Please join us for our free Condo Seminar with Lauren Pair on May 21st. The seminar will include talks by condominium conversion attorney Steven M. Buckman of BuckmanLegal PLLC and Palisades Title Company and featured speaker Lauren Pair, Esquire, the Rental Conversion and Sale Administrator for the District of Columbia. The Rental Conversion and Sale Division regulates a tenants' right to purchase, the conversion of property to a condominium, conversion fees and the Structure Defect Warranty Claim Program.
Our seminar will be conducted on Tuesday, May 21st, between 2:30 p.m. and 4:30 p.m. at the DC Boathouse Restaurant which is located at 5441 MacArthur Blvd. NW, Washington, DC (MacArthur Blvd. NW at Cathedral Ave. NW). Hors d'oeuvres and beverages will be served.
In the condo seminar, we will be providing information about the proper way to conduct condominium registrations and conversions in the District of Columbia, and Ms. Pair will discuss the impact of Tenant Opportunity to Purchase Act (TOPA) rights on the conversion process. There will also be a Q&A session that will allow you to ask questions directly to Mr. Buckman and Ms. Pair.
Seating will be limited so please RSVP today by sending an email to Norman@BuckmanLegal.com or by calling Ms. Norman at 202-351-6100 ext. 0 and providing us with your name and email address.
Monday, April 29, 2013
Thursday, April 18, 2013
6-Month Super-priority Condominium Foreclosures by the Association
There is an alternative to ordinary condominium lien foreclosures that BuckmanLegal, PLLC has begun to use. We have made the change due to current market conditions and the fact that there is a de facto residential foreclosure moratorium in DC.
The D.C. Condominium Act gives the condominium association a lien priority ahead of the first mortgage to the extent of six months of regular assessments (no acceleration and no special assessments). We refer to this lien priority as the "six-month super-priority." What this lien priority means is that the association may foreclose on a lien only for the most six most recent months of regular assessments plus interest, costs of collection, attorney’s fees and advertising costs. Perhaps most critically, the sale will not be subject to the first mortgage. In other words, the successful bidder (or the association if it takes the unit back) is not stuck paying off the first mortgage. The first mortgage would be entirely wiped out by the foreclosure.
The process of foreclosure is exactly the same up through the sale. The only differences are the calculation of the amount that must be paid to stop the sale and the fact that the association's opening bid is considerably less. This changes the economics in a number of ways. On the negative side, while the unit owner remains personally liable for unpaid assessments due for months prior to six months before the foreclosure, and can be sued for that amount, the association will not automatically recover this money through the foreclosure process. The association can only keep the six month amount and must remit any surplus to the first mortgagee. On the positive side, in a majority of cases, the first mortgagee will pay the six-month amount to keep from having its first mortgage wiped out, which gives the association cash in hand, and the association may be able repeat this process every six months, thereby not losing anything more than the unpaid assessments due for months prior to six months before the first time it does a six-month super-priority foreclosure.
One advantage of the foreclosure may be that if neither the unit owner nor the first mortgagee pay to stop the foreclosure, then there may be a greater likelihood of getting bidders at the foreclosure sale. These bidders would produce cash in hand, and will become new unit owners that will be liable for condo assessments on a going forward basis. Also, even if there is no new owner, and the association takes the unit back, the first mortgagee cannot foreclose on the unit. Therefore, the association will not be time delimited on collecting rent to cover its losses.
We have conducted condominium lien foreclosures numerous times over the past couple of years. In almost every single case, the lender has stepped up and paid the amount being sought. Moreover, in the vast majority of cases, BuckmanLegal, PLLC has been able to collect all of the amount owing—not just the most recent 6 months—due to the specter of the association pursuing condominium lien foreclosures again and again. In not one case have we been forced to actually sell any units. And in every single case, we were successful in getting back every penny of the fees and costs due. This means that the process did not cost the associations anything. Of course, past performance does not guarantee future results.
The D.C. Condominium Act gives the condominium association a lien priority ahead of the first mortgage to the extent of six months of regular assessments (no acceleration and no special assessments). We refer to this lien priority as the "six-month super-priority." What this lien priority means is that the association may foreclose on a lien only for the most six most recent months of regular assessments plus interest, costs of collection, attorney’s fees and advertising costs. Perhaps most critically, the sale will not be subject to the first mortgage. In other words, the successful bidder (or the association if it takes the unit back) is not stuck paying off the first mortgage. The first mortgage would be entirely wiped out by the foreclosure.
The process of foreclosure is exactly the same up through the sale. The only differences are the calculation of the amount that must be paid to stop the sale and the fact that the association's opening bid is considerably less. This changes the economics in a number of ways. On the negative side, while the unit owner remains personally liable for unpaid assessments due for months prior to six months before the foreclosure, and can be sued for that amount, the association will not automatically recover this money through the foreclosure process. The association can only keep the six month amount and must remit any surplus to the first mortgagee. On the positive side, in a majority of cases, the first mortgagee will pay the six-month amount to keep from having its first mortgage wiped out, which gives the association cash in hand, and the association may be able repeat this process every six months, thereby not losing anything more than the unpaid assessments due for months prior to six months before the first time it does a six-month super-priority foreclosure.
One advantage of the foreclosure may be that if neither the unit owner nor the first mortgagee pay to stop the foreclosure, then there may be a greater likelihood of getting bidders at the foreclosure sale. These bidders would produce cash in hand, and will become new unit owners that will be liable for condo assessments on a going forward basis. Also, even if there is no new owner, and the association takes the unit back, the first mortgagee cannot foreclose on the unit. Therefore, the association will not be time delimited on collecting rent to cover its losses.
We have conducted condominium lien foreclosures numerous times over the past couple of years. In almost every single case, the lender has stepped up and paid the amount being sought. Moreover, in the vast majority of cases, BuckmanLegal, PLLC has been able to collect all of the amount owing—not just the most recent 6 months—due to the specter of the association pursuing condominium lien foreclosures again and again. In not one case have we been forced to actually sell any units. And in every single case, we were successful in getting back every penny of the fees and costs due. This means that the process did not cost the associations anything. Of course, past performance does not guarantee future results.
Subscribe to:
Posts (Atom)