Condo Media - August 2017 - 46

The Region

RHODE ISLAND

Paying for Not Paying

The Cost of Failing to Timely Pay Condominium Assessments
[by Mary-Joy Howes, Esq.]

Unit owner Bea Innerbonnet has
been holding back her common
fees for four months because she
disagrees with how the money is
being spent. The association has
turned her account over to the association's attorney for enforcement of its
lien. Does she have a right to withhold
her fees? If not, what is her exposure
for doing so?
First, there is no right to set off condominium fees for any real or perceived
claim. If a unit owner has a grievance,
it must be dealt with separately. Unit
owners claiming to hold their fees
back for any reason should be told that
there is no right to setoff, and failure
to pay will result in their account
being turned over for collection. A
unit owner attempting to setoff fees
because of a real or perceived claim
against the association and/or a unit
owner holding back fees as a protest to

46

CONDOMEDIA

the board because they disagree
with certain decisions made
(for example, they dislike
the new landscaping in
the common areas) is
distinguishable from
a dispute related
to the amount of
the debt itself,
pursuant to Fair
Debt Collection
Practices, such as
questioning the
correct amount
owed or whether
certain payments
have been accounted
for. Any defenses
to non-payment that
relate to the latter should
be investigated and referred
to the association's legal counsel.
Second, the consequence for
non-payment of assessments can be
substantial. Per Section 3.15 of the
Rhode Island Condominium Act,
the association is allowed to charge
interest on past due common expenses
assessments, at a rate not to exceed 21
percent per year. The association is also
allowed to charge late fees on past due
assessments.
(Unit owners must have notice of
such penalties and their amounts. This
should be set forth in the Declaration or
an amendment to the Declaration. The
board can also set forth late fees and
interest via a rule, but all owners must
be given notice of the rule and when it is
to take effect.)
As explained in more detail below,
attorney fees and costs incurred to
enforce the lien, up to $7,500, are ahead
of even a first mortgage on a unit. These
amounts, on top of any assessments,
fees, and interest due, are also the unit
owner's responsibility. The ultimate

consequence of non-payment, however,
is foreclosure of the unit.
SUMMARY OF THE RHODE
ISLAND CONDOMINIUM LIEN
The association's assessment lien is
not only statutory, but is contractual in
nature, as the payment of assessments
is also mandated by the Condominium's
Declaration. With respect to the
contractual element, a unit owner is
agreeing not only to the lien on his/her
unit, but to the personal responsibility for the assessment lien. Pursuant
to Section 3.15 of the Act, common
expenses must be assessed at least
annually against all unit owners in accordance with the allocations set forth
in the Declaration. Pursuant to Section
3.16(a) of the Act, the condominium association has an automatic lien for any
assessments levied against the property
"from the time the assessment or fine
becomes due."
Section 3.16(b)(4) of the Act allows
for enforcement of the association's lien
once any portion of the lien has been
delinquent for at least 60 days. The
statute outlines the mandatory notice
requirements that must be given to the
unit owner and the first mortgagee of
record. If assessments remain unpaid,
pursuant to Section 3.16(a) the association may foreclose on the unit. Section
3.21 outlines the notice and advertising
requirements that must be complied
with, to proceed with foreclosure of the
unit at public auction.
THE SUPER PRIORITY LIEN
Section 3.16(b) provides that the
condominium's lien is prior to all
liens on a unit except for those liens
recorded prior to the Declaration
and not subordinated thereto, first
mortgages recorded before the date
the assessment became delinquent,
Condo Media - August 2017

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