The Fourth Circuit just released it’s opinion in E Qualcom Corp. v. Global Commerce Center Association, Inc.. This is one of the most disturbing condominium foreclosure cases ever.
Normal condominium foreclosure law provides few legitimate defenses by the unit owner. Examples of legitimate defenses include that the unit owner paid the assessment and the association failed to apply it properly; the assessment was improperly passed or is otherwise invalid and the like.
The recent case provides a new defense. Here, the unit owner operated a business in a commercial condominium. The unit’s roof was damaged, causing leaks. The condominium association was on a notice of the damage to the roof, and failed tto repair the roof timely. Because of the roof leaks, the unit owner’s business allegedly suffered. The unit owner failed to pay their assessments, and the association tried to foreclose. The unit owner defended that because of the association’s failure to maintain the common elements, the unit owner was unable to pay their assessment.
The Fourth DCA agreed with the unit owner. They held that the defense that a unit owner was unable to pay their assessment because of the actions of a condominium association was a defense to a foreclosure action.
Although the facts may appear sympathetic and limited, many unit owners do claim that the association’s actions did force the lack of payment. Furthermore, although this case involved a commercial condominium, these allegations are very common in residential condominiums as well (e.g., the board didn’t have to spend a fortune repair the roof in the manner it did and because they improperly spent a fortune I can’t afford the assessment). This case opens up a very unnecessary slippery slope in condominium foreclosures.
Joel McTague's Blog 