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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 16-CV-262 03/01/2018
ANDREA LIU, APPELLANT,
v.
U.S. BANK NATIONAL ASSOCIATION, APPELLEE.
Appeal from the Superior Court of the
District of Columbia
(CAR-6539-14)
(Hon. Ronna L. Beck, Motions Judge)
(Argued January 31, 2017 Decided March 1, 2018)
Robert C. Gill for appellant.
S. Mohsin Reza for appellee.
Before BLACKBURNE-RIGSBY, Chief Judge,* and GLICKMAN and THOMPSON,
Associate Judges.
BLACKBURNE-RIGSBY, Chief Judge: In the District of Columbia,
condominium associations are granted a “super-priority lien” over first mortgage
lienholders, which permits an association to collect up to six months of unpaid
*
Chief Judge Blackburne-Rigsby was an Associate Judge at the time this
case was argued. Her status changed to Chief Judge on March 18, 2017.
2
assessments upon foreclosure on a condominium unit. 1 In Chase Plaza
Condominium Ass’n v. JPMorgan Chase Bank, N.A., 98 A.3d 166, 172 (D.C.
2014), this court was asked to determine whether a condominium association’s
foreclosure on its super-priority lien could extinguish an otherwise first-priority
deed of trust or mortgage when the proceeds of the foreclosure sale were
insufficient to satisfy the deed of trust or mortgage. We held in the affirmative—
that “a condominium association is permitted to foreclose on [its] six-month
[super-priority] lien and [to] distribute the proceeds from the foreclosure sale first
to satisfy [its super-priority] lien and then to satisfy any remaining liens in order of
lien priority.” Id. We clarified that in such circumstances “[a]ny liens [including a
first mortgage or first deed of trust] that are unsatisfied by the foreclosure-sale
proceeds are extinguished, and the foreclosure-sale purchaser acquires free and
clear title.” Id.
The present case requires this court to determine a similar issue. We must
decide whether, prior to the 2017 amendment to D.C. Code § 42-1903.13,2 a
1
D.C. Code § 42-1903.13 (a)(2) (2012 Repl.).
2
Effective April 7, 2017, D.C. Code § 42-1903.13 was amended to add a
provision requiring that the foreclosure sale notice expressly state whether the
foreclosure sale is for the six-month priority lien and not subject to the first deed of
(continued…)
3
condominium association could choose to sell the condominium unit “subject to
the first mortgage or first deed of trust” on the property, while at the same time
enforcing its super-priority lien. We conclude that a condominium association
could not foreclose on its super-priority lien while leaving the property subject to
the unsatisfied balance of the first mortgage or first deed of trust—to find
otherwise would contravene our holding in Chase Plaza. Accordingly, we reverse
the trial court’s order granting summary judgment to U.S. Bank, which concluded
that a condominium could foreclose on its super-priority lien while leaving the
underlying mortgage lien intact, and remand for further proceedings consistent
with this opinion.
I. Factual Background
On March 9, 2007, Jon Michael Lucas obtained a mortgage loan in the
amount of $589,750 to finance his purchase of condominium unit 1003, located at
301 Massachusetts Avenue, N.W., in the Sonata Condominium complex. Mr.
Lucas also executed a deed of trust and promissory note, which secured the loan on
(. . . continued)
trust, or for more than the six-month priority lien and subject to the first deed of
trust. D.C. Code § 42-1903.13 (c)(4)(B)(ii).
4
the condominium. Mr. Lucas’s mortgage loan was originally from Vanguard
Mortgage and Title, Inc. (“VMT”) and the deed of trust and note were executed in
VMT’s favor. The deed of trust was recorded in the land records of the District of
Columbia. Mr. Lucas’s mortgage loan was later assigned to U.S. Bank (“Bank”),
which also took possession of the note.
