QUESTION
What proof does one need to show that they do not have an ownership interest in a property they surrendered?
Asked on Mar 25th, 2013 on Bankruptcy - Florida
More details to this question:
I write on behalf of my friend Sam (fictitiously named). Sam received a letter of Satisfaction or Release of Mortgage dated 12/10/12 for the smaller of two mortgage loans he obtained from Chase in 2007 for a vacation condo in Florida. Sam rents in NYC as his primary residence. He notified Chase in writing in October 2009 that he could no longer afford to pay the mortgage, then vacated and surrendered the property, and has not been back there since. Sam filed for chapter 7 bankruptcy in 12/2010 and obtained it in 3/2011. Both mortgage loans were included in the bankruptcy. Sam does not know why he has not received a Satisfaction or Release of Mortgage for the larger loan. Sam has called Chase about this numerous times. Most often, they transfer him from one agent to the next before sending Sam to the Deed in Lieu (DIL) Dept. where they encourage him to file a DIL, which he has not. Meanwhile, the condo's homeowner's association has hired the law firm XYZ (fictitiously named) to collect post-petition hoa fees, assessments, interest, and attorney fees that total over 7 thousand dollars. XYZ states in their letter to Sam that if he does not dispute this debt within 30 days of receiving their letter, they will assume the debt is valid. XYZ further states that, "According to the Official Records of Seminole County, you continue to have an ownership interest in the subject property." Is the Satisfaction or Release of Mortgage for the smaller loan sufficient proof that Sam does not have an ownership interest in the condo? If not, what does he need to prove that he has no ownership interest in the property?
4 ANSWERS
Bankruptcy does not remove your name from property you own. While the liability to pay the mortgage has been discharged, the real estate remains in your name and remains your responsibility. A deed in lieu would remove your name from the deed.
Answered on Apr 03rd, 2013 at 8:43 PM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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Sam is the owner of the property until it is foreclosed. He owes post-petition homeowner's fees until the date of foreclosure. He shouldn't pay the latter since the purchaser of the property at trustee's sale will be required to catch up on those fees.
Answered on Mar 26th, 2013 at 3:08 AM
Deborah F. Bowinski
Unfortunately It sounds as gouge Sam does indeed still have an ownership interest in the property and is still liable for payment of all post-petition HOA fees to the condo association. The fact that he intended to surrender the property is not enough to effect the transfer of title. Until such time as the lender forecloses or accepts a deed in lieu of foreclosure Sam remains on the hook for HOA fees.
Answered on Mar 26th, 2013 at 2:21 AM
The Satisfaction or Release of Mortgage regarding the smaller loan and the bankruptcy discharge regarding the bigger loan only address the debt not the ownership of the property. This means that your friend is not liable to the bank for the amounts owed but the home remains in his name until the bank completes the applicable transfer of title procedures (e.g., completion of foreclosure, deed in lieu). As the titled owner of the property, your friend continues to be responsible for post petition HOA fees and is liable for anything that might arise in the property. Since he no longer lives in the property and is not receiving any interest he might be able to use this argument and the bankruptcy against the HOA. I did this with a client and the HOA stopped collection against them personally, however they can continue to collect. If the bank has suggested a deed in lieu, this might be a good option for your friend in order to finally transfer the title of the property. Please keep in mind that each case is different and that the above information is general and based on the facts you provided, any change in facts could affect the above information. Therefore, I recommend that your friend contact an attorney that can properly evaluate the case.
Answered on Mar 26th, 2013 at 2:06 AM