RHODE ISLAND – Rhode Island Supreme Court gives HOAs priority above mortgage liens
HOUSINGWIRE.COM: Rhode Island Supreme Court gives HOAs priority above mortgage liens
Condominium association liens now hold “super-priority”
By Cynthia Barraza
February 19, 2016
The Supreme Court of Rhode Island supports the homeowner’s association “super priority” concept, making The Ocean State part of a growing list of states that are, in some fashion, ruling in favor of making HOA liens a priority above mortgage liens.With the Rhode Island Condominium Act allowing lenders or the condominium association a lien for up to six months of delinquent assessments, this super-priority is superior to the lien of a first mortgage holder. Which means the HOA has the authority to foreclose on a home and extinguish a mortgage non-judicially.
In the latest mortgage banking update provided by law firm Ballard Spahr, they say the court reached this conclusion even though a purchaser at the condominium association foreclosure sale may pay just a fraction of the amount of the first mortgage lien.
Even though the court acknowledges it will cause an unmerciful effect on first mortgage holders, they surmised that homeowners have to ability to either pay off the super-priority portion of the condominium association lien and add such amounts to the borrower’s principal, or require the borrower to pay association assessments into escrow. Read more:
Posted on February 20, 2016, in Uncategorized. Bookmark the permalink. Comments Off on RHODE ISLAND – Rhode Island Supreme Court gives HOAs priority above mortgage liens.