In 2009, Mr. Lucas stopped paying both his monthly mortgage payments and
his condominium assessments, the latter of which prompted the Sonata
Condominium Unit Owners Association (“Sonata”) to seek foreclosure on the
condominium, pursuant to D.C. Code § 42-1903.13 (a)(2), which entitles
condominium associations to a super-priority lien for the most recent six months of
unpaid condominium assessments. Between 2011 and 2014, Sonata scheduled
several foreclosure sales for the condominium, but the sales were all cancelled
after the Bank paid Mr. Lucas’s unpaid assessments. The Bank paid the
assessments on Mr. Lucas’s behalf in order to preserve its lien on the
condominium. These payments were secured under Mr. Lucas’s loan by the deed
of trust.3
3
The “Condominium Rider,” which was signed by Mr. Lucas on March 9,
2007, and which supplemented the deed of trust, states that Mr. Lucas and his
Lender agreed that “[i]f [Mr. Lucas] does not pay condominium dues and
(continued…)
5
On May 1, 2014, Mr. Lucas was in default for unpaid condominium
assessments, prompting Sonata to file a “Notice of Foreclosure Sale of the
Condominium Unit for Assessments Due” with the District’s Recorder of Deeds.
The notice stated that Mr. Lucas was in arrears to Sonata for $11,503.67.4 Sonata
sent the notice of the foreclosure sale to Mr. Lucas and all other interested parties,
including the Bank; the notice stated that the foreclosure sale would not be held
until thirty-one days past the date on which the notice was mailed, and that if the
past due amounts were not paid in full by that time, the condominium would be
sold at a public auction on June 4, 2014. On May 23, Sonata also sent the Bank a
letter stating the amount that needed to be paid in order to stop the scheduled
foreclosure sale.
(. . . continued)
assessments when due, then [the] Lender may pay them. Any amounts disbursed
by [the] Lender . . . shall become additional debt of [Mr. Lucas] secured by the
[deed of trust].”
4
The amount Mr. Lucas owed was accelerated through 2014. According to
the attorney conducting the foreclosure sale, Elizabeth Menist, if a unit is sold to a
third-party, an adjustment is made so that the foreclosed unit owner is not charged
for future assessments given that he or she no longer owns the unit. The third-
party purchaser is then responsible for the monthly assessments as they become
due.
6
Sonata publicly advertised the sale of the condominium in the Washington
Post on May 23, May 28, and June 3, 2014. The advertisement stated that the
condominium would be sold pursuant to D.C. Code § 42-1903.13, and that it
would be “[s]old subject to a deed of trust for approximately $589,750.00 (as of
03/09/2007)[,]” referencing the Bank’s deed of trust for Mr. Lucas’s mortgage
loan.
On June 4, Sonata held a public auction for the foreclosure sale and the
condominium was sold to appellant Liu, the highest bidder at the auction, for
$17,000. An accounting of the foreclosure sale, included in the record,
demonstrates that, of the $17,000 purchase price for the condominium, Sonata
deducted almost six months of unpaid condominium assessments, totaling
$5,195.28, as well as interest on the assessments, attorney’s fees, and other
expenses from the foreclosure sale. 5
The Bank attempted to pay the assessments owed to Sonata in order to stop
the foreclosure sale. Sonata, however, did not receive the check from the Bank
5
Ultimately, there was a surplus of $7,512.92 after Sonata collected the
assessments ($5,192.28), interest ($216.45), attorney’s fees and reimbursable costs
($2,788.93), advertising costs ($885.08), the auctioneer’s commission ($425), and
the lienholder’s portion of interest on unpaid balance from buyer ($30.04).
7
until June 5, 2014, the day after the foreclosure sale. Accordingly, the Bank’s
check was returned with a letter indicating that the condominium had already been
sold to a third-party purchaser. Ms. Liu recorded the deed of trust, dated July 1,
2014, which included a provision inserted by Sonata, stating: “The hereinafter
described property is sold subject to a deed of trust recorded in the Office of the
Recorder of Deeds at Instrument Number 2007035647.”
On October 16, 2014, the Bank filed a claim for judicial foreclosure against
Mr. Lucas, as the mortgagor in default under the note, and later joined Ms. Liu, the
new record owner of the condominium, as a defendant in the action. In its claim,
the Bank asserted its rights as the beneficiary of the deed of trust, and also notified
the court that Mr. Lucas’s loan had been accelerated, and that he owed
$799,034.23 under the note.6 In her defense, Ms. Liu maintained that she
purchased the condominium at the foreclosure sale, free and clear of the Bank’s
mortgage lien, pursuant to both D.C. Code § 42-1903.13 (a)(2) and this court’s
6
In May 2014, the Bank sent Mr. Lucas a demand letter, and attached a
“Payoff Quote” at the back of the letter. According to the Bank’s quote, Mr. Lucas
owes $589,749.85 for the principal balance on the note, $10,487.96 for an escrow
advance, $62,873.59 for a corporate advance, $135,855.25 in interest, and $67.58
in late charges. These charges equate to $799,034.23, the total amount the Bank is
currently seeking under the note.
