A unit owner stopped paying assessments. The condominium association properly recorded and perfected a lien against the unit for those assessments. Under the applicable Oregon statute, the condo association lien is prior to all other liens, except tax liens and a first mortgage or deed of trust. An exception exists, such that the condominium association can gain priority over the first mortgage if (among other things) “the association gives the first lienholder formal notice of the unpaid assessments, and the lienholder ‘has not initiated judicial action to foreclose the mortgage * * * prior to the expiration of 90 days following the notice[.]’” In this case, five days after the association recorded its lien, the bank filed a judicial foreclosure action against the unit, but did not name the association as party, and therefore the foreclosure suit would not have terminated the lien rights of the association. To correct this issue, the bank filed an amended complaint naming the association as a party. Five months later the trial court issued a dismissal of the claim against the association, without prejudice, for failure to prosecute. Five months after that the association sent the bank notice of the unit owner’s default on assessments. The bank took no action in the next 90 days to reinstate the dismissal or file a new action against the association.
Continue Reading Lien Priority Statutes and Why They Make Sense