BAC Home Loans Servicing, LP v. Fulbright

Jeanne Lewis purchased a condominium with a $277,000 loan from Bank of America. The condominium association recorded its declaration in 2006. Bank of America recorded its deed of trust in 2007. Lewis defaulted on her condominium assessments in 2008. In 2009, the condominium association initiated a judicial foreclosure proceeding under chapter 64.34 RCW. Michael Fulbright bought the condominium at the trustee's sale for less than $15,000, which under the statute would extinguish Bank of America's lien. Bank of America attempted to redeem the condominium under the redemption statute, RCW 6.23.010. Because Bank of America recorded its deed of trust before Lewis defaulted on her assessments, the trial court and Court of Appeals held that Bank of America did not record its mortgage "subsequent in time" to the condominium's lien and therefore under RCW 6.23.010, Bank of America did not have a statutory right of redemption. The Supreme Court reversed the Court of Appeals, holding that a condominium association establishes its priority to collect unpaid condominium assessments at the time the condominium declaration is recorded, even though it is not enforceable until the unit owner defaults on his or her assessments. The Condominium Act creates an exception to the recording act and can alter the established priorities. Here, the effect of the foreclosure lawsuit was to give the Condominium Association's lien priority over Bank of America's interest, bringing Bank of America within the redemption statute provisions. View "BAC Home Loans Servicing, LP v. Fulbright" on Justia Law