Oregon Supreme Court Rules Condominium Association Priority Over Lender | Weiner Brodsky Kider PC

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The Oregon Supreme Court recently ruled that a condominium association’s lien for unpaid appraisals took precedence over a bank’s lien because the bank failed to initiate foreclosure proceedings within 90 days. the opinion of the co-ownership association regarding the default of a co-ownership owner.

A landlord purchased a condominium in 2003 and delivered a note to the bank’s predecessor in law, which was secured by a duly registered trust deed. In 2011, the owner did not make a loan repayment. In 2013, the owner also failed to pay for the condominium association appraisals. The condominium association filed its lien for the unpaid appraisals on July 25, 2013. Five days later, on July 30, 2013, the bank initiated foreclosure proceedings, but did not name the condominium association in the ‘action. On December 11, 2013, the bank and the owner entered into a stipulated limited judgment of foreclosure. In January 2014, the bank filed its first amended judicial foreclosure complaint naming the condominium association as a party. In May 2014, the court rendered a general judgment of non-suit without prejudice to the co-ownership association for failure to prosecute.

On or around October 1, 2014, the condominium association sent a notice to the bank of the owner’s default on the assessments. On May 4, 2015, the bank asked the lower court to reinstate the foreclosure action, which the court granted. The condominium association responded to the complaint and claimed priority over the bank in accordance with ORS 100.450 (7). The condominium association then sought summary judgment, arguing it had priority because the bank failed to initiate foreclosure proceedings within 90 days of the notice. The bank argued that it was not required to initiate proceedings when it had already initiated one. The trial court issued a summary judgment for the bank and the appeals court upheld the judgment.

The Oregon Supreme Court overturned the judgment, ruling that the bank had not initiated proceedings after its previous proceedings were dismissed by general judgment. Usually, a first mortgage takes precedence over the lien of an association of co-owners for unpaid appraisals. However, such a lien may take precedence if, after the condo association notifies a lender of the condo owner’s default, the lender fails to initiate foreclosure proceedings within 90 days of the notice. While the bank was not required to initiate proceedings within 90 days of notification if it had proceedings pending, the bank’s earlier proceedings were not pending because they had been dismissed. Therefore, she was required to initiate proceedings within 90 days of the notice to maintain her priority.

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