DC Condo Foreclosure: 31 Days, a Forced Election, a 3-Year Lapse

Take first the question of which communities this reaches, because the District has only one statutory regime and it is narrower than people assume. D.C. Code § 42-1901.01(a) applies the Condominium Act to all condominiums created in the District, and § 42-1901.01(b) provides that the terms horizontal property regime and condominium project correspond to condominium and that council of co-owners corresponds to unit owners' association. Section 42-1901.01(c) supersedes the Horizontal Property Act of 1963 and bars establishing any condominium except under Chapter 19 after March 28, 1977, while preserving instruments validly recorded before that date. The result is that pre-1977 horizontal property regimes are pulled into the same lien and foreclosure machinery as a building converted last year.

Outside condominiums there is no statutory machinery at all. The phrase homeowners association appears in only five sections of the entire D.C. Official Code, and not one of them creates an assessment lien or a power of sale. Title 42, Subtitle III contains Chapter 19 on condominiums, Chapter 20 on horizontal property regimes, a limited-equity cooperative task force and a common interest community repairs chapter, and no planned community or homeowners association act. The cooperative associations chapter in Title 29 carries no assessment lien either. A standalone District homeowners association or housing cooperative therefore collects on the strength of its recorded declaration and general law, not on § 42-1903.13, and none of the limits described below applies to it by force of statute.

Now the power itself. Section 42-1903.13(c)(1) gives the unit owners' association a power of sale once an assessment is past due, and provides that by accepting a deed to a unit the owner is irrevocably deemed to have appointed the association's chief executive officer as trustee for exercising it. The same paragraph is aggressive about the governing documents: language in the condominium instruments authorising specific collection procedures may not be construed to prevent power-of-sale foreclosure unless the instruments specifically and expressly prohibit it. Under (c)(3) the chief executive officer acts as trustee on the direction of the executive board, and the recitals in the trustee's deed are prima facie evidence of their truth and conclusive in favour of bona fide purchasers for value.

The 2017 amendments, D.C. Law 21-241, built the limits that now do most of the work. Section 42-1903.13(c)(4)(A) forbids a sale until at least 31 days after the Notice of Foreclosure Sale of Condominium Unit for Assessments Due is recorded in the land records and sent, by a delivery service providing tracking confirmation and by first-class mail, to the unit's mailing address, any last known mailing address, and any other address the owner designated to the board. Paragraph (c)(4)(B) then dictates the contents: the past due amount that must be paid to stop the foreclosure, an express statement of whether the sale is for the six-month priority lien and not subject to the first deed of trust or for more than that and subject to it, and a warning that if the amount is unpaid within 31 days of mailing the board shall sell the unit at public sale at the stated time, place and date. That forced election is the single most consequential limit in the section, because it makes the association declare in advance which lien it is selling.

Paragraph (c)(4)(D) requires an enclosure carrying a statement of the past due amount, a breakdown of assessments, accrued interest, late charges and every other category with the dates each accrued, a statement that the amount being foreclosed on may not be the total owed together with instructions for requesting a full account statement, and a resources notice in at least 18-point font pointing the owner to the Department of Housing and Community Development's list of community-based housing counselling organisations and to HUD-approved counsellors. Paragraph (c)(4)(E) requires the same notice, at least 31 days in advance, to go to the Mayor or the Mayor's designated agent, all junior lien holders of record, and any holder of a first deed of trust or first mortgage of record together with successors, assignees, trustees, substitute trustees and MERS. Section 42-1903.12a imposes a parallel duty earlier in the process: when the association tells an owner it intends to take legal action to collect, the notice must carry a statement of account with the same category-by-category breakdown, contact details for the person or office to settle with, and the same 18-point resources enclosure.

The sale itself is timed by (c)(5): the date may be no sooner than 31 days from mailing, public notice must be by advertisement in at least one newspaper of general circulation in the District, and the advertisement must appear on at least three separate days during the 15-day period before the sale. Throughout, (c)(2) preserves the owner's right to cure at any time before the sale by tendering the past due assessments in full plus any late charge or interest and reasonable attorney's fees and costs. Proceeds are applied under (c)(6) to unpaid assessments with interest or late charges, then to foreclosure costs including reasonable attorney's fees, then to whoever is legally entitled to the balance. Subsection (d) lets the executive board bid at the sale on the association's behalf unless the instruments say otherwise.

Two provisions kill the lien outright, and both cut against the association. 13(e) provides that the lien lapses and is of no further effect as to unpaid assessments and accrued interest and late charges if it is not discharged, or if foreclosure or other enforcement proceedings have not been instituted, within three years from the date the assessment or instalment became due and payable. 13(h) is sharper still: any unit owner or purchaser may request in writing a recordable statement of the unpaid assessments currently levied against the unit, and failure to furnish or make that statement available within 10 days of receiving the request extinguishes the lien created by subsection (a) as to that unit.

The statement, once given, binds the association, the executive board and every unit owner, and the instruments may require a reasonable fee for it. 12(c). 09. 13(j) lets the executive board suspend the voting rights of an owner more than 30 days in arrears until the assessment is paid in full.