Condo Media - May 2012 - 18

RHODE ISLAND N e w s

by Frank A. Lombardi, Esq.

R e g i o n a l

On Death and Taxes
Protecting the Association Lien
the association should treat the estate’s representative as the new owner, or at the very least, a substitute owner. As the association is a creditor of the estate, notice of claim should be sent to the estate’s legal representative.

C A I

Notice of Claim
When filing such a notice, be sure to let the probate court and the legal representative know, or at least “remind them,” that the association is a secured creditor by and through its statutory assessment lien under RIGL 34-36.1-3.16, and that the association reserves its right to foreclose on its assessment lien. In most cases, the probate court will not be able to prevent the association from foreclosing on its assessment lien. However, out of an abundance of caution, I would send a notice of claim, indicating that you intend to continue the collection process with the legal representative, who at this time may be in the process of gathering the assets and can pay the assessment under their administrative powers. Occasionally an executor may ask for time, so long as there is no competing interest (i.e. the bank, which could also foreclose and wipe out assessments representing more than six months; or as we shall see, taxes), then an agreement may be reached. The association may treat this probate claim as a regular collection and just have the mortgage lender bank pay the assessment out of its negative escrow, as both the association and lender have an interest in maintaining and protecting the value of the unit. If neither the

s the saying goes, there are two things we cannot escape in life — death and taxes. In most cases, a unit owner can escape paying monthly assessments by moving out. The association could chase them on the personal obligation, but the unit owner could seek bankruptcy protection and most likely avoid paying. Or, morbid as it is, a unit owner could escape paying assessments by passing away. So, given that, let’s examine briefly how the grim reaper and the tax man can affect the association’s ability to collect on its lien for assessments. First, what happens when a unit owner dies? Their assets and liabili-

ties are handled by an executor (if there is a will) or administrator (if there is no will). These legal representatives take control of the estate assets, including the unit, pay the last bills and distribute the remainder to the heirs or devisees. Where does the association fit into the estate administration process? And, what can it do to protect its lien for assessments? When the association becomes aware of a unit owner’s demise, the association should make an attempt to learn the identity of the legal representative as soon as possible. Check the probate court located in the city or town hall where the unit is located. For collection purposes,

CONDO MEDIA • MAY 2012

Condo Media - May 2012

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