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Home Foreclosures: 14.3.1 Same Manner as a Lien on Real Property

Many state laws provide that an association may foreclose upon a unit in the same manner as a mortgage or deed of trust on real property.155 The intent of these statutes is presumably to simplify the procedural aspects of the enforcement of a lien for assessments against a condominium.156 Where laws governing the disposition of real property and civil procedure provide that a complaint must be filed prior to a foreclosure sale, an association may not, for example, pursue through writ of executio

Home Foreclosures: 14.3.2 Lien Recordation Requirements

Many states provide that a lien for assessments must be perfected prior to foreclosure through recordation of the lien, a notice of lien, or a claim of lien. In some states, recordation of the declaration may be sufficient to perfect the association’s lien, or the association may be afforded an automatic lien from the time the assessment becomes due.

Home Foreclosures: 14.3.3.1 Pre-Acceleration Notice

Most states impose notice requirements upon associations prior to foreclosure upon an owner’s unit. Notice requirements can be integral to the process of foreclosure, since in some jurisdictions the failure to adhere to certain prescribed practices can operate to extinguish the lien or void a foreclosure sale. From a timing perspective, requirements can range from pre-acceleration notice to postforeclosure sale notice, depending upon applicable law.

Home Foreclosures: 14.3.3.2 Notice or Statement of Delinquent Assessments Upon Request by Unit Owner

A number of state laws provide that a unit owner, along with other interested parties,164 may request a written statement from the association setting forth the amount of unpaid assessments or other charges.165 Some states require that this statement be in recordable form.166 In most of the states containing such provisions, a fee for the requested statement is authorized.167 All of the states with th

Home Foreclosures: 14.3.3.3 Notice Prior to Filing or Imposing a Lien

Some states require a condominium association to provide notice to the unit owner, prior to obtaining an actual lien, that it intends to impose a lien. California law requires that, thirty days prior to recording a lien, the association must notify the unit owner in writing and by certified mail.

Home Foreclosures: 14.3.3.4 Notice of Lien

A number of states require that once an association obtains a lien on the subject property, it must provide notice to the unit owner, and a certain time period must elapse between the time of notice and any foreclosure action.188 State laws vary as to the requisite time period between notice of the lien and foreclosure, with some states simply requiring “reasonable notice.”189 Some states require written notice or recordation of the lien, which serves as notice, but they do not specify the manda

Home Foreclosures: 14.3.3.5 Notice Prior to Sale

Because a foreclosure sale works a deprivation of property, most jurisdictions generally require notice as an element of due process.196 In addition, several state condominium laws specifically reference the necessity to provide notice prior to a foreclosure sale.

Home Foreclosures: 14.3.3.6 Post-Sale Notice

At least two states’ condominium laws specifically provide for postforeclosure sale notice. Rhode Island law requires that within seven days after the sale, the association must send an additional written notice to the holder of the first mortgage or deed of trust of record that identifies the name of the highest bidder and the amount of the bid.206 Virginia law requires that the trustee file an accounting of the sale with the commissioner of accounts and that it record that accounting.

Home Foreclosures: 14.3.4 Reasonable Rental Claims by Association During Foreclosure

A number of state condominium laws provide that in any foreclosure, the unit owner is obligated to pay a reasonable rental for the unit during the foreclosure process, if so provided in the association’s bylaws, and the plaintiff in such foreclosures is entitled to the appointment of a receiver to collect the rental payments.211 Where an association’s declaration, but not its bylaws, requires the payment of reasonable rental, and the statute specifically mentions bylaws but not the declaration, a court should deny an award of reasonable renta

Home Foreclosures: 14.4.1.1 Alternative Dispute Resolution

While a majority of state condominium acts do not specify the methods or procedures by which a unit owner may forestall or contest a lien or foreclosure, some states do specifically set forth such procedures.248 Note that a general alternative dispute resolution requirement relating to foreclosure may apply to condominium foreclosures.249

Home Foreclosures: 14.4.1.2 Civil Action

Some state acts expressly provide that a unit owner may initiate a civil action in order to contest the levying of an assessment or a lien.266 Ohio law contains an “appeal procedure” providing a unit owner who believes that the common expenses for which a certificate of lien has been filed by the association has been improperly assessed with the right to commence an action for the discharge of the lien in the court of common pleas where the condominium property is located.