8
decision in Chase Plaza.7 Both Ms. Liu and the Bank moved for summary
judgment before the trial court.
On February 3, 2016, the trial court granted the Bank’s motion for summary
judgment and denied Ms. Liu’s motion for summary judgment. The trial court
acknowledged that, at the time of Sonata’s foreclosure sale, the law was unclear
regarding the effect of a condominium association’s foreclosure sale, pursuant to
its super-priority lien, on a bank’s first-priority mortgage lien.
Despite this lack of clarity in the law at the time of Ms. Liu’s purchase, the
trial court emphasized that the advertisements, the memorandum of sale to Ms.
Liu, and the deed of trust all specified that the property was sold to Ms. Liu subject
to the Bank’s mortgage lien. Thus, it was “abundantly clear” that Ms. Liu was
purchasing the property subject to the Bank’s lien. Furthermore, the court noted
that Ms. Liu had testified at a deposition that the property was worth between
7
On August 28, 2014, a few months after Ms. Liu’s purchase of the
condominium at the foreclosure sale, we issued our decision in Chase Plaza.
Relying on the plain language and legislative history of the super-priority lien
provision, as well as general principles of foreclosure law, we held that “a
condominium association can extinguish a first deed of trust by foreclosing on its
six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2).” Chase Plaza,
supra, 98 A.3d at 178.
9
$700,000 and $750,000, and that the District of Columbia Office of Tax and
Revenue assessed the condominium at a value of $719,930. The court stated that
the $17,000 purchase price “obviously reflected the understanding that the
Property was subject to [the Bank’s] lien.” Accordingly, the trial court concluded
that “[i]t would be an inequitable windfall and contrary to the parties’ expectations
to permit Ms. Liu to disavow [the Bank’s] mortgage . . . and would impose an
enormous foreclosure deficiency on [] [Mr.] Lucas if Ms. Liu’s purchase is not
subject to [the Bank’s] lien, as was contemplated at the foreclosure sale.” This
appeal followed.
II. Discussion
We review a trial court’s order granting summary judgment de novo. Chase
Plaza, supra, 98 A.3d at 172. In determining whether summary judgment was
appropriate, we view the evidence in the light most favorable to the non-prevailing
party and we draw all reasonable inferences in that party’s favor. See Woodland v.
Dist. Council 20, 777 A.2d 795, 798 (D.C. 2001). “Summary judgment is only
appropriate where there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law.” Chase Plaza, supra, 98 A.3d at 172
(citation and internal quotation marks omitted).
10
A. Chase Plaza
In Chase Plaza, this court was asked to, for the first time, address the proper
interpretation of a condominium association’s super-priority lien for unpaid
assessments under D.C. Code § 42-1903.13 (a)(2), and the impact of an
association’s foreclosure, pursuant to a super-priority lien, on a bank’s first deed of
trust or first mortgage. We explained that, under the District of Columbia
Condominium Act, condominium association liens for unpaid assessments are
“split[] . . . into two liens of differing priority[.]” Chase Plaza, supra, 98 A.3d at
173. First, the condominium association is granted a lien for the most recent six
months of unpaid condominium assessments, which is “higher in priority than the
first mortgage or first deed of trust[,]” and commonly referred to as a “super-
priority lien.” Id.; see also D.C. Code § 42-1903.13 (a)(2) (stating that a
condominium association’s lien “shall [] be prior to a mortgage or deed of trust . . .
to the extent of the common expense assessments . . . which would have become
due in the absence of acceleration during the [six] months immediately preceding
institution of an action to enforce the lien . . .”). Second, the Act grants the
condominium association a lien for any remaining unpaid assessments beyond the
most recent six-month period. See D.C. Code § 42-1903.13 (a). However, this
11
second lien is “lower in priority than the first mortgage or first deed of trust.”
Chase Plaza, supra, 98 A.3d at 173.
