Similar in scope to the CAI amicus filings of Chase Bank v. Chase Plaza Condo in DC in December 2013 and the recently filed Nevada brief in of Bayview Loan Servicing v. SFR Investments Pool 1, LLC, the question raised in this case is whether a foreclosure of a statutory non-judicial condominium priority lien is a “true lien priority" and not merely a distributional preference in favor of the association. Additionally, the result of this appeal will have a dramatic effect on all states that have adopted a statutory non-judicial priority lien. The Rhode Island Superior Court has ruled that the foreclosure of a condominium's statutory non-judicial priority lien does not extinguish a first mortgage, regardless of the failure of the first mortgagee to either satisfy the priority portion of the lien prior to the association's sale, or exercise its statutory right of redemption.
If the Supreme Court of Rhode Island affirms the Superior Court ruling that an association's foreclosure of their priority of lien does not extinguish the first mortgage, there will be a chilling effect on association lien foreclosure sales. Individuals will not bid at an auction when the mortgagee may come back at any time to foreclose its mortgage and take the property. Also those who may take the risk of bidding at a foreclosure sale will not maintain payment of condominium assessments and will have no interest in expending money to preserve or otherwise improve the property that they could lose at any time.
Brief: Pending
Prior Ruling: Lower Court Decision
Status: Supreme Court Ruling for CAI's Position
CAI Amicus Brief Author: Edmund Allcock, Esq.
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Thomas Moriarty, Esq; Steve Weil, Esq; Jonathan Levine, Esq.; Gary Kessler, Esq.