptcy protects a debtor from adverse action by an Association based upon the filing of his bankruptcy,  while the unit owner is in bankruptcy proceedings.  So:

1.If the violation existed for a long period before the  bankruptcy filing, and the Association had never done anything about it before, then the Association will be hard-pressed to demonstrate that any recent action wasn’t taken as a result of the filing of the bankruptcy.

2.If a new violation occurs, then as long as the Association acts diligently, it can take action, provided the Association can demonstrate that it takes similar action against those who are not bankrupt. 

The practical problem is that a person who has nothing or very little, so as to have declared bankruptcy, often cannot pay fines regardless of how much they are.

Griffin Alexander, P.C.
Robert C. Griffin, Esq.
415 Route 10 
2nd Floor
Randolph NJ 07869-2100
(973) 366-1188
rgriffin@lawgapc.com

The automatic stay in bankruptcy applies to prevent collection actions against an owner in bankruptcy.  However, this generally pertains to amounts owing at the time a debtor files for bankruptcy protection.

Conduct violations after a bankruptcy filing may warrant fines and penalties, which are post petition debts (i.e. new debts arising after the bankruptcy case).  Thus, in my opinion that imposition of post petition fines would not violate applicable bankruptcy law.

David G. Hellmuth
P: (952) 746-2107
dhellmuth@hjlawfirm.com
8050 West 78th Street 
Edina, MN 55439

If the rule violation occurs after the bankruptcy filing, then yes the owner can be fined. Likewise, assessments made after the bankruptcy filing must be paid timely.

Sara A. Austin
Austin Law Firm LLC
226 E. Market St.
York, PA 17403
717.846.2246 phone
717.846.2248 fax
saustin@austinlawllc.com

Yes, you can impose fines and start enforcement proceedings for post-petition violations. However, you may have a difficult time collecting them unless and until the Unit is sold. Even then, there may be no equity in the Unit after the secured creditor (if any) takes title. On the other hand, the owner may have a new bank account or another source of payment. If you’re willing to spend the money, a proceeding for injunctive relief barring further violations may also be effective.

Kenneth Jacobs
Smith, Buss & Jacobs LLP
733 Yonkers Avenue
Yonkers, NY 10704
914-476-0600 X4102