Thus, under the circumstances presented here, where a condominium unit
owner defaults on both his mortgage payments and his condominium assessments,
the condominium association’s super-priority lien for the most recent six months of
assessments, is higher in priority than the first mortgage or first deed of trust on the
condominium unit. See D.C. Code § 42-1903.13 (a)(2); Chase Plaza, supra, 98
A.3d at 173. Importantly, the Act also expressly prohibits “variation by
agreement,” which prevents parties from contracting around the statute: “Except as
expressly provided by this chapter, a provision of this chapter may not be varied by
agreement and any right conferred by this chapter may not be waived.” D.C. Code
§ 42-1901.07.
Chase Plaza involved facts similar to those presented in this case and
therefore, is central to our consideration. In Chase Plaza, Chase Plaza
Condominium Association, Inc. instituted foreclosure proceedings against a
condominium unit owner to collect six months of unpaid assessments, pursuant to
its super-priority lien under D.C. Code § 42-1903.13 (a)(2). Chase Plaza, supra,
98 A.3d at 168. Chase Plaza’s notice of the foreclosure sale “specified that the
12
foreclosure sale would not be subject to the first deed of trust” and thus, the bank’s
first deed of trust, as a lien lower in priority than the condominium association’s
super-priority lien, would not be protected by the foreclosure sale. Id. After the
condominium was sold to the highest bidder at the sale, JPMorgan Bank, as holder
of the note for the first deed of trust, filed a complaint against Chase Plaza and the
new record owner, requesting that the trial court set aside the foreclosure sale and
declare that JPMorgan Bank held title to the unit. Id. at 169. The trial court
granted summary judgment to JPMorgan Bank on the basis that “Chase Plaza
could not lawfully extinguish [JPMorgan Bank’s] first deed of trust[.]” Id.
Accordingly, the trial court voided Chase Plaza’s foreclosure sale “because the unit
had not been sold subject to the first deed of trust.” Id.
We reversed the trial court’s decision, recognizing the general and well
settled principle of foreclosure law that “liens with lower priority are extinguished
if a valid foreclosure sale yields proceeds insufficient to satisfy a higher-priority
lien[.]” Id. at 173. We observed further that the plain language of the super-
priority lien provision, under D.C. Code § 42-1903.13 (a)(2), did not suggest that
the Council of the District of Columbia intended to deviate from this general
principle. Id. at 174. Upon a review of the legislative history of the super-priority
lien provision, we noted that the Council intended for the super-priority lien to give
13
condominium associations “maximum flexibility in collecting unpaid
condominium assessments.” Id. (citing D.C. Council, Report on Bill 8-65, at 3
(Nov. 13, 1990)). We also noted that our super-priority lien provision had been
modeled after similar provisions from the Uniform Common Interest Ownership
Act (“UCIOA”) and the Uniform Condominium Act (“UCA”), and that the
drafters’ official comments under those Acts indicated that they understood that a
condominium association’s foreclosure on its super-priority lien would extinguish
a first mortgage or first deed of trust. Id. However, the drafters “expected that
mortgage lenders would take the necessary steps to prevent that result, either by
requiring payment of assessments into an escrow account or by paying assessments
themselves to prevent foreclosure.” Chase Plaza, supra, 98 A.3d at 174-75; see
also UCIOA § 3-116, cmt. 2; UCA § 3-116, cmt. 2. For these reasons, we
concluded that the condominium association’s foreclosure pursuant to its super-
priority lien effectively extinguished JPMorgan Bank’s first deed of trust. Chase
Plaza, supra, 98 A.3d at 175, 178.
B. Analysis of Super-Priority Lien Provision
On appeal, neither party disputes this court’s holding in Chase Plaza. Ms.
Liu argues that the decision supports a conclusion that she purchased the
14
condominium at Sonata’s foreclosure sale, free and clear of the Bank’s mortgage
lien. She contends that the anti-waiver provision of the Condominium Act
precludes a condominium association from enforcing its super-priority lien at a
foreclosure sale, subject to a first mortgage or deed of trust. 8
Conversely, the Bank argues that the trial court properly granted its motion
for summary judgment on equitable grounds because “the sale’s advertisement, the
auctioneer’s statements [] at the sale, the Memorandum of Purchase signed by Ms.
