Argued
January 18, 2018
Appeal
from the Superior Court of the District of Columbia
(CAR-593-15) (Hon. Ronna Lee Beck, Trial Judge)
Anthony R. Champ, with whom Benny L. Kass was on the brief,
for appellant.
Anand
Ramana, with whom Phillip C. Chang was on the brief, for
appellee.
Before
Beckwith and McLeese, Associate Judges, and Farrell, Senior
Judge.
FARRELL, SENIOR JUDGE.
This
appeal requires us to decide an issue left open by our recent
decision in Liu v. U.S. Bank Nat'l Ass'n,
179 A.3d 871 (D.C. 2018), which concerned a foreclosure sale
initiated by a condominium association to recover on its
super-priority lien for unpaid assessments on a condominium
unit. The issue is whether, under the controlling language of
D.C. Code § 42-1903.13 (a)(2) (2012 Repl.) at the time
of the sale in question, "a lien [foreclosed on]
covering a period in excess of six months [of arrearage] . .
. is properly conceptualized as a split-lien, which includes
a six-month portion entitled to super-priority status [under
the statute], or as one lien, all of which is considered to
be lower in priority to the first mortgage or deed of
trust" encumbering the unit. Liu, 179 A.3d at
879 n.9. The question is one of law that we decide de novo.
See Chase Plaza Condo. Ass'n v. JP Morgan Chase Bank,
N.A., 98 A.3d 166, 172 (D.C. 2014).
I.
In
2007, Anusha Putty executed a note for $308, 750 to finance
the purchase of condominium unit 305 at the Parker House,
4700 Connecticut Avenue, N.W. ("the Unit").
Appellee Capital One, N.A. ("Capital One") is the
current holder of the note (on which Putty later defaulted)
and the beneficiary of the related first deed of trust. By
December 2012, Putty had fallen into arrears to the Parker
House Condominium Association ("the Association")
for some eleven months of unpaid condominium assessments, and
in December 2012 the Association recorded a lien on the
property in the amount of $6, 108.75. The Association's
Notice of Foreclosure Sale advertised as one term of sale
that the Unit would be sold "subject to the first deed
of trust, for the original amount of approximately $308,
000.00 (as of 12/10/07)." The sale, in which the
Association sought to recover the eleven-month balance of
unpaid assessments, took place in January 2013. Appellant
4700 Conn 305 Trust ("the Trust") was the
successful bidder at the sale, buying the Unit for $11, 000.
The Memorandum of Purchase memorializing the sale, as well as
the Trustee's Deed from the Association to the Trust,
explained that the Unit had been sold subject to Capital
One's first deed of trust.
In
January 2015, Capital One filed a complaint for judicial
foreclosure on the Unit in Superior Court. The Trust filed
counterclaims to quiet title and for slander of title,
asserting that the Association's foreclosure on the Unit
to enforce its lien for unpaid assessments had extinguished
Capital One's first deed of trust. On Capital One's
motion for summary judgment, the trial court determined that,
whatever the language of D.C. Code § 42-1903.13 (a)(2)
might dictate, "the only equitable result" was to
require the Trust "to abide by the agreement by which it
agreed to be bound," namely to purchase the Unit subject
to Capital One's original mortgage and deed of trust.
II.
As our
prior decisions have explained, § 42-1903.13 (a)(2)
provides District of Columbia condominium associations with a
"super-priority lien" over first mortgage
lienholders that permits an association to collect up to six
months of unpaid condominium assessments by way of
foreclosure on a defaulting unit. In Chase Plaza,
supra, where the condominium association had sought
and obtained six months of unpaid assessments from
foreclosure, 98 A.3d at 168, we held that the effect of this
enforcement of the "super-priority lien" is that
(a) the association may "distribute the proceeds from
the foreclosure sale first to satisfy the
condominium-assessment lien and then to satisfy any remaining
liens in order of lien priority"; and (b) "[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. at 172. In the more
recent case of Liu, supra, the issue was
whether that result changed when, unlike in Chase
Plaza, a condominium association expressly sold the
condominium unit "subject to the first mortgage or first
deed of trust" on the unit, while at the same time
enforcing its super-priority lien. Liu, 179 A.3d at
874. We held that the anti-waiver provision of D.C. Code
§ 42-1901.07, by "expressly stat[ing] that any
right conferred under the Condominium Act may not be
waived," "precludes a condominium association from
exercising its super-priority lien while also preserving the
full amount of the [first mortgage-holder's] unpaid
lien." Id. at 878. Because in Liu the
condominium association had "collected on only the most
recent six months of unpaid assessments," we concluded
that it had "enforced its super-priority lien at the
sale" and that, "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," despite the express effort to preserve
it. Id. at 878-79. As stated earlier, Liu
did not decide whether the analysis and result would be
otherwise if a condominium association sought to recover more
than the "six-month portion [of the arrearage] entitled
to super-priority status." Id. at 897 n.9.
We now
conclude that the result is the same in either case. As we
explained in Chase Plaza, § 42-1903.13 (a)
makes condominium assessment liens prior in enforceability to
any other lien or encumbrance except, among other things, a
previously recorded first mortgage or first trust; but it
then "provides the highest priority to liens relating to
the most recent six months of condominium assessments,"
98 A.3d at 173, by stating:
The lien shall also be prior to a [first] mortgage or [first]
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
...