NEW: The hearing on this bill has been rescheduled for April 8, at 1:00 pm.
On April 3, 2009, the Judiciary Committee of the Maine Legislature will consider a bill to protect the ability of condominium associations to collect common expense assessments when a unit is under foreclosure. Under the bill, the association will be first in line for payment of up to six months unpaid common expenses charges, ahead of the foreclosing bank. This is especially important because, although the association has a lien for unpaid condominium fees, this lien is presently in second place behind the banks mortgage. Since it is common for the bank mortgage to exceed the value of the property, the association can find itself unable to collect condo fees for up to two years during the foreclosure process.
The bill was presented by Representative Cynthia Dill at the request of the Maine Legislative Action Committee of Community Associations Institute, New England chapter. The Community Associations Institute is a nonprofit organization dedicated to the advancement of condominium and other community associations nationwide.
The public hearing on this important bill will be held at 9:00 am in room 438 of the State House, Augusta, Maine. If you are interested in attending the hearing or wish to discuss it, contact me at atty@maine.rr.com.
Set out below is the language which the bill proposes to add to the Maine Condominium Act.
“(c) The association’s lien securing the priority amounts as defined below is prior to a first mortgage. “Priority amounts” means the amount of the association’s regular assessments established under a periodic budget which would have become due in the absence of acceleration during the six month period immediately prior to the initiating a lawsuit to enforce such lien, the expenses of heat and utilities paid by the Association in order to preserve the unit during such 6 month period, and the association’s costs and reasonable attorneys’ fees incurred in enforcing the lien. Priority amounts shall not include any amounts attributable to special assessments, late charges, fines, penalties and interest assessed by the association. The association’s failure to send notice to the first mortgagee either that the owner is 60 days delinquent in the payment of common expenses or that the Association intends to file an action to enforce the lien within 30 days shall not affect the priority of the lien securing the six months’ regular assessments and heat and utility components of the priority amounts, but such failure to send at least one such notice shall mean that the priority amounts shall not include any costs or attorneys’ fees incurred in the action to enforce the lien. The payment of the priority amounts shall release the lien securing the priority amounts.”