The question raised in this case is if an association foreclosure wipes out the first mortgage on a property (except to the extent excess monies attach to the proceeds IF NOTICE is given). Importance lies in the fact that the lower court got it wrong on the narrow issue of that an association foreclosure does not wipe out the first mortgage. By basics of foreclosure law the foreclosure action must extinguish the first lien as a matter of law.
Ultimately, the questions to be answered in the brief is what is the meaning of “priority" in conjunction with the right of the bank to re-secure its position by payment prior to lien sale by payment? How is the statute designed to help an association which is otherwise subject to the bank's priority? In other words, who would want to bid at an auction, especially where there is no right of the bidder to recoup amounts bid and expenses incurred in a situation where the lender then forecloses its mortgage?
CAI's Amicus Committee is asking the intended brief author to limit the argument to whether a foreclosure of a condominium priority lien extinguishes the first mortgage. CAI is not looking to support one side or the other in terms of who should prevail in this case so CAI does not need to address the issue of lack of notice to lenders.
Brief
Prior Ruling: Order on Partial Motion for Summary Judgment
Status: Ruling for CAI's Position
CAI Amicus Brief Author: Thomas Moriarty, Esq; Henry Goodman, Esq; Loura Sanchez, Esq.
CAI Amicus Brief Review Committee: Henry Goodman, Esq; Stephen Marcus, Esq; Jonathan Levine, Esq; Steve Weil, Esq; Gary Kessler, Esq.