Liu, and the Trustee’s Deed [] recorded by Ms. Liu” all demonstrate that the
condominium was sold to Ms. Liu, subject to the deed of trust. The Bank argues
that Chase Plaza is not applicable to this case because Sonata did not enforce its
super-priority lien at its foreclosure sale, but instead elected to sell the
condominium subject to its deed of trust. The Bank also challenges Ms. Liu’s
purchase at Sonata’s foreclosure sale on other grounds, which we address later in
this opinion.
8
Ms. Liu further asserts that the provisions in the advertisement, on her
memorandum of sale, and in the deed of trust, which indicated that the property
was sold subject to the deed of trust, were only included because of the trial court’s
erroneous ruling in Chase Plaza, which was later reversed by this court. Notably,
Ms. Liu mentions the attorney who conducted the foreclosure sale of the property
at issue in this case was the same attorney who conducted the foreclosure sale in
Chase Plaza.
15
To begin, we agree with Ms. Liu that the anti-waiver provision of the
Condominium Act, D.C. Code § 42-1901.07, precludes a condominium association
from exercising its super-priority lien while also preserving the full amount of the
Bank’s unpaid lien. D.C. Code § 42-1901.07 states “[e]xcept as expressly
provided by this chapter, a provision of this chapter may not be varied by
agreement and any right conferred by this chapter may not be waived.” (emphasis
added). As we stated in Chase Plaza, none of the provisions of the chapter
expressly indicate that a super-priority lien may be contracted away by the parties
or waived by the condominium association.
Furthermore, permitting a condominium association to exercise its super-
priority lien while also preserving the full amount of the Bank’s unpaid lien,
defeats the Council’s purpose in enacting the super-priority lien. The super-
priority lien provision effectively shields condominium associations from pressure
by lenders to require foreclosure-sale purchasers to agree that the property is
subject to the first mortgage, a term that could reduce the number of interested
bidders and impair the condominium association’s ability to recover unpaid
assessments.
16
Here, the record demonstrates that Sonata enforced its lien for Mr. Lucas’s
most recent six months of unpaid assessments, when it sold the condominium to
Ms. Liu at the foreclosure sale. The foreclosure notice to Mr. Lucas and Sonata’s
letter to the Bank indicated that Sonata was seeking to collect $11,503.67 in unpaid
assessments and related costs, and that if the amount was not paid, Sonata would
institute foreclosure proceedings on the unit.
The Bank argues, however, that because the terms of the sale indicated that
the unit would be sold subject to its first deed of trust, Sonata did not actually
enforce its super-priority lien. The Bank also maintains that a condominium
association may agree to subordinate its super-priority lien to a first deed of trust
during a foreclosure sale. We disagree. Such a reordering of lien priorities would
effectively constitute a waiver by the condominium association of its super-priority
lien, which is not permitted under D.C. Code § 42-1901.07. That section expressly
states that any right conferred under the Condominium Act may not be waived.
“[W]hen the language of a statute is plain and unambiguous, we are bound by the
plain meaning of that language.” See Hudson Trail Outfitters v. District of
Columbia Dep’t of Emp’t Servs., 801 A.2d 987, 990 (D.C. 2002) (citation and
internal quotation marks omitted). Thus, any attempt by a condominium
association or a holder of a first mortgage or deed of trust to have a condominium
17
association’s super-priority lien waived or varied by contract is invalid, as a matter
of law.
To be clear, we are not stating that a foreclosing condominium association is
required to foreclose pursuant to its super-priority lien. 9 However, here, where
Sonata collected on only the most recent six months of unpaid assessments, we are
satisfied that Sonata enforced its super-priority lien at the sale. 10 Under these
circumstances, if the proceeds of the sale are insufficient to cover the first deed of
trust, then the first deed of trust must be considered effectively extinguished. See
9
We do not address the question of whether a lien covering a period in
excess of six months prior to the 2017 amendment to D.C. Code § 42-1903.13 is
properly conceptualized as a split-lien, which includes a six-month portion entitled
to super-priority status, or as one lien, all of which is considered to be lower in
priority to the first mortgage or deed of trust.
We also refrain from addressing the issue of whether the foreclosure sale
should be set aside, given that the sole count in the complaint was one for judicial
foreclosure, and in light of the Bank’s statement that it “does not seek to set aside
the June 4, 2014 sale in this action.”
