Real Cases in Real Estate By Andrea Lee Negroni, Esq. – November 20, 2013 Update

Connecticut condominium association’s super-priority lien for unpaid assessments is not a one-time benefit -- it arises in every foreclosure. Connecticut amended its condominium super-priority lien law this year, with important consequences for lenders holding loans on condos.  Connecticut law (like those of a dozen or more other states) gives a condominium association’s assessment lien priority over a first mortgage on the condo unit for up to 9 months of unpaid dues. (Before June 24, 2013, the super-priority lien amount was six months dues.) The portion of unpaid dues that trumps the first mortgage loan is called the “superlien.”

Bruce and Barbara Burke were delinquent in their condo dues, so the Chatsworth Village Homeowners Association sought to foreclose their condo in 2009 to collect the delinquency. The first mortgagee, Bank of America, paid the Burkes’ delinquent dues in 2011 and the association withdrew its foreclosure complaint. After several years’ delay involving the Burkes’ unsuccessful attempts at foreclosure mediation and loss mitigation and their subsequent bankruptcy, they again accumulated unpaid condo fees. The unit owners association sued a second time to foreclose its lien for the unpaid assessments. At that point, Bank of America claimed the association’s superlien could only be filed once, and because the previous delinquency was paid, the association lien no longer had priority over the first mortgage.

The issue decided was whether a unit owners association can invoke a superlien more than once. The Connecticut court said yes, relying on an amendment to Conn. Gen. Stat. §47-258 [enhanced version available to lexis.com subscribers], which both increased the superlien amount to 9 months’ assessments and clarified that the superlien does not affect the priority of other assessment liens by the association. The court observed that “whether … the statute allows a unit owners’ association to assert its superpriority lien only once in a foreclosure action, or in any number of them, is a matter of statutory interpretation,” concluding that the language of the law did not limit the superlien to one use in one foreclosure action. As a result, the association was permitted to assert its superlien a second time, even though its prior lien was paid in full by the mortgage lender.

Chatsworth Village Homeowners Assn v. Burke, No. HHDCV126030093S (Conn. Super. Oct. 22, 2013 (Unreported) [enhanced version available to lexis.com subscribers].

Real Cases in Real Estate is a periodic update on real estate law, with legal principles illustrated and explained by lawsuits from around the country. The topics are wide-ranging for appeal to a broad spectrum of readers including lawyers, homeowners, investors and the general public. Andrea Lee Negroni, a Washington DC attorney and legal writer with 25 years of experience in financial services and mortgage law, contributes the case summaries.

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