To make a very long story short, a resident of our condo building is in foreclosure proceedings and has also filed for bankruptcy. I have already consulted with one lawyer about how this affects the association and payment responsibility for some upcoming repair work the building will need, but the big variable we don’t know about right now is timing for both court cases. (And this lawyer practices primarily real estate law, not bankruptcy, and I will probably consult a bankruptcy attorney as well once I finish herding the rest of the cats in the condo association.)
Obviously timing varies, and courts are chock-full of bankruptcy and foreclosure proceedings these days, but what’s the range of time either case is likely to take? The rest of us are trying to figure out what to do to ensure that someone is on the hook for the broke resident’s share of repairs, which are likely to be substantial.
Although IAAL, I am not your lawyer, you are not my client, this is just general information.
In Chicago right now, figure 9 months minimum for a foreclosure to go through from filing to confirmation of the sheriff’s sale. That’s assuming the person doesn’t contest it (i.e., the bank gets a default judgment).
The bankruptcy stops the foreclosure either temporarily or permanently, depending on the chapter. It’s really hard to give you an answer on timing without knowing more details.
The unit owner is responsible for post-bankruptcy-petition condo assessments. Pre-petition arrearages may be discharged by the bankruptcy court, so you may just lose out on those. Going forward, you may have collection problems, of course. Once the bank* becomes the owner of the property, they become liable for the assessments.
In a normal transfer, any past due assessments would have to be paid out of the closing proceeds. There is some nuance I can’t remember right now for how much a bank is responsible for assessment arrearage when they take the property. That’s something to discuss with your attorney.
It’s very likely that the association is going to lose at least some assessments, so you should work with an attorney to make sure that any special assessments are issued at a time when someone will actually have to pay them.
*It might not be the bank who ends up with the property after the foreclosure, but it probably will be unless there is substantial equity in the property
Thanks bunches - this at least gives me something to talk about with the rest of the unit owners. The foreclosure was filed in May, and the bankruptcy (I just opened a PACER account and looked it up myself) was filed on 7/31.
The owner was actually not in arrears on assessments at all at the time the bankruptcy was filed. I’m not so worried about the regular monthly assessments (which are pretty cheap anyway) as about any necessary special assessment for the repairs. So yeah, figuring out how to time a special assessment so that somebody eventually pays it is the $64,000 question. (Although I sure hope the repairs are less than $64,000!) But first, we have to decide on exactly what work needs to be done and get some estimates, and all that good stuff.
The property was a short sale even before all this happened, so there ain’t no equity. And yeah, I suspected the guy was full of it when he tried to tell the treasurer that he didn’t have to pay assessments anymore. We will have to figure out how to break it to him that this is not, in fact, the case.
I don’t know; I haven’t looked at all the Pacer docs yet. Which ones are worth printing out? (I am a paralegal at a law firm, and though others at my office use Pacer, I don’t normally. I just set up an account so as not to spend my employer’s money on personal stuff, but I can probably get my co-workers to help me out.)
You can see whether it’s a 7 or 13 on the main Pacer info screen for the case. The only thing you might be interested to see is what he intends to do with the property. Presumably, if it is a 13 he intends to keep the property. If it’s a 7, you can check the schedules (I can’t recall which one, sorry, it’s been a while since I’ve practiced in this area) to see what he intends to do with the property. It should be in the part listing secured creditors, and will probably say that he intends to surrender it.
If he’s not planning to keep the property, you should watch for his mortgage company to file a motion for relief from the automatic stay. That is a prerequisite for the mortgage foreclosure to continue, so it should give you some indication of timing.
Aha - it’s a Chapter 7, which is what I suspected. He actually told all of us (even though I already knew) that he’d filed for bankruptcy, and that he’d let us know when he would be moving out. But I am reluctant to ask for details, because the guy is a real PITA on just about every front in which I’ve had the displeasure of dealing with him so far.
But in any case, the rest of us need to protect our own interests, and it’s a very small building (4 units). So it’s a real whammy to the rest of us if he skips out on his share of repair costs. Now I just have to convince everyone else that it’s worth spending a few bucks on a lawyer to make sure our interests are properly protected…
OK, so now that I can pay some attention to this - Pacer downloads aren’t free, so which of the following things are likely to tell us something we want to know? I’d want to share this info with any lawyer we consulted with anyway, no?
