Given the growing popularity of the condominium market in Massachusetts and an awareness of not wanting to repeat the mistakes of the past, the Massachusetts Supreme Judicial Court (SJC) recently issued a ruling giving condominium associations the power to more easily collect withheld and overdue monthly condominium fees. Specifically, in Drummer Boy Homes Association, Inc. v. Britton, et al, the SJC held that condominium associations can file for multiple and successive super-priority liens, pursuant to G.L.c. 183A, §6, that take precedence over the first mortgage for up to six months of unpaid fees.
The SJC’s holding largely rests on the Court’s interpretation of the legislative intent behind the statutory scheme encompassing G. L. c. 183A, § 6. The Court held that, “our interpretation of G. L. c. 183A, § 6, is consistent with the Legislature’s long-standing interest in improving the governance of condominiums and strengthening the ability of organizations of unit owners to collect common expenses, thereby avoiding a reemergence of the serious public emergency that developed in the early 1990s.”
This ruling effectively shifts the incentives of the interested parties in a manner to ensure that condominium associations are properly funded. Where previously the first mortgage holder had little to no incentive to get involved in association fee disputes, as their priority was never at risk, now this ruling shifts the incentives of the parties to align with that of the individual condominium community and condominium industry more generally. By allowing a scheme whereby the first mortgage holder’s priority can be jeopardized by a condominium association’s rolling super-priority lien, the SJC’s holding effectively incentivizes the first mortgage holder to take its own action against an owner who is withholding condominium fees in order to produce such fees and protect that first mortgage holder’s priority status.Proponents of this ruling argue that it prioritizes the long-term stability of the condominium industry in Massachusetts by making it easier for condominium associations to collect the fees necessary for the maintenance and upkeep of condominium communities.