Rollin’, Rollin’, Rollin’ — Rolling Condominium Super-Priority Liens Ruled Valid

Under the Massachusetts condominium statute, the organization of unit owners, i.e., the condominium association, has a lien on each condominium unit for the unpaid common expense assessment levied against each unit from the time the assessment becomes due. This lien has priority over all existing mortgages, except that the priority over first mortgages is limited to the condominium fees due “during the six months immediately preceding institution of an action to enforce the lien.” That lien is considered a “super-priority” lien for that six-month period of unpaid fees because of its priority over the first mortgage, making it a valuable tool for the condominium association in collecting unpaid condominium fees.

What if a unit owner does not pay the condominium fees for six months, the condominium association commences an action to enforce the lien, and the unit owner continues in failing to pay the condominium fees while that action is pending? Do those continuing-to-accrue unpaid condominium fees become subject to the first mortgage? This was the situation and issue presented to the Massachusetts Supreme Judicial Court (SJC) in Drummer Boy Homes Association, Inc. v. Britton, 474 Mass. 17 (2016).

In Drummer Boy Homes Association, the Brittons became engaged in a dispute with their condominium association over parking rights and fines, eventually deciding to withhold payment of their monthly condominium fees. After six months, the condominium association commenced an action against the Brittons to collect the unpaid fees and to enforce its lien. The Brittons continued to withhold payment of their monthly condominium fees and, after another six months, the condominium association commenced a second action to recover the unpaid fees that had accrued since the first action and to enforce a second six-month priority lien. Undaunted, the Brittons continued to withhold payment of their monthly fees and the association commenced a third action to recover the unpaid fees that had accrued since the second action and to enforce a third six-month priority lien. The three actions were consolidated and summary judgment granted in favor of the association; however, the association’s lien priority over the first mortgage was limited to the one six-month period preceding the first action. The Appeals Court affirmed the judgment and rejected the condominium association’s argument that the condominium statute permitted it to establish multiple priority liens ahead of the first mortgage. According to the Appeals Court, the six-month priority period was intended as an equitable balance between assisting in the collection of unpaid condominium fees and protecting the interest of mortgage lenders. Consequently, only one six-month super-priority lien was allowed.

Earlier this year, the SJC reversed the decision and agreed with the condominium association that because a unit owner’s responsibility to pay monthly condominium fees is a recurring obligation, the association can file successive actions under the condominium statute to establish and enforce multiple contemporaneous liens on a unit, each with a six-month period of priority over the first mortgage. The SJC did not find the “rolling” super-priority lien unfair to first mortgage lenders because when the legislature amended the condominium statute to add the super-priority lien for six months of overdue condominium fees, it also added a procedure by which a first mortgagee could maintain its lien priority notwithstanding the initiation of an enforcement action by the condominium association. The procedure, however, requires the first mortgagee to pay the amount of the six-month super-priority lien and agree to pay all future condominium fees so the balance, whether facing rolling super-priority liens or invoking the procedure to maintain the priority of the first mortgage, is clearly in favor of the condominium association.