Condominium Liens and Mortgages
G.L.c. 183A, §6 addresses the question of the priority of first mortgages over the condominium lien. Here are the relevant parts of the statute:
- "Such [condominium] lien is prior to all other liens . . . except . . . (ii) a first mortgage on the unit recorded before the date on which the assessment sought to be enforced became delinquent . . . . "
- "This [condominium] lien is also prior to the mortgages described [above] . . . to the extent of the common expense assessments based on the budget adopted . . . which would have become due in the absence of acceleration during the six months immediately preceding institution of an action to enforce the lien . . . provided, further, that the payment of the assessments with respect to such six month period . . . shall serve to discharge such lien to the extent that such lien is prior to such mortgages . . . ."
Paragraph A is simple: if a lender takes a mortgage on a unit when the common charges are delinquent it has no one to blame but itself.
Paragraph B is a bit more complicated. This part of the statute addresses situations where common charges go into default while the mortgage is in place, and makes reference to the "institution of an action to enforce the lien" as the benchmark that permits us to calculate relative priorities. It is these assessments that gain priority over the mortgage: If there is no "institution of an action to enforce the lien" then there is no benchmark, and nothing to measure from and, therefore, no priority of the condominium lien over the mortgage. The thing is, that (subject to the comments below) there is no limitation as to how many "actions" the association can bring and therefore "stack" charges in a priority position, which results in the lien becoming a "rolling lien." In other words (subject to the comments below) the mortgagee can find itself under a deluge of liens (in excess of six months) unless the mortgagee moves quickly to foreclose.
But if the first mortgagee enters into an agreement with the association acknowledging its obligation to pay at least six months' of fees and "all future common expenses" then the association is preventing from bringing the "action," which is the "benchmark," and thus "lenders can avoid the 'rolling lien' feature of the superlien law -- to which they always took umbrage -- by paying common expenses." Galvin, "Issues in Condominium Law." See http://www.davismalm.com/UploadedDocuments/Articles/galvinissuesincondominium.pdf.
What happens if the association does institute an action to enforce the lien but then gives a "clean" 6d certificate? Title Standard No. 69 says:
Title is not defective by reason of the existence on the record of a complaint to enforce a lien under M.G.L. c. 183A if there is recorded thereafter a later dated certificate of no common expenses in accordance with §6(d) which asserts that there are no outstanding liens on the Unit.
So, even if the action has been brought, and priority is thereby preserved, a "clean" 6d certificate will negate the lien altogether, regardless of priority questions.
1 Second and subsequent mortgages enjoy no priority position. [Back to Text]
2 It's a cat-and-mouse kind of thing here because if the association "jumps the gun" and institutes an enforcement action when defaults first occur (i.e., into the first month or so) it may be entitled to a judgment for all amounts due but its priority position will be "capped" for expenses due during that shorter period. The statute is clear that the payment of the assessments with respect to such six month period discharges the lien to the extent that the lien is prior to such mortgages. I'm not sure that successive actions could be brought to regain the priority once the first case is instituted. [Back to Text]
3 This is a title standard. I presume (but don't know) that the courts would follow it. I think they would, simply because the statute specifically states (without regard to priority) that a statement from the organization of unit owners setting forth the amount of unpaid common expenses and other amounts which have been assessed against a unit owner "shall operate to discharge the unit from any lien for other sums then unpaid when recorded at the appropriate registry." [Back to Text]