When Rising Maintenance Fees Push Nassau County Co-op and Condo Owners Toward Bankruptcy: Understanding Your Options

Nassau County homeowners facing mounting co-op maintenance fees and condo assessments often find themselves at a financial crossroads. With median home prices in Nassau County reaching approximately $800,000 and monthly charges for condos reaching $3.20 per square foot while co-op maintenance fees reached $2.44 per square foot, the financial burden can become overwhelming, especially when combined with unexpected assessments or rising costs.

For many Nassau County residents, the decision to file for bankruptcy isn’t just about credit card debt or medical bills—it’s increasingly about the crushing weight of housing-related expenses that show no signs of decreasing. Management companies are expecting increases of 3 to 6 percent given growing insurance, labor, maintenance, and energy costs, with experts noting unprecedented upward pressure on maintenance fees.

How Co-op and Condo Fees Complicate Bankruptcy Decisions

Understanding how maintenance fees and assessments are treated in bankruptcy is crucial for Nassau County homeowners considering their options. The relationship between these ongoing obligations and bankruptcy discharge is complex and varies significantly between Chapter 7 and Chapter 13 cases.

Homeowner association (HOA) dues and fees, commonly known as maintenance, can be discharged in a bankruptcy proceeding—but only those dues and fees owed up through the date the bankruptcy petition is filed. Any homeowner association dues and fees that accrue after the petition is filed cannot be discharged.

This distinction creates a significant consideration for Nassau County co-op and condo owners. Debts for certain condominium or cooperative housing fees are among the types of debt that may not be dischargeable, particularly those that accrue post-petition.

Chapter 7 vs. Chapter 13: Different Outcomes for Maintenance Fees

The type of bankruptcy you file dramatically affects how your ongoing maintenance obligations are handled:

Chapter 7 Bankruptcy: A Chapter 7 discharge does not discharge a co-owner’s obligation to pay post-petition assessments for so long as the co-owner has title to the unit, regardless of whether the co-owner intends to “surrender” the unit to the first mortgagee. As such, an association has every right to collect these post-petition assessments from the co-owner personally or through foreclosure.

Chapter 13 Bankruptcy: The situation is more favorable under Chapter 13. Condo fees that come due after a Chapter 13 bankruptcy is filed are discharged at the conclusion of the case, with the 9th Circuit Court of Appeals ruling that the more expansive Chapter 13 discharge trumped a bankruptcy statute sticking condo owners with the fees.

The Nassau County Real Estate Reality

Nassau County’s high property values create unique challenges for residents considering bankruptcy. Property values can easily be close to $1 million and the New York Homestead Exemption in Nassau County only protects a fraction of that amount, making Chapter 13 the preferable route for many people.

The financial pressure is intensified by the structure of co-op and condo fees themselves. Co-op maintenance fees include property taxes, with the building paying property taxes as a whole and distributing those costs among shareholders, while condo owners receive their own separate tax bill which they’re responsible for paying.

Strategic Considerations for Nassau County Homeowners

When maintenance fees and assessments are driving financial distress, timing becomes critical. If you fail to pay an assessment, whether you live in a coop or condo, the building can put a lien on your unit, which explains why high assessments often result in multiple units being sold either before or during the assessment period.

For homeowners considering bankruptcy, the decision often comes down to whether they want to keep their unit or walk away. It’s best to completely divest yourself of the property prior to filing a consumer bankruptcy to avoid the strong possibility of owing fees and dues to a condo association or HOA even after you obtain your discharge.

Professional Guidance is Essential

Given the complexity of how maintenance fees interact with bankruptcy law, Nassau County residents facing financial difficulties should consult with experienced legal counsel. A qualified Bankruptcy Lawyer Nassau County can evaluate your specific situation and help you understand how your co-op or condo obligations will be treated in different types of bankruptcy cases.

Each client’s case should be evaluated individually based on their specific situation and needs, with the goal of offering highly effective legal help that is both compassionate and affordable. The best approach often uses multiple debt solution tools—bankruptcy, litigation, and negotiation—together as part of a larger strategy, examining all options by considering how realistic they are, the risks versus benefits, timing, costs, and approach to create a plan that gives clients the best chance of successfully resolving their debt problems.

Looking Ahead: Planning for Financial Stability

With 2023 being called the worst year in memory for maintenance fee hikes and 2024 not looking much better, with property managers expecting increases between 3 and 6 percent, Nassau County co-op and condo owners need to plan strategically for their financial future.

Whether you’re facing immediate financial crisis or trying to plan ahead, understanding how bankruptcy law treats maintenance fees and assessments is crucial. The interplay between Nassau County’s high property values, substantial maintenance fees, and complex bankruptcy discharge rules requires careful analysis and professional guidance to navigate successfully.

For Nassau County residents struggling with mounting co-op or condo expenses, bankruptcy may offer a path to financial relief—but only with proper planning and legal representation that understands the unique challenges of high-cost housing markets and the intricate relationship between property ownership and debt discharge.