Home Foreclosures: 14.4.1.3 Notice of Contest of Lien

Florida law states that by recording a Notice of Contest of Lien, a unit owner may require the association to enforce a recorded claim of lien against the condominium parcel at issue.269 After the Notice of the Contest of Lien is recorded, the clerk of the circuit court must mail a copy of the recorded notice to the association by certified mail, return receipt requested, at the address shown in the claim of lien or most recent amendment to it, and service is complete upon mailing.

Home Foreclosures: 14.4.2.1 Challenging Assessments and Fees

A common problem for unit owners in many states is that it may not be practical to assert a counterclaim in a suit brought to collect assessments, fines, or other fees that is based upon the reasonableness of the charge at issue.271 This is true even when the owner genuinely believes that the charge is not lawful or that a valid reason or justification exists for not paying the charge that underlies the lien.

Home Foreclosures: 14.4.2.4.1 Right to sell

The foreclosure sale of a condominium unit must be based upon the seller’s legitimate right to sell stemming from state law and the association’s governing documents. In one case where, under the terms of the condominium declaration, the owner was granted an additional fifteen days to pay the assessments and utility fees, and where the substitute trustee conducted the foreclosure sale before the fifteen days had expired, a judgment of wrongful foreclosure was appropriate.

Home Foreclosures: 14.4.2.4.2 Notice

When statutory requirements regarding notice prior to sale are not met,316 a court may decide to set aside a sale, particularly when other procedural deficiencies are present.317 In addition, even where statutory requirements are satisfied, a court may set aside a sale if an association fails to comply with notice requirements contained in the association’s declaration.318

Home Foreclosures: 14.4.2.5 Failure to Accept Partial Payment While Claim Is in Dispute

A number of cases state that an association need not accept partial payments, since most state statutes grant an association the right to a lien for the entire amount due.349 Also, some statutes may state outright that an association is not obligated to accept partial payments.350 However, where an association refuses to accept partial payments while a claim is in dispute, a court may find that such refusal is improper under the circumstances of a given case.

Home Foreclosures: 14.4.2.6 Failure of Association to Ascertain Ownership

It is not reasonable for an association to record a lien against an individual’s property without first ascertaining that individual’s ownership interest in the unit. For instance, an association may assume that a unit is owned by one person when in fact it is owned by several family members or the heirs of the original unit owner.

Home Foreclosures: 14.4.2.8 Failure to Accept Reasonable Payment Plan

When a unit owner stops making payments, the association may secure a lien on the property and eventually proceed to foreclosure or commence litigation to recover the unpaid assessments. An association is generally under no obligation, statutory or otherwise, to offer or enter into a reasonable payment plan that could possibly abrogate the necessity for legal action.

Home Foreclosures: 14.4.3 Right to Cure Default

Some state condominium acts explicitly grant the owner the right to cure a default prior to a foreclosure sale.387 These laws provide that in order to cure, the owner must pay not only the “performance due under the security agreement” or payment in full of past due assessments, but also any amounts due because of acceleration, plus late charges, interest, or other reasonable expenses associated with proceeding to foreclosure, such as attorney fees.

Home Foreclosures: 14.4.4 Payment in Chapter 13 Case

If state law does not grant the owner the right to cure a default prior to a foreclosure sale, the filing of a chapter 13 bankruptcy may be considered. Filing bankruptcy will not only invoke the automatic stay in order to prevent the foreclosure sale process from continuing,390 but also in a chapter 13 case, the debtor can deal with an assessment lien claim by making payments on the claim under a chapter 13 bankruptcy plan.

Student Loan Law: 16.1.1 Introduction

Banks, nonprofits, nonbanks, credit unions, state-affiliated organizations, and for-profit (and nonprofit) schools extend consumer loans to students and/or parents to fund undergraduate, graduate, and other forms of postsecondary education. Private student loans are also known as private education loans and private-label or alternative loans.