10
The attorney conducting the foreclosure sale, Elizabeth Menist, also
conducted the foreclosure sale in Chase Plaza. In this case, Ms. Menist testified
that her intention was for Sonata to foreclose on a lien for January through
December, 2014. However, given that the sale occurred on June 4, 2014, Sonata
foreclosed on a lien covering slightly less than the six months entitled to super-
priority status. As discussed in note 4, supra, an adjustment is made so that the
foreclosed unit owner is not charged for future assessments.
18
Chase Plaza, supra, 98 A.3d at 176 (stating “the general rule that foreclosure on a
lien with greater priority extinguishes liens with lower priority”). The plain
language of D.C. Code § 42-1903.13 (a)(2), the super-priority lien provision, does
not indicate an intent to deviate from this general principle. Id. at 175.
C. Equitable Estoppel
The Bank contends that the trial court properly concluded that Ms. Liu was
equitably estopped from claiming that its mortgage interest was extinguished at the
sale. We have recognized that “[a] party raising equitable estoppel must show that
he changed his position prejudicially in reasonable reliance on a false
representation or concealment of material fact which the party to be estopped made
with knowledge of the true facts and intent to induce the other to act.” Nolan v.
Nolan, 568 A.2d 479, 484 (D.C. 1990) (citation and internal quotation marks
omitted). In response, Ms. Liu asserts that the provisions in the advertisement, on
her memorandum of sale, and in the deed of trust, which indicated that the property
was sold subject to the deed of trust, were only included because of the trial court’s
erroneous ruling in Chase Plaza, which was later reversed by this court.
19
Here, the record does not support the trial court’s application of the equitable
estoppel doctrine to preclude Ms. Liu from maintaining that her purchase of the
condominium was not subject to the Bank’s deed of trust. To begin, the Bank has
not demonstrated that it reasonably relied on the advertised terms of sale to protect
its mortgage interest. To the contrary, the Bank attempted to pay the six months of
condominium assessments in order to stop the foreclosure sale, but failed to make
the payment on time. Moreover, although the Bank contends that it “reasonably
relied upon Ms. Liu’s actions in accepting the terms of the sale by not moving to
vacate the sale after it occurred[,]” this argument lacks merit—the Bank was aware
through its loan servicer that the state of the law on super-priority liens was in flux
at the time, and that the Bank’s interest could be subordinate to Sonata’s interest in
the event of a foreclosure sale.
Furthermore, the legislative history of the super-priority lien provisions and
public policy concerns related to ensuring a condominium association’s collection
of unpaid assessments, also support a conclusion that equitable estoppel is not
appropriate in this case. See Sears v. Sears, 293 F.2d 884, 887 (D.C. Cir. 1961)
(“[A] court of equity, in determining whether to interpose the bar of equitable
estoppel, must consider all the factors of the particular case at bar, the parties
involved, the effect of the ultimate decision on third parties who are not before the
20
court, the nature of the rights sought to be vindicated and, as well, public policy as
expressed by pertinent statutes and prior judicial declarations.”). For example, in
2013, the Joint Editorial Board for Uniform Real Property Acts (“JEB”)—a board
established by the Uniform Law Commission (“ULC”)—created a report, to in
part, address the appropriate interpretation of the six-month limited priority lien
provision.11 See JEB Report, supra note 11, at 6. In its report, the JEB discussed
how the depressed real estate market has led to incentives for banks to intentionally
delay foreclosure proceedings, at the expense of condominium associations, which
are forced to forgo timely payments of assessments, and at the expense of
condominium association residents who “bear the consequences of default by a
[condominium unit owner] [on] assessment obligations.” Id. at 4. In this case, Mr.
Lucas was in default on both his mortgage payments and his condominium
assessments for a lengthy period, from 2009 to 2014, yet the Bank waited five
years to institute foreclosure proceedings on the unit. In addition, the
11
The JEB monitors all uniform real property acts and “provides guidance
to the [ULC] and others regarding potential subjects for uniform laws relating to
real estate[.]” Report of the Joint Editorial Bd. for Unif. Real Prop. Acts, The Six-
Month “Limited Priority Lien” for Association Fees Under the Uniform Common
Interest Ownership Act (June 1, 2013) (“JEB Report”). The Board is made up of
representatives from the ULC, the American Bar Association’s Real Property,
Trust and Law Section, and the American College of Real Estate Lawyers, and
liaisons from the American College of Mortgage Attorneys, the American Land
Title Association, and the Community Associations Institute.
