Condominium Association Managers

Recovery of Delinquent Assessments; Foreclosure

Our firm is experienced in helping condominium and other homeowners associations anywhere in Vermont recover delinquent assessments and other obligations from members.

Under Vermont law, assessments for common expenses become a lien on the individual unit, prior to all other liens except (a) property taxes, (b) a previously recorded first mortgage, and (3) mechanics liens (if any).

If the unit owner fails to pay one or more assessments voluntarily, the Association’s lien can be foreclosed, in the same manner as a mortgage. Attorney’s fees and other costs incurred by the Association in the foreclosure proceeding, as well as ongoing interest, are added to the amount of the debt. If the unit owner does not pay the full debt by the end of the foreclosure proceeding, the unit is sold at auction. The proceeds of sale are distributed to pay any delinquent taxes, the balance of any first mortgage, any mechanics liens and then to pay the full debt to the Association.

Deficiency Judgments
In the event the proceeds of an auction sale on the unit are not sufficient to pay all of the debt owed to the Association, a judgment is issued by the Court for the difference (called a “deficiency judgment”). We then take steps to enforce the deficiency judgment against other assets or income of the owner. The additional attorney’s fees and costs incurred by the Association in the enforcement process, as well as continuing interest, are added to the amount of the deficiency judgment and recovered out of the owner’s other assets or income.

Suit
An Association can choose to recover an owner’s debt by suing the owner, obtaining a judgment, and enforcing it (like a “deficiency” judgment) against assets or income of the owner apart from the unit itself (e.g., a bank account).

Collection Agency v. Attorney
Some Associations use collection agencies to attempt to recover delinquent assessments. However, a collection agency is limited to contacting the debtor by mail and phone, to try to persuade him to pay voluntarily. An attorney is not limited to that approach, and can take legal action to obtain payment directly via foreclosure and/or from assets or income of the debtor.