Ct Says HOA That Did Not Record Lien Cannot Be Classified as a Secured Creditor in Bankruptcy

US District Appellate Court decision (November 21, 2014).

In this case, a homeowner in a common interest development filed a Chapter 13 bankruptcy. The homeowners association filed a claim as a “secured creditor” in the bankruptcy proceedings for unpaid dues. The homeowner / debtor in the bankruptcy objected to the association’s characterization of its claim as “secured” on the basis that the association had never taken steps to obtain a lien on the homeowner’s property prior to the filing of the bankruptcy. The association contended that such action was not necessary for it to have a lien on the debtor’s property based on the language contained in the association’s declaration.