Got Lien? Massachusetts Condominium Liens & 6d Certificates For Unpaid Condo Fees and Special Assessments
Unpaid condo fees and special assessments can be a real thorn in any condominium’s side, especially smaller condos. Not only do unpaid condo fees threaten the financial health of a condominium, but a high delinquency rate can run afoul of Fannie Mae/Freddie Mac and FHA condominium lending guidelines. thereby hindering the sale of a unit.
Fortunately, the Massachusetts Condominium Act, General Laws Chapter 183A. provides condominium trustees and managers with a fair amount of ammunition to recover those unpaid condo fees and special assessments. The law provides that condominium common expense assessments (monthly condo fees) are a lien against condominium units from the date each assessment becomes due, and that unit owners are personally liable for their share of condominium common expenses, including late charges, fines, penalties, interest, and all costs of collection. Ultimately, the condominium trust can foreclose its lien and sell the unit at foreclosure auction.
Massachusetts Super-priority Condo Lien
The real teeth of the Condominium Act is the “super-lien” provision. A properly filed condo lien has “super-priority” over the first mortgage on a unit for up to 6 months worth of unpaid condo fees, plus all attorneys’ fees and collection costs. Required 60 and 30 day statutory notices must be sent to the mortgage lender and unit owner prior to filing the lien. Typically, the mortgage lender will not want to allow a condo lien to negatively affect the priority of its mortgage, so it will pay the unpaid condo fees and other charges, then charge them back to the borrower/unit
owner. Even in the case of foreclosure of a unit, the super-lien will continue to roll-over (up to 6 months worth).
For all sales of Massachusetts condominiums, Mass. General Laws Ch. 183A, sec. 6(d) requires that the condo trustees sign a certificate verifying the outstanding condo fees assessed against the unit, if any. The term “6d” certificate refers to that statutory section of the Condominium Act, section 6(d). Lenders and their closing attorneys will require a “clean” 6d which states there are no unpaid fees. The recording of a clean 6d certificate will prevent the association from ever filing a lien against that unit.
No Right to Withhold
Another favorable aspect of the lien law is that a unit owner is not allowed to withhold payment even if he disputes the charges. There is no right to set-off. If the unit owner is unhappy or disputes the validity of the assessment, that’s too bad. He must pay the fees under protest, and file a suit challenging the legality of the assessment.
Collection Against Tenants
Another helpful remedy in the case of absentee unit owners is that the condo trust has a right to collect rents from tenants of non-paying unit owners. The condominium association will notify the tenants in writing that they are required to forward all future rent payments to the condo trust until the unpaid balance is satisfied. This typically gets the prompt attention of the unit owner.
Here is a sample 6d certificate.