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Massachusetts Condo Association Can Establish Multiple Successive Priority Liens for Unpaid Common Expenses
Massachusetts General Laws c. 183A, § 6(c) provides that a lien for the unpaid common expenses of a condominium is prior to all other liens on the unit except those recorded before the master deed was recorded, a first mortgage on the unit recorded before the assessment became delinquent, and liens for property taxes and other municipal assessments. The statute further provides that the lien for common expenses does take priority over a first mortgage to the extent of the common expenses assessments that would have become due absent acceleration in the six months immediately preceding the filing of the action to enforce the lien, as well as costs and reasonable attorneys’ fees to enforce that lien.
The statute does not state whether an organization of unit owners can file multiple actions for priority liens after the first six-month period of unpaid common expenses if the unit owner continues not to pay. The Massachusetts Supreme Judicial Court recently considered this issue in Drummer Boy Homes Association, Inc. v. Britton. The parties have been involved in lengthy litigation involving parking rights at the condominium complex for many years, but this case addressed only the unpaid common expenses.
The defendants began withholding monthly common expenses due to a dispute regarding parking and fines in 2004. In August 2007, the association filed suit, seeking unpaid common expenses and the enforcement of a priority lien. The defendants continued withholding payments, and the association filed a second claim for the unpaid expenses that accrued after the first case was filed, as well as another priority lien. The association filed yet a third case in October 2008. The trial court granted the association’s motion to consolidate all three cases.
The trial court ultimately granted the association’s motion for summary judgment, awarding more than $22,000. The judge found that the association was the proper party to seek the unpaid common expenses and that there were no issues of material fact. The trial court found that the defendants could not simply ignore parking fines and refuse to pay common expenses. If they believed the parking policies were illegal, they could instead have initiated their own action to address that issue.
The trial court further found that G. L. c. 183A, § 6 (c) did not permit successive actions, and the association’s priority lien over the mortgage company was limited to the six months of unpaid common expenses preceding the first action and reasonable attorneys’ fees and costs. The judge therefore allowed a priority lien of $15,054.86 and denied the association’s motion to amend the judgment to add the other successive six-month periods.
Both parties appealed. A panel of the Appellate Division affirmed. Both parties then appealed to the Appeals Court, which also affirmed. The Supreme Judicial Court granted an application from the association for further appellate review.
The association argued it should be able to file successive actions because the unit owner has a recurring obligation to pay the monthly common expenses. The statute provides that the organization of unit owners is to send notice to the unit owner and the first mortgagee when the common expenses have been delinquent for at least 60 days. The organization also must provide notice of an intention to file suit to the first mortgagee 30 days before filing. The court found that the purpose of these notices was to give the unit owner an opportunity to pay the delinquent fees to avoid enforcement that could result in foreclosure and to allow the first mortgagee to take any necessary appropriate action to protect its security interest.
The court noted that the legislature identified “a serious public emergency” when the unit owners had stopped paying common expenses, and condominium buildings were not being maintained. Part of the legislature’s action to remedy the situation was adding language to G.L. c. 183A, § 6(c) to establish priority of liens.
The court also reviewed the statutory language that establishes the procedure a first mortgagee can use to maintain its lien priority. This portion of the statute references “priority liens against a particular unit for common expenses,” and twice more it references the organization of unit owners’ “liens,” in the plural. The statute prohibits the organization from taking further action to enforce its priority liens if the first mortgagee agrees in writing that the priority lien exists and pays the delinquent assessments for common expenses for the six months immediately preceding the notice of delinquency, the costs and reasonable attorney’s fees incurred by the organization up to that time, and future common expenses.
The court found that by creating this process to allow the first mortgagee to assume the responsibility for unpaid common expenses, the legislature balanced the interests of the association and the first mortgagee. The process assures that the association will receive the previous six months of delinquent common expenses and future common expenses, while allowing the first mortgagee to maintain its lien priority.
The court found that interpreting the statute to only allow a single priority lien for the recovery of just six months of common expenses would make this process inconsequential. First mortgagees would not have any reason to assume the responsibility for the common expenses if the priority lien were limited to a single six-month period. The mortgagee would not undertake payment of the future common expenses because they would be subordinate to the first mortgage. The court further noted that an interpretation that the statute only allowed a single priority lien would ignore the statutory references to “liens” in the plural. The court therefore found that the statute allowed an association to file multiple priority liens and reversed the judgment of the Appellate Division. The court further found that the association was entitled to reasonable attorneys’ fees and costs for the appeals before the Appeals Court and the Supreme Judicial Court.
This case clarifies that a condominium association may file multiple actions to recover unpaid common expenses. Attorney Richard Mucci was previously a trustee of a large condominium association and understands Massachusetts condominium law. If you have a legal dispute involving a Massachusetts condominium, call (781) 729-3999 to schedule a meeting with a Massachusetts real estate attorney.