Daily Development for
Tuesday, June 3, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

BANKRUPTCY; LIENS; AVOIDANCE; CONDOMINIUM LIENS: Condominium assessment liens, even though judicial action is required to enforce them, are "statutory liens, and not "judicial liens within the meaning of Section 522(f)(1) and therefore not subject to avoidance.

King v. Cherrywood Residents Assoc., Cas. No. 96-1-7368 (Bkrtcy. D. Md. 5/9/97)

Under the Bankruptcy Law, a debtor may avoid certain judicial liens to the extent that they "impar an exemption." The court indicated that the term "judicial lien" has a specific definition under 11 U.S.C. sec. 101(36):

"'Judicial lien' means lien obtained by judgment, levy sequestration, or other legal or equitable process of proceeding."

Even though Maryland law requires that a condominium lien be enforced through a judicial action, the court ruled that it does not arise by such action, but rather by the terms of the statute.

"Because the lien in question was created by filing the Statement of Lien in the Clerk's office, and not by the means described in 11 U.S.C. Sec. 101(36), the lien is not a judicial lien and, therefore, is not susceptible of avoidance by debtor under Sec. 522(f)."

The court further noted, in dicta, that the debtor may be discharged from personal liability on association liens existing at the time of filing, but that liability for future assessment obligations is not discharged.

Comment: Once in a while even the Bankruptcy courts get it right. This decision cites a few other bankruptcy court level decisions consistent with its view here, and does not address any cases contra.

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