Condominium Associations—Delinquent Common Charges

You asked what recourse condominium associations have when unit owners fail to pay their monthly common charges.

Condominium associations have a statutory lien that automatically attaches to an owner's unit to secure payment of delinquent common charges. The lien attaches once the declaration is recorded on the land records. The lien has priority over every other lien except taxes and other government assessments, first and second mortgages, and liens recorded on the land records before the declaration was recorded. The lien in an amount equal to six months of assessments plus foreclosure costs and attorney's fees has priority even over first and second mortgages. The lien can be foreclosed in the same way a mortgage can.

A condominium association has a statutory lien on a unit for any assessment it levied against that unit or fine it imposed against the unit owner. Recording of the declaration constitutes record notice and perfection of the lien. The association is not required to record any other lien claim. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment becomes due.

Unless the condominium declaration provides otherwise, the following fees, charges, late charges, and fines, are also enforceable as an assessment:

1. payments, fees, or charges the association imposes for the use, rental, or operation of common elements, and for services provided to unit owners;

2. charges and interest for late payment of assessments;

3. reasonable fines the association levies for violating the declaration or the association's bylaws, rules, and regulations; and

4. reasonable charges for preparing and recording amendments to the declaration, resale certificates, or statements of unpaid assessments.

This lien has priority over all other liens and encumbrances on a unit except (1) those recorded prior to the recording of the declaration; (2) liens for real estate taxes and other governmental assessment or charges; and (3) first or second mortgages recorded before the assessment became delinquent, except for an amount equal to common expense assessments that would have become due during the six months immediately preceding an action to enforce the lien on the first or second mortgage. This six month priority lien over previously recorded first or second mortgages also includes the association's costs and attorney's fees it incurs to enforce its lien.

This statutory lien for condominium association assessments departs from the common law rule of first in time equals first in right. The statutory priority scheme delineates which liens take priority over this lien and the extent to which the assessment lien takes priority over first and second mortgages. This scheme establishes the order in which the lienholders are paid from the available equity in the real estate when the court orders the property sold (Dime Savings Branch of New York, FSB v. Muranelli, 39 Conn. App. 736 (1995)).

This priority arrangement controls whether it is the association that institutes the foreclosure or it is another lien holder, such as a first or second mortgage holder.

Condominium associations have tried to expand the reach of their lien over first and second mortgages. In one case, the trial court ordered a foreclosing mortgage holder to make payments to the condominium association in lieu of common charges during the pendency of the foreclosure action. But the Appellate Court held that the trial court order is unauthorized by law and reversed the trial court ruling. The Appellate Court concluded that the effect of the trial court order was to give the association a priority lien for more than an amount equal to six months assessments and thus violated the statutory scheme established in CGS § 47-258 (Dime Savings Bank of New York, FSB v. Muranelli, 39 Conn. App. 736 (1995)). Similarly, the Supreme Court rejected the argument that the law gives associations a priority lien for common expense assessments that accrue during the pendency of a foreclosure action that the association instituted (Hudson House Condominium Assn., Inc. v. Brooks, 223 Conn. 610 (1992)).

But our courts have likewise resisted efforts by mortgage holders to decrease the scope of the superpriority lien as it relates to first or second mortgage holders. A trial court had concluded that the association's priority lien did not include attorney's fees and costs. The Supreme Court overturned this ruling holding that CGS § 47-258 creates a superpriority lien for attorney's fees, title examination fees, and other costs associated with foreclosing the association's statutory assessment lien (Hudson House Condominium Assn., Inc. v. Brooks, 223 Conn. 610 (1992)). Thus, these costs plus an amount equal to six months assessments have priority over first and second mortgages.

The assessment lien is extinguished unless proceedings to enforce it are begun within two years after the full amount of the assessments became due. But, if the unit owner files for bankruptcy, the time for instituting proceedings to enforce the lien is tolled until 30 days after the automatic stay of proceedings under the Bankruptcy Code is lifted.

If a first or second mortgage holder forecloses on a unit, the purchaser at the foreclosure sale is not liable for any unpaid assessments against the unit that became due before to the sale, other than the superpriority amount equal to six months assessments. Any unpaid assessments not satisfied from the proceeds of the sale become common expenses collectible from all the unit owners, including the purchaser.