21
condominium association had to file several notices of foreclosure in an effort to
obtain payments to cover Mr. Lucas’s defaults on the assessments. It is this
prejudice to condominium associations from extended delays by a bank to institute
foreclosure on a condominium unit, which the super-priority lien was intended to
prevent.
Finally, and most importantly, we note that equitable relief is not available
when granting such relief would contravene the express provision of a statute. The
judicial system is charged with enforcing public policy as embodied by legislative
statute. “It is a basic maxim that equity is ancillary, not antagonistic, to the law.
Equitable relief is not available when the grant thereof would violate the express
provision of a statute.” Dep’t of Transp. v. Am. Ins. Co., 491 S.E.2d 328, 331 (Ga.
1997) (citation and internal quotation marks omitted); see also T.F. v. B.L., 813
N.E.2d 1244, 1253-54 (Mass. 2004) (citation and internal quotation marks omitted)
(stating that “[e]quity is not an all-purpose judicial tool by which the right thing to
do can be fashioned into a legal obligation possessing the legitimacy of legislative
enactment”). Although it may seem like Ms. Liu was able to procure the property
for a relatively low amount of money through the foreclosure process, any
concerns about this process are properly addressed through the legislative process.
Moreover, the Bank still retains a claim against Mr. Lucas, the borrower under the
22
Bank’s mortgage loan, from whom the Bank can seek to recover the remaining
balance owed on Mr. Lucas’s mortgage.
D. The Bank’s Additional Claims
The Bank makes a few additional challenges to Sonata’s foreclosure sale,
which warrant brief discussion. First, the Bank argues that Sonata was permitted
to conduct the foreclosure sale subject to the Bank’s first deed of trust, because a
secured party bank and a condominium association may agree to subordinate a
condominium association’s super-priority lien to a bank’s mortgage lien under the
JEB Report. However, this is a mischaracterization of the JEB Report. Example
One of the JEB Report addresses an instance in which a unit owner is in default on
both its mortgage with the bank and its common expense assessments, and the
bank institutes foreclosure proceedings on the unit. JEB Report, supra note 11, at
7-8. Example One clarifies that a bank’s foreclosure on the unit will not extinguish
the association’s super-priority lien because that lien is senior to the bank’s lien.
Id. at 7. Instead, the association’s super-priority lien will transfer to the proceeds
of the sale, and the buyer at the foreclosure sale will take title to the unit, subject to
the association’s six-month super-priority lien. Id. at 7-8. In this example, the JEB
Report mentions that as an alternative, the bank and the association may agree that
23
the foreclosure sale will deliver clear title to the buyer, with the proceeds of the
sale being distributed first to the association to cover its six months’ worth of
unpaid assessments prior to being applied to the bank’s unpaid mortgage balance.
Id. at 8. This alternative, however, does not suggest that the association may
subordinate its senior lien status; to the contrary, it reinforces the principle that an
association’s six-month priority lien has “true priority” over the bank’s subordinate
lien. See id.
Next, the Bank argues that Sonata could only impose its six-month super-
priority lien through a judicial foreclosure, and maintains that because the
association conducted a non-judicial foreclosure in this case, the sale could not
operate to extinguish the Bank’s mortgage lien. We disagree. The Bank cites to
the version of D.C. Code § 42-1903.13 (a)(2) in effect on the date of the
foreclosure sale, which states that:
[t]he lien shall also be prior to a mortgage or deed of trust . . . to the
extent of the common expense assessments based on the periodic
budget adopted by the unit owners’ association which would have
become due in the absence of acceleration during the 6 months
immediately preceding institution of an action to enforce the lien.
However, the statute also contemplates non-judicial enforcement of liens, as
occurred in Chase Plaza—D.C. Code § 42-1903.13 (c)(1) expressly states that
“[t]he unit owners’ association shall have the power of sale to enforce a lien for
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assessments against a condominium unit . . . unless the power of sale procedures
are specifically and expressly prohibited by the condominium instruments.”
(emphasis added). Here, the condominium by-laws explicitly authorize a non-
judicial foreclosure, stating that “[t]he lien for assessments may be foreclosed in
the manner provided by the laws of the District of Columbia either, at the option of
the Board of Directors, by a sale in a non-judicial proceeding or by suit brought in
the name of the Board of Directors, acting on behalf of the Association.”
