S.P. from Delaware writes:
Dear Mister Condo,
My condo Board says they can foreclose on my condo because I have fallen behind in my common fees and haven’t been able to make a payment towards a Special Assessment levied earlier this year for a new roof. I say they can’t foreclose on my unit because it is mortgaged and the bank takes priority. I have never missed a mortgage payment. Can the condo foreclose on me and take my unit?
Mister Condo replies:
S.P., I am sorry that you are struggling with your common fees and Special Assessment payments. Many folks who purchase into a condominium association don’t fully understand that the association has a great many rights built into the condominium association’s governing documents that you agreed to when you purchased your unit. Chief among those rights is the ability to garnish assessments and collect those fees. While foreclosure is not their first method of collecting the fees against your unit, it is available to them, regardless of the mortgage status of your unit. In other words, having a mortgage does not protect you from a foreclosure action from your association. In fact, if you aren’t keeping up with your common fees and assessments, it is quite possible that you are in violation of your mortgage agreement as well. A condo mortgage typically requires that you keep the unit insured, that you keep the taxes paid, and that you keep current on your common fees and assessments. Taxes and insurance are often escrowed by the mortgage company. As an owner, you are responsible for paying your common fees and assessments. Yes, the association can foreclose and may have to if you leave them no other choice. Many associations will turn to a collection agency or attorney to insure they get their money. A collection agency will work with you as long as you work with them. In other words, answer their letters, emails, or phone calls. Set up a payment plan if offered. Take a home equity loan if available but get those fees paid. An attorney will simply take legal steps such as lien and foreclosure to enforce the legal rights of the association. This can be expensive and lead to foreclosure. Reach out to your association. Offer some type of payment and keep the dialogue open. Otherwise, you may leave them little choice but to bring in a third party and collect their money by whatever means necessary, up to and including foreclosure. Best not to let that happen. Good luck!
This is really good advice, and I’ve seen it happen when there is a special assessment at our complex that it caused an owner to be foreclosed on by the association. Another time there was a large assessment that had to be paid in full by each owner, not in payments, so you had to be able to get a loan if you didn’t have sufficient fungible resources, or sell. The details and process are spelled out in C.G.S. Sec. 47-258 regarding the association has super priority lien rights. Some associations can start a foreclosure process fairly quickly, if you can get a consult with a real estate attorney, it can be helpful, perhaps who did your closing. You’ll be better able to evaluate your options, if you can make payments if the association is amenable to that, but they may not be able to, or if you know you will not be able to make significant payments, or even if need be to put your condo on the market. An attorney can guide you which to pay if they think perhaps a different order than what you are doing, whereby something is not going to get paid. Our complex now has a better amount in reserves, still not as good as should be, but it was very scary to go through these scenarios, and there still could be an emergency that could cause a special assessment. I’m sorry this has happened you are in these circumstances, many people don’t realize how easily it can happen.
woops- I meant this for the Connecticut post above this one, but it is also about a similar topic, but the statute references are not for Delaware. Apologize.