In a recent Division I opinion, the Court of Appeals reiterated that condominium assessments enjoy super status compared to other lien holders.
In BAC Home Loans Servicing v. Fulbright, the Court addressed Bank of America’s attempt to protect its security interest in a foreclosed condominium against the claims of a purchaser at a foreclosure sale.
In 2006, the Tanglewood at Klahanie condominium declaration was recorded. Jeanne Lewis purchased a unit in 2007 and secured the loan with a deed of trust. In 2008, Ms. Lewis failed to pay the condominium assessments.
The association started foreclosure proceedings in 2009. Bank of America was a named defendant. The Bank did not respond. A default was entered in June 2009 and a foreclosure decree issued.
Michael Fulbright purchased the condominium for a bit over $14,000 in May 2010. This amount covered the unpaid assessments. The sale was confirmed in June 2010.
Nearly a year later (but within the redemption period) the Bank alerted Mr. Fulbright that it intended to redeem the property by paying him the amount due, plus costs and accrued interest. Mr. Fulbright refused and the Bank sought an injunction to force the matter.
The Court rejected the Bank’s attempt at redemption. Relying on the language in RCW 64.34.364(1), the Court concluded that the association’s lien commenced when the assessment came due. The Bank’s argument that the lien dated from the date the declaration was recorded was expressly rejected.
The recording of the declaration gave the bank notice that a future assessment lien might arise. The Bank was provided with notice when the foreclosure proceedings commenced. “This was the bank’s opportunity to step in and pay off the delinquent assessments in order to avoid having its own lien eliminated. The bank missed this opportunity.”
Indeed, the bank did miss the opportunity… and Mr. Fulbright seized it!