Condo Media - May 2010 - 18

RHODE ISLAND N e w s

by Frank A. Lombardi, Esq.

R e g i o n a l

Additional Clarification
A Closer Look at the Rhode Island Super Lien Law
s unit owners, board members, managers and attorneys alike are aware, it has been nearly two years since an amendment to the Limited Priority Assessment Lien set forth in the Rhode Island Condominium Act (34-36.1-3.16) beefed up the provisions, which in effect made it a Super Lien. With this amendment, if the condominium association follows the guidelines set forth in the statute to the letter, then it would be in a position to possibly eliminate the first mortgagee’s interest in the property altogether. The effect of this law has made a substantial difference in getting banks to advance the assessments and costs of its mortgagor/unit owner to the association. So now that the condominium association industry has the attention of the banks, it’s time to pay more attention to the details of the collection process itself since the bank’s representatives are strictly scrutinizing the ledgers that associations or their managers produce in support of their request for the funds.

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lender will ultimately contact our office for a breakdown of the super lien amounts. The law states briefly that the association is entitled to collect from the bank up to six months of assessments which would have become due immediately preceding the foreclosure of the interest of the unit owner, including any costs and attorneys fees not to exceed $2,500, incurred in the collection of any delinquent assessment or other

charges by legal proceedings or otherwise and all costs of foreclosure, including publication, advertising and auctioneer costs; this foreclosure costs is not to exceed $5,000 (for a total aggregate of attorneys fees and costs of $7,500). So the ledger going to the bank should indicate six months of assessments at say, $200 per month for a total assessment of $1,200.00 (assuming there were six months of assessments due at the time immediately

Sample Ledger
November 1st $200 monthly assessment $100 special assessment 0.00 received 0.00 received $200 owed $100 owed

December 1st

$200 monthly assessment $100 special assessment

0.00 received 0.00 received

$200 owed $100 owed

January 1st

$200 monthly assessment $100 special assessment

0.00 received 0.00 received

$200 owed $100 owed

What’s Covered
We’ll leave it to a future Condo Media article to remind associations not to wait longer than two months to initiate collection proceedings as, very often, balances in excess of six months may not get collected at all. But for now, let’s assume the association has a bank willing to pay what is due to protect its lien position. Typically, if either the unit owner’s lender or if the association is foreclosing on the assessment lien, the

February 1st

$200 monthly assessment $100 special assessment

0.00 received 0.00 received

$200 owed $100 owed

March 1st

$200 monthly assessment $100 special assessment

0.00 received 0.00 received

$200 owed $100 owed

April 1st

$200 monthly assessment $100 special assessment

0.00 received 0.00 received Total owed:

$200 owed $100 owed $1,800

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CONDO MEDIA • MAY 2010
Condo Media - May 2010

Table of Contents for the Digital Edition of Condo Media - May 2010
