Condo Ass’n was Bound by Terms of Confirmed Chapter 13 which Not Only Surrendered the Condo, but also Vested Title to Condo in Lender

Condo Ass’n was Bound by Terms of Confirmed Chapter 13 which Not Only Surrendered the Condo, but also Vested Title to Condo in Lender

This is the second of two cases in which this court was asked to determine the extent to which a condominium should be granted relief from the automatic stay to pursue collection of post-petition assessments from a debtor who surrendered an over-encumbered condominium unit under a previously confirmed Chapter 13 plan. Neither the lender nor the condominium objected to confirmation of that plan. Unlike the plan considered in a recent case,  however, the plan in this case provided not just for the unit to be surrendered, but also for title to be vested in the lender upon confirmation pursuant to 11 U.S.C. § 1322(b)(9). Because a confirmed plan is binding on the parties, the court concludes that in this case the condominium also should be granted relief from the stay, but only to pursue collection from the debtor of the post-petition assessments that accrued prior to confirmation of the Chapter 13 plan.

The court has before it the Motion for Relief from Automatic Stay (the “Motion”) filed by  Condominium Association, Board of Directors and Council of Unit Owners (the “Condominium”), and the Opposition filed by the debtor ( “Debtor”). The Condominium requests termination of the automatic stay to (i) foreclose its in rem lien rights against the Debtor’s condominium unit, and (ii) pursue an in personam collection action against the Debtor for unpaid assessments that accrued after commencement of this case. The Debtor does not oppose enforcement of in rem rights against her unit, but takes the position that she has no ongoing in personam liability for the post-petition assessments because under the terms of her confirmed Chapter 13 plan (i) the unit was surrendered to lienholders, (ii) the surrender was in full satisfaction of the underlying claims secured by the unit, and (ii) title to the unit was vested in the first priority mortgage lender, which was identified in the plan as RCS.

Although the Condominium did not file a proof of claim, it is also a secured creditor of the Debtor. According to the terms of the Declaration, however, the priority of the Condominium’s lien is subordinate to at least the first mortgage. At the time the Motion was filed, the Condominium asserted that it was owed under the Declaration at least $12,420.08 for assessments, late fees and other charges with respect to the Property that were due for time periods after the Petition Date. According to the Ledger attached to the Motion, however, the amount due at the time the Court confirmed the Debtor’s plan was only $4,096.05.

In addition, the court takes judicial notice of the following facts which are also not in dispute and which can be determined from the record in this case. On November 29, 2016, this court entered an Order Confirming Plan (the “Confirmation Order”) that confirmed the Debtor’s amended Chapter 13 plan filed on September 26, 2016 (the “Chapter 13 Plan”). The Debtor served the Chapter 13 Plan on RCS, Ditech, SLS, and the Condominium. The only objection to confirmation of the Chapter 13 Plan was filed by the Chapter 13 Trustee, whose objection was resolved prior to the confirmation hearing scheduled for November 22, 2016.

With respect to the Property and the secured claims of RCS, SLS, and the Condominium, the Chapter 13 Plan provides in pertinent part as follows:

The following secured claims will be satisfied through surrender of the collateral securing the claims (describe the collateral); any allowed claims for deficiencies will be paid pro rata with general unsecured creditors; upon confirmation of the plan, the automatic stay is lifted, if not modified earlier, as to the collateral of the listed creditors:

[Thereafter, the Debtor lists RCS, SLS, and the Condominium as claimants, states an amount for each of their claims, and describes the collateral of each of them as the Property.]

Amended Chapter 13 Plan, ¶ 2(e)(iv) [Docket No. 41, Page 2 of 3]. In addition, the Chapter 13 Plan contained the following relevant nonstandard provision:

All collateral listed in ¶ 2(e)(iv) claims is surrendered in full satisfaction of the underlying claims secured by the collateral. Pursuant to §§ 1322(b)(8) and (9), title to the [Property] shall vest in Residential Credit Solutions upon confirmation, and the Confirmation Order shall constitute a deed of conveyance of the Property when recorded at the applicable Land Records office.

Amended Chapter 13 Plan, ¶ 8. None of RCS, Ditech, SLS, or the Condominium filed a notice of appeal from the Confirmation Order, which order is now, and long has been, a final order. The Confirmation Order provides (consistent with the terms of the Chapter 13 Plan) that “the property of the estate shall not vest in the Debtor until the Debtor is granted a discharge or the case is dismissed or otherwise terminated.” Order Confirming Plan.

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