In a September 11, 2015 Law 360 article, Shapiro Lifschitz and Schram’s B.A. Spignardo cautions that mortgage lenders should be cautious when financing deals that are secured by condominium properties. Citing Chase Plaza Condominiums Association Inc. v. JPMorgan Chase Bank NA (decided Aug. 28, 2014), Spignardo explains that, “the D.C. Court of Appeals held that the traditional condominium association lien with regard to the most recent six months of assessments trumps the lien of a “first” mortgage, and thus, the condominium association can foreclose on such lien and wipe out all other liens, including the mortgage lien.”
In light of the ruling, Spignardo outlines protective measures that lenders should take when closing financing transactions secured by condominium real property. “While not eliminating the issue of a priority lien in favor of a condominium association, proper notice to the lender of defaults, title insurance coverage to the extent available, and an escrow of condominium fees established at closing can provide lenders enough comfort to proceed with loan transactions secured by condominium properties.”
For more information on how lenders can protect themselves, or other real estate law issues, contact B.A. Spignardo at firstname.lastname@example.org.