Voluntary Petition (Chapter 7)
Chapter 7 Statement of Current Monthly Income and Means Test Calculation - Form 22A
Certificate of Credit Counseling
Declaration Re: Electronic Filing
Statement of Social Security Number(s)
Request for Chapter 7 341 Meeting of Creditors
BNC Certificate of Service - Meeting of Creditors (filed 8/2/2010)
Notice of Required Document(s) for Discharge
BNC Certificate of Service - Notice of Required Documents for Discharge
Meeting of Creditors Chapter 7 No Asset
BNC Certificate of Service - Meeting of Creditors (filed 8/13/2010)
The last time I asked our treasurer, we hadn’t received any notice (and the condo association is listed as a creditor), but we should have received something by now, no? I’ll ask her again.
P.S. Tom Scud, on reviewing my printouts, commented that it’s scary how much is public record in a case like this. I told him all he has to do is never declare bankruptcy, and he has nothing to worry about.
Voluntary Petition (Chapter 7) has a bunch of useful stuff, but it’s also the longest document and thus the most expensive to look at. The date of the 341 Meeting should be found on the main screen for the case, but if it isn’t, you’ll want the Request for Chapter 7 341 Meeting. The date of that meeting is important, even if it’s already passed. The rest of the documents are less important, if at all, but if a bankruptcy attorney ends up helping you, he/she will be able to pull up whatever they want.
Given that this is a no asset chapter 7, from your perspective there’s not going to be a lot of information in the petition that you really care about (curious to look at might be a different story). All you really care about now is how fast the mortgage company can lift the automatic stay and get back to state court and continue the foreclosure proceeding.
If the foreclosure is in Cook County, you can pull some information on the case from the clerk’s website (Home | Clerk of the Circuit Court of Cook County). It’s not nearly as useful as Pacer, but it can give you some idea of where the foreclosure stands.
Thanks for reminding me to look on the Cook County site as well - I’ve used it a few times for work, though mostly to check on criminal matters.
Interestingly, I couldn’t find anything by searching on the bankruptcy case number I had, but I did find a few things on a name search, including what looks like an additional payday loan default from 2002 (so much for his contention that he’s always done everything by the book but just couldn’t deal with a prolonged stretch of unemployment! Presuming, of course, that it’s him and not someone else with the same name.)
One of the cases (filed by a bank) also names the condo association as a defendant. I’m not aware of any suit against the condo association. Any idea what that mgiht be about? Should I hike over on my lunch hour and pull the record?
That’s got to be the foreclosure. Condo associations are almost always named as defendants in mortgage foreclosures.
If you didn’t already, make sure to set the division to Chancery. A payday loan default would probably be in the civil division, but foreclosures are in Chancery.
I searched both out of curiosity (and because I wasn’t sure where the foreclosure would show up) - that’s how I found the payday loan. The courthouse is only a couple of blocks from my office, and I might just be curious enough to head over there and pull the file.
P.S. If the condo association is a defendant, wouldn’t someone on the board have gotten a notice? And why would the condo associaiton be a defendant anyway? It’s certainly not the norm for the condo association to have any responsibililty for a unit owner’s mortgage!
The association should have been/will be served at some point. The fact that you haven’t may indicate that the foreclosure is at the beginning stages.
The reason the association is named a defendant is that they may have an interest in the property by virtue of unpaid assessments. The bank needs to get everyone who has an interest in the property into the case so that the liens can be prioritized and the parties paid out of the sale proceedings. The priorities are set by statute.
So, for example, a property may have the following liens:
Property Tax Lien: $10,000
First Mortgage: $200,000
Second Mortgage: $$50,000
Past Due Assessments: $10,000
Mechanic’s Lien: $5,000
The bank that filed the foreclosure needs to get everyone who has a stake in this property to get their cards on the table, determine the validity and amount of each lien and the priority of those liens so that when the property sells, the sale proceeds can be divvied up properly.
The bank will not be trying to hold the association responsible for the mortgage.
Consult with your attorney (!!!) before blowing any deadlines in the summons, but if the guy doesn’t owe the association any money, associations often just allow themselves to be defaulted. No sense in paying an attorney to prepare an answer that simply admits you’re not owed anything.
We finally got a notice in the mail yesterday. I’m still not sure why he even listed the association as a creditor, given that as of the date of filing, he didn’t owe one red cent to the association.
Apparently the meeting of credtiors is scheduled for 10/22, but the court thinks he doesn’t have any assets to divide up, so there is no need to come to the meeting unelss they find out otherwise, in which case the court will send another ntoice.
Never boring. Although I do tend to concur with my attorney co-worker that the association should hire a bankruptcy attorney to ensure our interests are protected, not to mention quote the guy chapter and verse that the fact that he has filed Chapter 7 does NOT mean that he is absolved of responsibility for assessments from now on.
Back to cat-herding at our closed board meeting next week…
(Oh, and I googled his attorney. Let’s just say I’m not impressed. He’s only been admitted to the bar for 3 years, has one of the crappier websites I’ve ever seen, and has been in solo practice for less than a year.)