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4th DCA Rules for Homeowner, Finds Bankruptcy Protected Home From Sale

A Wellington homeowner recently received relief from her foreclosure after the 4th District Court of Appeal reversed a wrongful foreclosure pursued by her homeowner association.

Marie Alexandre of Wellington had unpaid assessments owed to her HOA, Scribner Village Homeowners Association, Inc. The HOA eventually won a final judgment of foreclosure against Alexandre, and set the property for sale.

Before the sale went through, Alexandre filed for Chapter 11 bankruptcy. Normally, only businesses file for Chapter 11 bankruptcy, although individuals may also use this type of case in certain circumstances. An individual will usually use a Chapter 11 case to reorganize real estate investments or reorganize debts that are too high to qualify for Chapter 13 bankruptcy.

After Alexandre filed her Chapter 11 case, she should have received an automatic stay which would prevent the foreclosure sale from going through until the bankruptcy case was resolved. However, the sale proceeded regardless of the bankruptcy case and the HOA purchased the home at the foreclosure sale. The clerk of court issued a certificate of title to the HOA, and Alexandre lost her home.

The HOA was able purchase Alexandre’s 5-bedroom, $460,000 house for $19,100. After the sale, the HOA filed for a writ of possession in order to take over the house. Alexandre asked a Palm Beach Circuit Court judge to deny this request and set aside the foreclosure sale on the basis of her bankruptcy case, but the judge refused.

The justices of the 4th DCA unanimously reversed the circuit court judge’s ruling, and found that the sale should never have been allowed before the automatic bankruptcy stay was lifted. The 4th DCA held that the trial court judge erred in denying Alexandre’s motion to set aside the sale and erred in every other action that came after the sale.

For its part, the HOA dropped out of the case and did not make any arguments on appeal.

State and federal law is clear: a bankruptcy stops all actions in a foreclosure case until the stay is lifted. What is most concerning about this case is that the circuit court judge ignored the law and proceeded with the sale anyway.

Homeowners facing foreclosure may have to deal with overly aggressive homeowner associations and judges who are unclear about the state of the law. With the help of an experienced attorney, these errors can be corrected or stopped before they even begin.

At Loan Lawyers, our attorneys have years of experience practicing in both foreclosure and bankruptcy law. We can review your case for free, and will help you protect your rights during a foreclosure. Our attorneys will analyze your case and help you create a plan to protect your financial future.

To schedule a risk-free, confidential consultation with our office about your foreclosure or bankruptcy matter, contact us today by calling (888) FIGHT-13 (344-4813).