The Supreme Judicial Court of Massachusetts (SJC) recently held that a homeowners association may establish and enforce multiple contemporaneous liens for unpaid common expenses, each with a six-month period of priority over the first mortgage, by filing successive legal actions.
A copy of the opinion is available at: Link to Opinion
The borrowers purchased a condominium unit, and later began withholding payment of their monthly common expense assessments because of a dispute concerning parking rules and related fines.
The condominium association commenced an action to recover the unpaid common expenses and to enforce a priority lien pursuant to Massachusetts G.L. c. 183A, §6 (c) that was superior to the first mortgage to the extent of the common expenses during the six months immediately preceding the commencement of the action.
The borrowers continued to withhold payment of their monthly common expense assessments. The condominium association commenced a second action to recover the unpaid expenses that had accrued since the filing of the first action, and to enforce a second six-month priority lien.
The borrowers continued to withhold payment of their monthly common expenses. The condominium association commenced a third action to recover unpaid expenses that had since accrued since the filing of its second action and to enforce a third six-month priority lien.
All three actions were consolidated into this single action. The trial court judge granted the condominium association's motion for summary judgment in the amount of $22,742.08.
However, the trial judge concluded that the filing of successive actions was not consistent with Massachusetts G.L. c. 183A, §6 (c), and that the condominium association's lien priority over the first mortgage for common expenses was limited to the one six-month period preceding the commencement of the first action. Thus, the trial judge established a priority lien in the amount of $15,054.86.
Both parties appealed, and the Appellate Division of the District Court affirmed the judgment in all respects. A panel reviewed the issues of standing and statutory interpretation. The panel found that extending a condominium association's lien priority beyond one six-month period of time would undermine the purpose of the statutory scheme.
Both parties appealed to the Appeals Court, which affirmed the judgment of the Appellate Division. The SJC granted the condominium association's application for further appellate review.
The Massachusetts SJC briefly addressed standing, and concluded that the condominium association had standing to bring the present action.
The SJC then addressed the issue of successive priority liens for successive periods of common expense assessments. The Court held that an organization of unit owners can file successive legal actions under Massachusetts G.L. c. 183A, §6, to establish and enforce multiple contemporaneous liens on a condominium unit, each with a six-month period of priority over the first mortgage for the recoupment of successive periods of unpaid common expenses.
The SJC noted that the intent of the legislature guided this decision. The Court explained that an organization of unit owners is entitled to have a lien on a condominium unit for unpaid common expenses from the time the expenses become due. Pursuant to Massachusetts G.L. c. 183A, §6, the SJC noted, notice must be given to the unit owner in order to give them an opportunity to remedy the delinquency and avoid an enforcement action that may result in foreclosure.
The Massachusetts SJC found that the legislature inserted a second paragraph to section C in Massachusetts G.L. c. 183A, §6, to establish the priority of diverse liens that could be placed on a condominium unit.
The Court held that, when a condominium association initiates a lien enforcement action, it may obtain a six-month super-priority status over a first mortgagee for six months' worth of common expenses. However, the SJC noted, section C in Massachusetts G.L. c. 183A, §6, is silent as to whether an organization of unit owners can initiate subsequent actions to establish such liens beyond one six-month period.
The Massachusetts SJC noted that the legislature later amended the statute to include two additional paragraphs, in order to establish the procedure by which a first mortgagee could maintain its lien priority notwithstanding the initiation of an enforcement action by an organization of unit owners to recoup unpaid common expenses. Additionally, the Court noted, these two paragraphs include the language "priority liens".
The SJC found that construing G. L. c. 183A, § 6 (c), as permitting an organization of unit owners to establish a single priority lien on a condominium unit for the recovery of only six months' worth of unpaid common expenses would render the mechanism established by the legislature in the fourth and fifth paragraphs of the statute inconsequential.
The Court noted that the first mortgagee would have little reason to assume responsibility for the payment of a unit owner's future common expenses if the condominium association were limited to one six-month period of lien priority. In such circumstances, the Court explained, future common expenses would always be subordinate to the first mortgage. The Court also noted that the procedure articulated in the fourth and fifth paragraphs of G. L. c. 183A, § 6 (c), reflects an awareness by the legislature that the statute permits an organization of unit owners to establish and enforce multiple contemporaneous priority liens on a condominium unit.
Accordingly, the Massachusetts SJC held that the association may file successive legal actions against the defendants under G.L.c. 183A, §6, to establish and enforce multiple contemporaneous liens on their condominium unit, each with a six-month period of priority over the first mortgage, for the recoupment of successive periods of unpaid common expenses.
Ralph T. Wutscher
Maurice Wutscher LLP
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Email: rwutscher@MauriceWutscher.com
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