Scam Turns Couple Financially Away

A guarded, gated community located in Saskatoo...

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It is bad enough when the economy turns down, the price of your residence gets upside down in comparison to your financial obligation to a mortgage payment, your mortgage payment lender refuses to cooperate with you on a modification or refinance of your original loan, but when you start to get into trouble with a closed community which has homeowner association fees, you just don’t know what trouble really is, until a scam on that association takes place.

Scam Illustrated

If you don’t believe me, ask Wanda Murray who once thought buying a retirement condominium in “Sin City” was a great idea. The idea she and her husband, who had worked and lived in the cold east while saving for retirement years all their lives, should buy a condominium in a closed gated community and then expect to spend time living a full life under the Nevada sun without the worry of working on a yard or home, is not a novel idea. The homeowner association seemed like the perfect approach to retirement and a reasonable financial obligation for the effort.

Wanda and her husband bought their dream retirement in 2002, but it was not long before their dream retirement turned into a nightmare. The entire homeowner association they purchased into became subject to an organized scam. By 2008, the association was eventually bankrupted by the organizers of the scam, committing over 8 million dollars of borrowed money, all in the name of the association, to businesses owned and operated by the same scam artists and their cohorts. Without realizing it, Murray and husband’s financial obligation was getting deeper.

Murray served on the homeowner association board and was an eye witness to all the shenanigans pulled by the scam artists. Eventually, the FBI investigated the scam and is currently prosecuting the perpetrator. The FBI stepping in was a good thing, but it may not be enough to thwart the financial obligation left behind.

Murray and husband moved out the gated community in 2008 and are currently living in a nearby development. They had to let their dream home slip into foreclosure, both vowing to stay away from a homeowner association in the future.

Homeowner Association has Effects on Bankruptcy

Homeowner association fees can be discharged in bankruptcy, but the fees can continue on through and after the bankruptcy process. So in effect, Murray and her husband might still have a financial obligation to the homeowner association in the form of fees and their portion of any of the debts made by the homeowner association while the scam artists were in control. Technically, until they can get their names legally untangled from the ownership of the condominium, their financial obligation might be for paying the fees and their portion of debt, even if they were to file bankruptcy. One exception to this fact is that if the homeowner association goes bankrupt, the debtors then might have the debts discharged.

Starting the foreclosure process does not automatically release a homeowner from certain financial obligations. Paying homeowner association fees and other association obligations only pass with the transfer of title or a release of the obligation by the homeowner association.

A homeowner association financial obligation can be discharged by bankruptcy up until the close of the bankruptcy. All new homeowner association obligations after the close of a bankruptcy are legal obligations you are expected to pay until the transfer of title takes place.

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