Rhode Island Condominium Associations Can Foreclose by Auction Under § 34-36.1-3.21, With Only the First Mortgagee Getting 30 Days to Redeem

The two sections work as a pair and it is worth keeping them apart. Section 34-36.1-3.16 creates the lien and fixes its priority; § 34-36.1-3.21 is the procedure for turning that lien into a sale. Both sit in Article III of chapter 36.1 of title 34, whose short title at § 34-36.1-1.01 is the "Rhode Island Condominium Act". Rhode Island did not adopt the Uniform Common Interest Ownership Act and has no planned-community or homeowners-association statute at all, so a Rhode Island subdivision association that is not a condominium falls outside both sections and is left to its declaration, to contract, and to chapter 35 of title 34 on enforcement of common law and contractual liens.

The priority limit is the money question. Section 34-36.1-3.16(b)(1) subordinates the association lien to encumbrances recorded before the declaration, to a first mortgage or deed of trust recorded before the assessment became delinquent, and to real estate taxes and other governmental charges. Subsection (b)(2) then carves the super-priority slice back out: the association still comes ahead of that first mortgage to the extent of the common expense assessments, based on the periodic budget adopted under § 34-36.1-3.15(a), that would have become due without acceleration during the six months immediately preceding the foreclosure, plus collection costs and reasonable attorney's fees not to exceed two thousand five hundred dollars ($2,500), plus all foreclosure costs including publication, advertising and auctioneer costs not to exceed five thousand dollars ($5,000), for a total aggregate of attorney's fees and costs of seven thousand five hundred dollars ($7,500). Subsection (b)(3) keeps special assessments, late charges, fines, penalties and interest out of the priority amount entirely, so a large fine balance sits behind the mortgage even though § 34-36.1-3.16(a) makes fines lienable.

A notice duty attaches before any of that. Once a unit owner's share of common expenses has been delinquent for at least sixty days, § 34-36.1-3.16(b)(4) requires the association to send the amount of the delinquency to the owner, and separately to the first mortgagee at the address in the land evidence records, by certified mail return receipt requested and by first class mail. Missing that notice does not destroy the six months of priority, but § 34-36.1-3.16(b)(5) strips the costs and attorney's fees out of the priority amount, so the $7,500 ceiling collapses to zero.

The sale procedure in § 34-36.1-3.21 is unusually prescriptive about publication. The association must first mail written notice of the time and place of sale to the defaulting owner at the last known address and to the record first mortgagee, both by certified mail return receipt requested, at least twenty days before publishing. It must then publish once each week for two successive weeks, and the sale must be at least fifteen days after the first publication. The statute then names the newspaper by geography: a Central Falls condominium is advertised in a daily published in Pawtucket, a North Providence condominium in a Providence daily, one in Cumberland, Lincoln, Smithfield or North Smithfield in a Pawtucket, Woonsocket or Providence daily, one elsewhere in Providence County in a Providence daily, one in Newport County in a Newport daily or, failing that, any daily published in Newport County, and one in Bristol, Kent or Washington County in a daily published in that city or town, in that county, or in Providence. Anyone with an interest of record recorded not later than thirty days before the originally scheduled sale also gets written notice at least ten days before it, and within seven days after the sale the association must tell the first mortgagee by certified and first class mail who the highest bidder was and what the bid was.

Redemption in Rhode Island belongs to the lender, not the homeowner. Section 34-36.1-3.21(c) gives a thirty-day right of redemption to the holder of the first mortgage or deed of trust of record, exercised by tendering all assessments due plus all attorney's fees and costs of collection and foreclosure within thirty days of the post-sale notice, and it terminates thirty days after that notice. No parallel right runs to the unit owner, whose equity of redemption the auction is expressly framed as selling. Two other limits are worth knowing: § 34-36.1-3.16(e) extinguishes the lien unless enforcement proceedings are instituted within six years after the full amount of the assessments becomes due, and § 34-36.1-1.02(a)(4) applies § 34-36.1-3.21 to condominiums created before June 19, 1991 only as to events occurring after June 18, 1991, while § 34-36.1-3.16 reaches even pre-July 1, 1982 condominiums under § 34-36.1-1.02(a)(2).

Because Rhode Island's is a power-of-sale regime, the association does not need a judgment to sell, and an owner who wants to stop a sale has to act before it happens. The practical checkpoints are procedural. 16(b)(4), the priority amount loses all costs and attorney's fees under subsection (b)(5). 21(a)(2) names for that city or county, or wait fifteen days after the first publication, the sale departs from the statute. 16(b), so a purchaser at an association auction generally takes behind the first mortgage. 16(g) requires a judgment or decree in any action brought under that section to include costs and reasonable attorney's fees for the prevailing party, which cuts both ways.

16(b)(2) common expense assessments from interest, attorney's fees, fines and other charges, together with a copy of the most recent periodic budget. 16(f) also preserves an ordinary action to recover the debt and allows the association to take a deed in lieu of foreclosure.