GSL Alert – Ruling from NH Supreme Court

Ruling from NH Supreme Court on Termination of Common Area Privileges and Services.

New Hampshire Housing Finance Authority v. Pinewood Estates Condominium Association.

In a decision issued today (9/20/16) the NH Supreme Court reversed and remanded a Superior Court ruling that pursuant to a Condominium Declaration the purchaser at foreclosure (the first mortgagee) was responsible to pay pre and post foreclosure condominium assessments before common area services have to be restored. In this case, a unit owner in Pinewood was delinquent on common assessments. Pinewood notified the unit owner and first mortgagee, New Hampshire Housing Finance Authority (“NHHF”), of the delinquency. The delinquent amounts were not paid and Pinewood terminated common area services, which included water and sewer. Subsequently NHHF foreclosed on the unit and purchased at the foreclosure sale. Following the foreclosure, Pinewood notified NHHF of the outstanding pre and post foreclosure common assessments. NHHF paid the post foreclosure assessment, refused to pay the pre foreclosure assessments and filed a declaratory judgment action in the Superior Court. NHHF sought a declaration that it took title to the unit free and clear of any junior encumbrances, namely the delinquent common assessments, and that Pinewood had no authority to terminate common area services.

The Court examined the interplay of the provisions of the Condominium Act governing termination of services (RSA 356-B46 IX) and unpaid assessments (RSA 356-B46 I). The statute says that the association’s lien is junior to, among other things, a first mortgage, except for a limited 6 month priority. In this case, Pinewood did not establish a priority lien. The Court concluded that NHHF’s foreclosure extinguished or wiped out the pre foreclosure common assessments on the unit and NHHF took title to the unit free and clear. The Court further concluded that since those pre foreclosure amounts were extinguished and all post foreclosure amounts were paid, that Pinewood had no authority to terminate services.

Link to the case:  NH Supreme Court Opinion 09/20/2016