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HOA Talk: Connecticut: Special Assessments Part of Priority Debt?

Posted By USFN, Monday, August 11, 2014
Updated: Tuesday, October 13, 2015

August 11, 2014


by James Donohue
Bendett & McHugh, P.C.
USFN Member (Connecticut, Maine, Vermont)

The question before the court in Cedarwood Hill Estate Condo. Ass’n v. Danise, 57 Conn. L. Rptr. 164 (Nov. 8, 2013), was whether “special assessments” should be considered part of the priority debt as defined by C.G.S. § 47-258(b) and modified by Public Act 13-156.

In Connecticut, § 47-258(b) gives an HOA a priority debt over a first or a second mortgage. Public Act 13-156, which became effective in June 2013, inter alia, specifically excludes late fees, interest, or fines from the calculation of the priority debt. The Act also extends the priority to include nine months of common expense assessments based on the periodic budget adopted by the association from the previous amount of six months. As noted in the court’s decision, “common expense assessments” is not defined in § 47-258(b). While the plaintiff HOA asserted that special assessments are adopted by the association as part of the periodic budget and, therefore, are includable in the priority debt, the defendant mortgagee contended that special assessments fall under other assessments, which do not enjoy the priority status.

The court stated “late fees, interest, and fines are excluded by the new language of the Public Act, and they do not otherwise appear to meet the common sense definition of common expense assessments based on a budget adopted at least annually by the association.” The court then went on to say “[t]his categorical difference supports the plaintiff’s position that the special assessments in this case, which are common to all unit owners, are common expense assessments for the purposes of § 47-258(b).”

At the initial judgment hearing, the court found that the affidavit of debt provided by the plaintiff was insufficient and denied the judgment without prejudice. After argument, the plaintiff submitted an updated affidavit, which specifically asserted that the special assessments were adopted as part of the annual budget. The court then granted judgment to the plaintiff, finding the priority debt to include the special assessments.

While not all assessments may be included in the nine-month priority, when an HOA can provide evidence that the assessment was approved as part of the annual budget process and is assessed as to all units, it can be part of the priority calculation. As the priority debt is the payment needed for a defendant mortgagee to redeem the property in the HOA’s foreclosure action, it is beneficial to review affidavits of debt carefully so as not to be overcharged.

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Summer 2014 USFN Report

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