A lien is a document that records a debt, using a condo unit as collateral for the debt. Ordinarily, a lien against real estate has “priority” based on the date the lien is recorded. Once a lien is recorded, it becomes next in line to any liens previously recorded – first come, first served. This is the general rule of lien priority.

When a condo unit owner fails to pay assessments, Washington law provides for the automatic creation of a lien in the amount of the unpaid assessments. Associations have the option to record a lien to make the association’s interest in the unit a matter of public record. Contrary to the normal lien priority analysis above, a condo association lien’s “date” of priority is determined by when the declaration for that condominium association was recorded.

Under the Horizontal Property Regimes Act (also known as the “Old Act,” RCW 64.32), no matter when they are recorded, the priority of liens always goes in this order:

(1) Government liens for unpaid taxes;
(2) Mortgages; and
(3) Association liens.

The government always gets its money first; then mortgages are paid; then, only if there is money left over, the association’s lien is paid. The Old Act applies to all condos created before July 1, 1990.

The Condominium Act (also known as the “New Act,” RCW 64.34) contains an additional protection for association liens known as a super priority lien. The super priority lien has priority over mortgages to the extent of the most recent six months’ delinquent assessments dating back from a sheriff’s sale or trustee’s sale. Condo associations formed under the “old act” (RCW 64.32) may also take advantage of the super priority lien protection by amending their declaration to include priority lien language in that documents.

So under the New Act, lien priority looks like this:

(1) Government liens for unpaid taxes;
(2) Association lien to the extent of the most recent six months’ delinquent assessments;
(3) Mortgages; and
(4) The remaining amount of the association’s lien.

The priority lien applies if the lender initiates a judicial foreclosure or a non-judicial foreclosure, and if the association initiates a judicial foreclosure. Exceptions to the super priority lien rule:

(1) If a mortgage-holder requests written notice of delinquent assessments and the COA fails to provide that written notice, the priority of the COA’s lien can be reduced by up to three months. RCW 64.34.364(4).
(2) If the COA forecloses its lien non-judicially, the lien ceases to have super priority over previously perfected liens. RCW 64.34.364(5).

If you have any questions we can answer, please feel free to leave a comment or contact us directly. We look forward to continuing this conversation with you in our future posts!