PAUL MANNES, Bankruptcy Judge.
Carrollan Gardens Condominium Association ("the condominium") seeks relief
This case presents the court with a situation frequently encountered in the world of bankruptcy. Here are two parties, neither one of which has done a thing wrong, engaged in mortal combat. The condominium is entitled to contributions from each of its unit owners for the common good. This is not a case of a creditor extorting usurious interest from a helpless debtor, a debtor seeking to pull a fast one, or a scam artist taking advantage of an unfortunate victim, but rather an effort to enforce the sums due pursuant to a voluntary association. On the other hand, Debtor here has no interest in the unit, does not benefit one iota from its ownership, and would dearly love to be disassociated from all connection to it. The real parties in interest — the secured creditors, or more precisely the senior secured creditor — sit by doing nothing. In a perfect world, the condominium could force GMAC, the holder of the senior lien, to take action and foreclose, returning the unit to the market place inhabited by a new resident who would pay its fees. Better still, the legislature might provide for a senior priority for condominium liens.
No one disputes the valuation of the property. Namely, that it is worth approximately one-third of the total of the claims secured by three liens on the property — a first mortgage securing a claim of GMAC said to be in the sum of $112, 695.00, a judgment lien held by BB & T whose claim is in the sum of $11,413.00, and the condominium lien claim in the sum of $2,973.43. Debtor's confirmed Chapter 13 Plan provides for 60 payments of $95.00 a month and for surrender of the unit to the secured lenders. In confirming Debtor's Plan, the court found that the $95.00 payment represented all Debtor's projected disposable income. However, none of the secured creditors has gone forward with foreclosure, and Debtor cannot compel them to accept his surrender pursuant to 11 U.S.C. § 1325(a)(5)(C).
In order to appreciate the dilemma faced by Debtor, and perhaps thousands of others in his shoes, consider the seminal case of In re Rosenfeld, 23 F.3d 833 (C.A.4 1994), holding that a condominium's right to payment for assessments arising post-petition is in the nature of a covenant running with the land and therefore survives a Chapter 7 discharge.
Another addition in 2005 was the following section dealing with discharges in cases under Chapter 13:
Because 11 U.S.C. § 523(a)(16) is not specifically listed among the exceptions to a Chapter 13 discharge entered after completion of all of a debtor's payments under Chapter 13 plan, the in personam obligation to pay condominium fees does not survive as an exception to discharge. But, this obligation survives discharge as an in rem obligation because it is a covenant running with the land. If it were otherwise, a debtor could continue to live in a unit after completion of a Chapter 13 plan in perpetuity without the obligation to pay the same fees that neighbors must pay. In that event, 11 U.S.C. § 1328(a)(2) would not only provide a fresh start for the honest debtor but a head start as well, a result generally disapproved. In re Taylor, 3 F.3d 1512, 1516 (C.A.11 1993). When Congress enacted 11 U.S.C. § 523(a)(16) amending the Bankruptcy Code to place personal responsibility for post Chapter 7 discharge liability, it could have continued the protection from the 1994 Act for debtors in cases where debtors no longer used the condominium unit had it seen fit. It did not.
A ruling that with the entry of a discharge under 11 U.S.C. § 1328(a)(2) the obligation continues as an in rem remedy but is discharged as a personal liability is based upon the plain meaning of 11 U.S.C. § 1328(a) that does not include 11 U.S.C. § 523(a)(16) among the exceptions to the discharge entered after plan completion. The Rosenfeld ruling was implemented by the enactment of 11 U.S.C. § 523(a)(16) by the 2005 Bankruptcy Code revisions as to cases like it under Chapter 7. However, in cases under Chapter 13 after discharge of pre-petition claims the condominium contract obligation rides through leaving a debtor without personal liability as with consensual liens under long-established law. As the Court said in Johnson v. Home State Bank, 501 U.S. 78, 82-83, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991):
See In re Hamlett, 322 F.3d 342, 349 (C.A.4 2003).
The existence of a covenant running with the land does not impose personal liability in the absence of privity. The doctrine concerns the liability of assignees, not the original obligor. It is generally recognized that there are three requirements that must be satisfied for a covenant to run with the land. First, the covenanting parties must intend to create such a
In accord with the Rosenfeld decision and prior to the 2005 amendment adding 11 U.S.C. § 523(16), this court opined in the case of In re King, 208 B.R. 376, 380 (Bankr.D.Md.1997), that:
Following Rosenfeld and the Code amendment, personal liability continues after discharge on condominium fees in cases under Chapter 7. But Congress did not include 11 U.S.C. § 523(a)(16) among the exceptions to a Chapter 13 discharge under 11 U.S.C. § 1328(a)(2). It is not for this court to add this exception. Until the discharge is entered, Debtor is stuck for the payment of these fees. This holding differs from that of In re Spencer, 457 B.R. 601, 605 (E.D.Mich.2011) where the court stated:
Courts have found that the relief from the stay of 11 U.S.C. § 362(a) is not required for post-confirmation attempts to collect post-filing condominium assessments, as they are not pre-petition debts. In re Reynard, 250 B.R. 241, 244 (Bankr. E.D.Va.2000); In re Zamora, 2012 WL 4501680 (Bankr.W.D.Tex.2012); cf. In re Schechter, 2012 WL 3555414 (Bankr. E.D.Va.2012) (Collection activities must be limited to property of the debtors, not property of the estate, but all post-confirmation earnings are property of the estate under 11 U.S.C. § 1306(a)(2)). This issue was not raised by either party, and the court will not address it.
Although the stay will be lifted, the court will comment on the state of affairs should Debtor be able to consummate his plan. The pre-filing claim of the condominium would be discharged. Its lien remains of record, not having been avoided. After discharge, 11 U.S.C. § 523(a)(16) will not impose personal liability upon Debtor to continue the payment of condominium assessments, but the charges of the condominium will continue as an in rem obligation. Cf. In re Colon, 465 B.R. 657, 662-63 (Bankr.D.Utah 2011). The situation is not unlike that in Long v. Bullard, 117 U.S. 617, 620-621, 6 S.Ct. 917, 29 L.Ed. 1004 (1886), as described in In re Hamlett, 322 F.3d 342, 347-48 (C.A.4 2003), that liens pass through bankruptcy unaffected. The discharge of the claim does not affect the condominium's rights under the Maryland Contract Lien Act.
457 B.R. at 614. This court does not have the same confidence that Judge Cleland voices in Spencer as to Debtor's ability to shed himself of the responsibility of this white elephant. Like Charlie, he appears doomed to ride forever `neath' the streets of Boston in the Kingston Trio song. Until he is able to pay both his plan payments and the condominium assessment he must live with this burden.
The court respectfully disagrees with this restriction on the § 1328(a) bankruptcy discharge. In the 2005 amendments to the Bankruptcy Code, five subsections of § 523(a) were added to the list of exceptions of the types of debts not discharged upon completion of all payments under a plan. Had Congress the intention to make such payments be the continuing personal obligation of the debtor, it would have included the newly enacted § 523(a)(16).
