J.R. from Washington State writes:
Dear Mister Condo,
A unit in our condominium community foreclosed after the death of the owner; after sale, any outstanding assessment prior to the sale was no longer collectible. Washington State RCW 64.32.200 states, “Where the mortgagee of a mortgage of record or other purchaser of an apartment obtains possession of the apartment as a result of foreclosure of the mortgage, such possessor, his or her successors and assigns shall not be liable for the share of the common expenses or assessments by the association of apartment owners chargeable to such apartment which became due prior to such possession. Such unpaid share of common expenses of assessments shall be deemed to be common expenses collectible from all of the apartment owners including such possessor, his or her successors and assigns.” Can the past due assessment be written off or is the assessment in arrears due and owing from the owners? We are a 20-unit community in Washington State incorporated in the 1980s.
Mister Condo replies:
J.R., that is a great question. Unfortunately, I am neither an attorney nor an expert in Washington State community association law so I can only offer you my friendly opinion on this matter. As a general rule, assessments are levied against the unit owner at the time the assessment is levied. So if the unit owner was alive at the time of the assessment, in theory, that unit owner (or that unit owner’s estate) is liable for the assessment. The foreclosure on the unit throws in an interesting wrinkle because now it is not only a case of collection but also of liquidation. Did the association make its claim during the foreclosure process? I did a quick internet search and it would appear that your condo would be governed by Washington State’s Horizontal Properties Law, also referred to as the “Old Act” because it applies to condos built before July 1, 1990. From what I have read the lien order is any governmental agency, followed by mortgagees, followed by the association. If this unit was liquidated through foreclosure, I would expect the association has collected all that it is going to collect. If those collection efforts failed to recoup all of the owed monies, it may be time to consider taking a write-off on the uncollected funds. There may also be a situation where the association placed a lien on the actual unit for the assessments. In that case, different rules may apply and the lien may still be in effect on the property. All that being said, this is a clear case for employing the association’s attorney to make sure no money is left on the table. Any loss incurred by the association will ultimately be passed on to the remaining unit owners. In a small community like yours, that may not be unsubstantial. Good luck!