Condo Media - May 2013 - 46

LEGISLATIVE UPDATE

ALL QUIET ON THE
LEGISLATIVE FRONT — FOR NOW
A Look at What is (or isn’t) Happening in Vermont, Rhode Island, and Massachusetts

T

he new legislative season is
well underway now, but when
this issue of Condo Media went
to press in March, CAI-NE’s
Legislative Action Committees (LACs)
were still compiling and reviewing the
bills likely to be considered this year.
Bearing in mind that some of their
assessments were still preliminary,
here’s what committee members were
reporting at the time:

Vermont

The Vermont LAC hasn’t identified
any bills directly affecting community
associations, but industry executives are
concerned about the way some Vermont
courts are interpreting the state’s priority
lien law. That measure, included in the
Common Interest Ownership Act, which
Vermont enacted, gives community associations a priority position in a foreclosure, allowing them to collect six months
of unpaid common area assessments
before the lender can begin collecting the
amount due under the loan. The state’s
courts have split on how that authority
can be applied, Carl Lisman, a partner in
Lisman Leckerling, P.C., explains. Some
have agreed with community associations
that they can file successive six-month
liens when foreclosure proceedings are
protracted, as they often are; others have
sided with lenders, ruling that the law allows only one priority lien covering only
six months of assessments.
According to Lisman, the drafters of
the Common Interest Ownership Act
(he was one of them) anticipated only
one priority lien filing in a default.
46

Condo Media • May 2013

“When we wrote that provision in the
1970s,” he says, “we never considered
that foreclosures would take a long
time.” Non-judicial foreclosures were
often completed “in a few weeks” and
never took “more than a few months.”
Judicial foreclosures were completed
“as soon as the court generated the
necessary paperwork,” because, he
notes, “there weren’t usually many
defenses” a borrower could mount.
“We didn’t foresee the overﬂow
of foreclosures in the court system”
created by the implosion of the real
estate market, Lisman says. “We never
[imagined] that there would be a
gazillion borrowers saying they did
have defenses. And we never assumed
it would be in a lender’s best interest to stall the foreclosure action,” a
strategy many lenders have adopted to
avoid assuming the responsibility they
would incur for paying taxes and common area assessments until they are
able to sell the property.
If the law allows only a single sixmonth priority lien, Lisman noted,
prolonged foreclosure delays will create
serious problems for community associations, which depend on common
area fees to finance their operations. Industry attorneys are discussing possible
“fixes” for the problem, he said, but
those discussions were just beginning
in late February and, he noted at the
time, “We are a long way from being
ready to recommend solutions.”
A remedy may come sooner from
the courts. “There is a reasonable
likelihood” that the most recent court

decision will be appealed, Lisman says,
and that appeal would go automatically
to Vermont’s Supreme Court. In the
meantime, he is telling his community
association clients to assume that multiple liens are allowed and “we’re citing
the cases that support that conclusion.”

Rhode Island

When contacted initially about the
Rhode Island legislative outlook,
Frank A. Lombardi, co-chair of the
Rhode Island LAC and a partner in
Goodman, Shapiro & Lombardi, LLC,
said lawmakers had been quiet in the
condominium arena “and I don’t see
anything currently on the horizon.”
His assessment changed a few days
later when he spotted a bill submitted
just before the filing deadline that the
committee plans to oppose in part.
The part they aren’t opposing would
make the publication of foreclosure
notices easier and less expensive by
permitting publication in “any daily
newspaper anywhere in the county”
if there are no dailies in the city or
town in which the property is located.
The LAC has no problems with this
change, which, Lombardi notes, will
create less costly alternatives to publishing in the Providence Journal.
The committee is concerned about
and plans to oppose another provision of the bill, which would give
foreclosed owners the same redemption rights mortgagees have under the
state superlien statute. So if a community association forecloses on a unit,
Lombardi explains, the owner, like the
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