Moreover, effective June 21, 2014, D.C. Code § 42-1903.13 (a)(2) was amended to
include language referring to “institution of an action to enforce the lien or
recordation of a memorandum of lien against the title to the unit by the unit
owners’ association.” “While the action of a later Council usually does not
provide definitive evidence of the intent underlying the action of a former
Council,” see Coleman v. Cumis Ins. Soc’y, 558 A.2d 1169, 1172-1173 (D.C.
1989), the fact that the 2014 “clarif[ication]” is consistent with the official
comments of the UCIOA and the UCA, discussed below, “lends some support for
our view that . . . the [earlier] Council intended to” provide for foreclosure of a
super-priority lien through a condominium association’s power of sale. Id.
The official comments of the UCIOA and the UCA for the super-priority
lien provisions state that an association’s super-priority lien may be foreclosed in
25
the same manner in which a mortgage on real estate is foreclosed. See UCIOA
§ 3-116 (k)(1); UCA § 3-116 (a); see also JEB Report, supra note 11, at 9 n.8
(“[A]n association may foreclose its lien by non-judicial proceedings if the state
permits non-judicial foreclosure.”). In this jurisdiction, a mortgage lender may
foreclose on a unit through judicial foreclosure or non-judicial foreclosure, and
accordingly, Sonata had the option of pursuing either type of foreclosure in this
case. See D.C. Code §§ 42-815, -816 (2012 Repl.). Thus, Sonata was not
precluded from pursuing non-judicial enforcement of its super-priority lien.
Lastly, the Bank argues that Sonata’s foreclosure sale could not have been
conducted pursuant to its super-priority lien because Sonata had already previously
attempted to foreclose on the unit. The Bank, relying on Example Three in the
JEB Report, is correct that the super-priority lien provision “does not . . . authorize
an association to file successive lien enforcement actions every six months as a
means to extend the association’s limited lien priority.” JEB Report, supra note
11, at 12. Example Three in the JEB Report, however, is based on a case in which
a foreclosure action is already pending at the time the association attempts to file
an additional foreclosure action; as a foreclosure action had already been initiated,
the additional action was not necessary to enforce the association’s lien and
represented an attempt to extend the association’s lien priority beyond the six
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months entitled to super-priority status. Although this precludes an association
from obtaining super-priority status on an amount in excess of six months while a
foreclosure action is pending, it does not preclude an association from enforcing
another super-priority lien if there is no action pending.
In JPMorgan Chase Bank, N.A. v. SFR Investments Pool 1, LLC, the United
States District Court for the District of Nevada stated that it could not find “any
authority stating that an [association] is precluded from bringing multiple
enforcement actions to enforce entirely separate liens (with super[-]priority
portions) for unpaid assessments against the same parcel of property.” 200 F.
Supp. 3d 1141, 1167 (D. Nev. 2016). The court recognized that the JEB Report
barred multiple attempts to “enforce the super[-]priority portion of its lien multiple
times during the pendency of the same bank foreclosure action” but that no such
bar existed for a subsequent enforcement action to enforce a separate lien when no
other foreclosure action was pending. Id. at 1168. Similarly, in this case, although
Sonata had previously collected on a separate super-priority lien, they were not
barred from filing a successive foreclosure action when no such action was
pending.
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III. Conclusion
In sum, we conclude that a condominium association, acting on its six-
month super-priority lien for unpaid condominium assessments, pursuant to D.C.
Code § 42-1903.13 (a)(2), may not conduct its foreclosure sale subject to the first
deed of trust. Although Sonata’s foreclosure sale in this case was purportedly
subject to the Bank’s deed of trust, the anti-waiver provision of D.C. Code § 42-
1901.07, precludes a condominium association from waiving the priority of its
super-priority lien or exercising its super-priority lien while also preserving the full
amount of the Bank’s unpaid lien. Thus, when Sonata enforced its super-priority
lien to collect six months of unpaid assessments at the foreclosure sale, the Bank’s
first deed of trust for the condominium was effectively extinguished and Ms. Liu
purchased the condominium free and clear of the Bank’s deed of trust.
Accordingly, we reverse the trial court’s order granting summary judgment to the
Bank and remand for further proceedings.
So ordered.