We have received many questions regarding when a homeowner’s obligation to pay assessments terminates as a result of being in or having completed a divorce, bankruptcy or foreclosure proceeding. The quick answer is that an owner is responsible for all assessments for as long as he or she is an owner as evidenced by a recorded document, a deed. For purposes of discussion it does not matter what type of deed is recorded to prove ownership or how the party came into ownership. Also, this article will only deal with collection cases, not lawsuits for foreclosure or receiverships. 

This will be a three part series. The first column in the series will discuss ownership responsibilities in a divorce proceeding. Again, for purposes of discussion, this column will assume that the parties are legally married and hold title jointly to the covenant controlled property e.g. condominium, townhome or single family home.

Until the parties are divorced and the deed to the property is transferred by sale to a third party or transferred to one of the divorcing parties as part of the property division –either voluntarily or by court order – both husband and wife are responsible for payment of the assessments.

If during the divorce proceedings, the court  grants the wife temporary use of the family home until the final divorce hearing and requires the wife shall make all payments associated with the property, the husband and wife are still jointly responsible for the assessment payments. The wife is obligated by the court to make the payments associated with the property, but the husband as a titled co-owner of the property is still jointly liable with the wife for the assessments.

The Association under its governing documents has the right to pursue both parties, notwithstanding the divorce court’s temporary orders requiring the wife to pay the assessments. The Court only has jurisdiction over the parties, the husband and wife. It does not have jurisdiction or the authority to tell the Association it can not seek its legal rights against both the husband for non-payment of the assessments. 

The husband’s recourse, for the failure of the wife to make the assessment payments, is in the divorce court. The divorce court can hold the wife in contempt if she willfully violates its orders by not making the assessment payments. But, the court can not relieve the husband’s obligation to the Association to make the payments if the wife does not.    

The parties get divorced. The court awards the property to the wife as part of the property settlement. The husband is ordered to quitclaim all his right, title and interest in the house to the wife. The wife is ordered hold the husband free and harmless against any claims made arising out of her failure to make the payments relative to the property.  

The husband signs a quitclaim deed granting all his interest in the property to the wife as ordered by the Court and records the quitclaim deed with the clerk and recorder of the county where the property is located.  From the moment of recording, the property is transferred from the husband to the wife. The husband is now no longer obligated to the Association for assessments.  From this point forward the wife is solely responsible to the Association for the assessment payments. 

If there is an obligation for payments outstanding prior to the transfer, both husband and wife are jointly responsible even though the wife was previously ordered to pay the assessments and the property has been transferred. The recording of the deed does not absolve the husband from the responsibility for the prior debt. The Association can seek unpaid assessments from both husband and wife for unpaid assessments prior to the recording of the deed, and from the wife for post-recording obligations.

In the scenario where the husband fails to sign and record the quitclaim deed, he is still jointly responsible for all assessments that go unpaid by the wife. Yes the divorce court awarded the property to the wife, and said she had to make all the payments, but remember, pursuant to the governing documents, the husband is still an owner until the property is transferred to the wife. It is the husband’s responsibility to make sure the proper documents are recorded. And if he does not the Association can still seek recovery now from both the ex-husband and ex-wife. “I didn’t know” or “no one told me” is not a proper defense to an action by the Association against the ex-husband  to collect unpaid assessments where the ex-husband fails to record a deed transferring ownership to the ex-wife as ordered by the court.

Once the ex-husband records the deed to the ex-wife per the court order, from that point he is freed from the obligation. But if he waits a month, a year, two years, or more, he will be jointly obligated to the Association along with the ex-wife; and if he is more accessible for collection, more assets, the Association may ignore the ex-wife and go after the ex-husband to satisfy the amounts due, including late fees, interest and attorney fees.

To simply summarize, both parties jointly owning property in a divorce situation are jointly responsible for the assessments until the property changes hands by the proper recording of a deed transferring ownership from one to the other per the final property division, or selling the property to third parties.   The Association is not barred by the court’s orders. It can pursue both parties for the unpaid assessments, dues, fines, late fees, interest, and attorney fees even though the court ordered only one of the parties to be responsible for the payments.

The next column will discuss responsibilities and liabilities involved in a foreclosure proceeding.