Maintaining Condominiums and Homeowner Associations: Ending the Free Ride

44 Pages Posted: 13 Oct 2016

See all articles by Stewart E. Sterk

Stewart E. Sterk

Yeshiva University - Benjamin N. Cardozo School of Law

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Date Written: October 10, 2016


During the recent real estate crisis, competition for scarce dollars pitted the holders of defaulted mortgages against condominiums and homeowner associations seeking to collect maintenance assessments. Statutes providing mortgagees with lien priority threatened association ability to provide services, and imposed a disproportionate burden on non-defaulting unit owners. Statutes enacted in other states gave associations a “super priority” lien for six months of assessments, but left uncertainty about the meaning of that super priority in an environment in which foreclosure delays became the norm.

The last five years have brought a spate of litigation over the relative rights of associations and mortgagees. The litigation appears to have settled one contentious but critical issue: the super priority lien confers on associations the right to foreclose. Other issues, however, remain unsettled, and often depend on state-specific statutory provisions.

As a policy matter, associations liens should enjoy complete priority over mortgage liens. As a matter of fairness, priority for association liens prevents banks from free riding on maintenance expenditures made by non-defaulting unit owners and ensures that all units bear their fair share of maintenance expenditures. From an efficiency perspective, banks are in a far better position to account for potential economic downturns than are associations. Moreover, giving associations priority over banks solves what is otherwise a difficult collective action problem in situations where multiple banks hold mortgages on different underwater units within a single common interest community.

Keywords: mortgage, lien priority, condominium, homeowners association, real property

Suggested Citation

Sterk, Stewart E., Maintaining Condominiums and Homeowner Associations: Ending the Free Ride (October 10, 2016). Cardozo Legal Studies Research Paper No. 499, Available at SSRN:

Stewart E. Sterk (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

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