One of the many terms surrounding condominium associations and their property rights is the idea of a ‘limited priority’ lien. Let’s take a closer look on this particular issue, as it relates to the New Jersey Condominium Act and what you need to know about it.
The Legalese: In section NJSA 46:8B-21(b) of the act, there are certain circumstances in which the recorded lien of a condominium association can have a limited priority over the existing mortgage in cases of delinquent common expense assessments. In that case, then the association will have a six month customary condominium assessment period which they would receive from the mortgage lender, as part of a foreclosure action.
How to Qualify: There are several parts to qualifying for this limited priority lien. The condo association is responsible for recording their lien before either the foreclosure complaint was received or before the filing of a lis pendens notice for the upcoming foreclosure proceedings. In addition, the association needs to have made a concentrated effort to inform the mortgage lender about the lien.
Condominium Act: One of the key parts of the condominium act is the definition of customary condominium assessments, or the point during the six month period where the mortgage lender will give regular periodic assessments, without any additional late fees, penalties or other charges for the collection or assessment enforcement.
Where the Provisions Apply: Surprisingly, these provisions are not valid in all circumstances. They are not the same for condominium associations in other states, and here in New Jersey, apply only to condo associations, rather than homeowner associations or other cooperatives. The lien’s priority is good for up to a maximum of five years or sixty months, and should be updated regularly.
The Bottom Line: What this all boils down to is that if the association records a lien for delinquent assessments before the notice and filing of a mortgage foreclosure action, and provides notice, they will then be entitled for up to six months of this limited priority lien. They will be given monthly assessments as regular, without any associated late or legal fees from the mortgage lender after the title has been transferred by the Sheriff’s sale.
For more information about limited priority liens, questions about condo associations, or other real estate inquiries, call our office today. We have a team of legal experts standing by to work with you. Call 201-498-9768 to learn more and speak with an associate.