October 21, 2015

Court Upholds Condominium Association Foreclosure that Extinguished Bank's Lien

In late 2009, a Washington condominium association foreclosed on a first position lien for delinquent assessments and purchased the unit at a trustee's sale for $8,818.17.  Deutsche Bank, which had a junior lien on the unit for $240,000 that was extinguished by that foreclosure sale, was notified of the association's foreclosure but did not respond.  Litigation later ensued concerning the validity of the association's foreclosure.  

The Washington Court of Appeals ruled in an unpublished opinion this summer that the association was entitled to foreclose on its lien (which had a limited six-month priority over the bank's lien pursuant to the Washington Condominium Act and its Declaration) regardless of whether there were any intervening liens and for any amount.  The court noted that Deutsche Bank failed to pay the association's lien, bid at the trustee's sale, or exercise its redemption rights despite being given ample notice and opportunity to do so.

Many foreclosures by condominium associations do not end well due to bank foreclosures and owner bankruptcies, so it is always good to be reminded that they can result in successful outcomes too.  The association's attorney can help it decide whether foreclosure is advisable and likely to result in payment.

October 14, 2015

Association Boards Should Get Their Legal Advice Straight from the Horse's Mouth*

The boards of some community associations that have property managers seldom or never communicate with their associations' attorneys directly.  This is hardly ideal.  The transmission of legal advice from attorney to client is performed most effectively when the client asks questions and receives the attorney's answers firsthand.  Nuance and complexity can be lost when legal advice is transmitted through agents.  Community association boards will obtain the best legal guidance if they play an active and direct role in the attorney-client relationship.

Washington appellate courts have been busily churning out opinions relevant to community associations recently, so more case law summaries are coming soon.

*Title inspired by the many good years I spent growing up in Texas.