Common expense assessments are the lifeblood of a condominium, ensuring its operation and survival. They are just as important as taxes are to running the government. Assessments cover association expenses ranging from landscaping and snow removal to property management and insurance.
The Rhode Island Condominium Act requires that these expenses be assessed to all unit owners, in accordance with the condominium’s declaration. All unit owners have both a contractual and statutory obligation to pay their common fees. Failure to pay assessments is not without consequence. The unit owner can be divested of their title to the unit as a result of delinquency. The condominium association has an automatic lien against the unit for these assessments.
In Rhode Island, a condominium lien is enforceable in the same manner as a mortgage, which is by non-judicial foreclosure. The first step is to send the unit owner a statutory notice of delinquency when the account is 60 or 90 days in arrears. Unless payment is received or an acceptable payment arrangement is agreed upon, a unit title is ordered and reviewed. A notice is sent to the owner of the first mortgage held on the unit, informing them of the delinquency amount.
In Rhode Island, the condominium lien enjoys a priority status ahead of any first mortgage, to the extent of 6 months of assessments, $2,500 in attorney fees, and $5,000 in collection fees. To protect the security interest, the holder of the first mortgage will often satisfy the arrearage by paying the condo board.
If the fees remain outstanding, the board can move to close on its lien, sending a 2nd notice to both the unit owner and mortgagee. The board can then sell the unit at public auction. If there is a mortgage on the unit, the board must send a notice to the first mortgagee within seven days of the sale, identifying the high bidder and the bid amount. The mortgagee has 30 days to redeem the unit through payment to the Association.
As a unit owner, just remember that when debts begin to pile up, you must pay the condo fees first. If you cannot pay, you cannot stay!