Condo Media - November 2010 - 22

LEGAL

by Ellen A. Shapiro, Esq.

Massachusetts Small Claims
No Substitute for Statutory Lien Enforcement
ypically, when the legislature passes a law that affects condominiums, the news travels rapidly. However, effective Aug. 1, 2010, the Massachusetts Legislature quietly increased the jurisdictional amount for small claims actions from $2,000 to $7,000. At first this did not appear to have a significant impact on condominium associations. However, in the time since the change, numerous questions have arisen as to whether or not it would be prudent to file small claims actions for unpaid condominium fees rather than going forward with the Massachusetts statutory lien enforcement process pursuant to what we now all refer to as the “Super Lien” law. For reasons discussed below, the simple answer to those inquiries is “No.”

The Clerk Magistrate Decision
As a preliminary matter, small claims matters are heard by clerk magistrates, not judges. While the majority of clerk magistrates do have law degrees, there is no requirement for them to be lawyers. It is undoubtably difficult enough for attorneys to interpret various provisions of the condominium law and governing documents; therefore, it is often an even more difficult problem for clerk magistrates when they are presented with condominium issues. They do not have the luxury of sitting in offices discussing the various nuances of particular words, researching case law and discussing the issues with colleagues who practice in this area. Rather, they sit in overcrowded courtrooms dealing with as many as 40 or 50 cases on any given day; try to listen to each parties’ presentations; and arrive at decisions, often within a matter

of moments. One can see how this scenario lends itself to mistakes, which while arrived at honestly, can have serious implications in the condominium setting. Of even greater concern, however, is the fact that small claims cannot be used to establish and enforce a priority lien. While merely going to court and filing a small claims action may be faster for an association than hiring an attorney, waiting for the results of a title examination (so mortgage holders can be notified of a unit owner’s arrearage) and then waiting even further for the case to work its way through the court system (in the event it is necessary to file a complaint and, ultimately, obtain a Judgment and Order for Sale of the unit), nevertheless, small claims presents one of those instances where speed does not obtain results. Prior to a hearing, clerk magistrates frequently suggest mediation. Most mediators who serve in small claims are not even clerk magistrates; furthermore there is no statutory authorization for this form of mediation. Clearly, the statutory lien for unpaid common area fees is not subject to mediation and this effort is merely a waste of time for associations and their managers. However, clerk magistrates tend to view with displeasure any suggestion that a claimant is not willing to enter into mediation and this also can have a negative impact on the proceedings.

Small Claims vs. Statutory Lien
In a substantial majority of instances, mortgage holders upon receipt of notification of their borrowers failure to pay common area assessments in a timely

fashion, will quickly pay the arrearage rather than risk both the increased legal fees that will be incurred in perfecting and enforcing the statutory lien or, of even greater significance to them, the possibility that their mortgages will be extinguished if the association proceeds to obtain a Judgment and Order of Sale to sell the unit at auction. However, if one were to proceed with a small claims action, the mortgage holders would not be notified and the association would lose the opportunity to receive swift payment from those entities. Additionally, unlike formal statutory lien proceedings, a small claims judgment does not establish the association’s lien for common area assessments. It is not given any priority over mortgages and other encumbrances and can only be satisfied by payment from the unit owner or a sheriff’s sale of the unit owner’s assets after an execution issues. Obviously, no one is going to purchase a unit sold by a sheriff to satisfy a small claims judgment when there is a first mortgage or even a second mortgage ahead of the execution. Thus, small claims actions in no way guarantee payment of any of the common fees. It is simply another method of obtaining a judgment; but when considered and compared with the statutory lien enforcement process set forth in Chapter 183A, §6, it is virtually useless. Therefore, while it may be appealing due to its relative speed and ease as compared with lien enforcement, it will not assist the association in obtaining payment of common area fees. CM Ellen A. Shapiro, Esq. is a partner in the Mass., and R.I., law firm of Goodman, Shapiro & Lombardi LLC.

CONDO MEDIA • NOVEMBER 2010

Condo Media - November 2010

Table of Contents for the Digital Edition of Condo Media - November 2010