In this case, in 2001 plaintiff conveyed a condominium unit to defendant. In September 2005, plaintiff informed defendant that he had violated the condominium bylaws by not completing construction within 12 months and that a hearing would be held on September 30, 2005, that could result in a fine of $1,000 a month. The hearing was rescheduled at defendant’s request, but he did not attend the rescheduled hearing. Plaintiff’s board of directors imposed an escalating fine schedule: $100 a month from November to January 2006, $500 a month from February 2006 to April 2006, and $1,000 a month after March 2006. Plaintiff informed defendant of the fine schedule via letter.
AUTHORITY TO LEVY FINES
The Condominium Act provides associations various relief in the event of a default by a co-owner, including the levying of fines.
It is plaintiff’s position that under its bylaws fines against owners can be treated as condominium assessments, and any unpaid assessments constitute a lien on the unit. Thus, after defendant failed to pay any of the fines or complete construction of the home, in May 2010 plaintiff filed a lien against defendant’s property for nonpayment of assessments. An amended lien was filed in 2017, for $137,800 in unpaid assessments. It is undisputed that this amount is comprised solely of the unpaid fines.
In October 2016, plaintiff initiated a lawsuit seeking judicial foreclosure on defendant’s unit to satisfy the lien.
AUTHORITY TO FORECLOSE
Defendant argued that plaintiff does not have authority to foreclose on his property solely because of unpaid fines.
This issue turns on the distinction between assessments and fines. This distinction is important because the bylaws (which mirrors the Condominium Act) only grant plaintiff the authority to foreclose assessments liens. Under the bylaws, unpaid fines do not become liens and, even if they did, the bylaws do not grant plaintiff authority to foreclose liens that consist only of fines. The Condominium Act also refers to assessments and fines as distinctive terms.
Condominium units are assessed amounts to cover maintenance, repair, management and other common expenses incurred by the association. In contrast, the purpose of fines is to punish owners for violation of the condominium documents.
The court agreed with plaintiff that under this provision that if an individual member or co-owner causes costs or damages, plaintiff may collect that amount as an assessment. However, plaintiff does not identify any costs or damages that it incurred because of defendant’s failure to timely complete construction. The court concluded the fines levied against defendant may not be treated as assessments and therefore plaintiff did not have authority under its bylaws to file a lien against defendant and seek foreclosure.
Assistance with Condo Association Disputes
Resolving condo association disputes in the most efficient and cost-effective manner is best for both parties. Aldrich Legal Services can help parties reach an agreement through negotiation or through an alternative dispute resolution option.