Condo Lien As A Continuing Lien – And Why Lenders Care


15 October, 2015


Mortgage Lender and Servicer Alerts

A new case firmly confirms an important principle: a condominium common charge lien is a continuing lien [Board of Mgrs. of Netherlands Condominium v. Trencher, 128 A.D.3d 452, 9 N.Y.S.3d 213 (1st Dept. 2015).]  What precisely that means to condominiums, and why it is quite meaningful as well to mortgage lenders, is our focus here.

The Continuing Lien Concept

Just as it is with a mortgage lender, a condominium (through its Board of Managers) will wait a certain amount of time before it feels the need to file its condominium common charge lien.  However many months (or years) that may be, when the lien is filed it represents a finite number of the various sums due, which include, among other things, common charges, assessments, late charges, interest, penalties, along with other possible charges.  Even if the unit owner eventually pays the past due amounts, the sum due will be greater than is recited in the lien, for the obvious reason that the passage of time caused further items to accrue.

Of similar import, if a condominium common charge lien action is begun, and whether it is paid off sometime during the action or actually proceeds to foreclosure sale, the sum due is considerably larger than the amount identified in the lien – for the same apparent reasons.  In that regard, a referee in the foreclosure is required to make the computation and his numbers will need to reflect accruing sums, not merely the number contained in the lien.

Must a condominium file liens periodically to address the growing sums?  And if they do, do they need to start separate actions?  How does this all relate to the condominiums foreclosure action?  Happily, the simple answer (as confirmed by the new case) is that the condo lien is a continuing lien, that is, the lien encompasses, and the foreclosing condo plaintiff is entitled to receive, not only the amount claimed in the lien, but also the aggregate of unpaid common charges and fees that have accrued since the filing of the lien.

While we have long believed that this was indeed the law, it had not been directly addressed by an appeal court – although that is solved with this new case.  Thus, higher court authority has stated what all the lower courts had concluded so that there can be no issue but that a condominium common charge lien is a continuing lien – obviously good and comforting news for any condominium board of managers.

Why This Matters to Mortgage Lenders

Some of our readers will be aware that statute affords to condominiums a special priority to the condominium common charge lien.  It is declared to be senior to (essentially) all other liens and mortgages except a first mortgage.  (This is pursuant to RPL §337-z.)

Thus, while the holder of a first mortgage is not concerned with the growing sum due on the junior condominium common charge lien, the holder of a second or more inferior mortgage upon the condo unit does care.  The subordinate mortgagee is subject to an ever increasing sum due on the condominium lien and, depending upon that amount, this could be consequential.

In conclusion, that a condominium lien is a continuing lien has genuine meaning both to condominiums and to lenders.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.