A Vermont Association Needs Three Months Arrears and a Board Vote

The association's lien arises automatically. Section 3-116(a) gives the association a statutory lien on a unit for any assessment attributable to that unit or fines imposed against its owner, and unless the declaration says otherwise it sweeps in reasonable attorney's fees and costs, other fees, charges, late charges, fines and interest charged under 27A V.S.A. § 3-102(a)(10), (11) and (12), plus any sums due under the declaration, Title 27A, or an administrative, arbitration, mediation or judicial decision. Where an assessment is payable in instalments, the full amount becomes a lien as soon as the first instalment falls due. No filing is needed: § 3-116(e) makes recording the declaration itself record notice and perfection of the lien, and expressly says no further recording of any claim or lien for assessment is required. A Vermont owner will therefore find nothing in the land records announcing the debt.

Priority is the ordinary Uniform Common Interest Ownership Act arrangement with a six-month super-priority. Subsection (b) puts the lien ahead of everything except liens and encumbrances recorded before the declaration, a first mortgage or deed of trust recorded before the assessment became delinquent, and real estate taxes and other governmental charges. Subsection (c) then claws back six months from the first mortgage: the lien is prior to that mortgage to the extent of the common expense assessments, based on the periodic budget adopted under § 3-115(a), that would have become due in the absence of acceleration during the six months immediately preceding the institution of an action to enforce the lien. The same subsection carries a sentence that matters a great deal to a Vermont homeowner: the lien "is not subject to the provisions of 27 V.S.A. chapter 3," which is the Estates of Homestead chapter. The $125,000 homestead exemption in 27 V.S.A. § 101 that shields a Vermont dwelling from attachment and execution does not stand between an owner and an association lien.

The limits on using that lien are where Vermont's version is stricter than the model act. Subsection (m) requires all three of arrears equal to at least three months of budgeted common expense assessments, a failed payment plan offered by the association, and a board vote naming the unit, before an action can even be commenced. Subsection (o) separates fines from assessments: if the sums due include no unpaid assessment, the association has to sue, win a judgment against the owner and perfect a judgment lien against the unit before any foreclosure action may begin, so a purely fine-driven foreclosure is a two-step process. Subsection (f) is a three-year statute of repose that extinguishes the lien unless proceedings are instituted within three years after the full amount of the assessment became due. Subsection (p) requires every aspect of a foreclosure, sale or other disposition, including method, advertising, time, date, place and terms, to be commercially reasonable.

Subsection (n) fixes how money is applied when an owner pays something rather than everything. Unless the parties agree otherwise, payments go first to unpaid assessments, then late charges, then reasonable attorney's fees, costs and other reasonable collection charges, and only last to all other unpaid fees, charges, fines, penalties, interest and late charges. That ordering prevents an association from pushing a paying owner back into assessment arrears, which is the threshold subsection (m) turns on. Subsection (i) gives the owner a tool: on a request made in a record the association must furnish a statement of the amount of unpaid assessments within 10 business days, and the statement binds the association, the executive board and every unit owner. Subsection (h) awards costs and reasonable attorney's fees to the prevailing party in any action under the section, which runs both ways. Subsection (l) lets the court appoint a receiver to collect rents owed to a delinquent owner, and subsection (k) bars the classic defence that abandoning the unit or giving up the common elements ends the obligation.

Section 3-116(j) sends the foreclosure itself to 12 V.S.A. chapter 172, which is judicial. Under 12 V.S.A. § 4941(c) a court may not decree foreclosure of the right of redemption without a sale unless it finds there is no substantial value in the property beyond the debt and unpaid property taxes, and must summarise the evidence for that finding; where such a decree issues, § 4941(d) sets redemption at six months from the decree unless the court orders or the parties agree on a shorter period. On the judicial sale track, § 4946(b) again sets six months from the decree for farmland or an owner-occupied principal residence. Nonjudicial foreclosure is unavailable here: 12 V.S.A. § 4961 excludes farmland and "a dwelling house owned by a natural person" from the power of nonjudicial sale, and § 4931(2) defines dwelling house to include individual units of condominiums or cooperatives, so an association cannot sell an individually owned unit without going to court.

Which communities all of this reaches is a separate question. Section 1-201(a) applies Title 27A to every condominium in Vermont created after January 1, 1999 and to other common interest communities of 12 or more residential units created after that date. Section 1-204(a)(1) then reaches back and applies § 3-116 to communities created before January 1, 1999 as well, for events and circumstances occurring after December 31, 1998, so the lien section is one of the few parts of the act that governs older Vermont condominiums. Section 1-203(a)(1) cuts the other way: a planned community with no more than 24 units and no development rights is subject only to §§ 1-105, 1-106 and 1-107 unless its declaration adopts the whole title, which means the smallest Vermont homeowner associations have no statutory lien under § 3-116 at all and must rely on whatever their declaration provides. Section 1-204(b) applies the same carve-out to small pre-1999 planned communities unless they amend under § 1-206.

An owner who falls behind faces collection before foreclosure. § 3-102(a)(11) the association may impose charges for late payment and, after notice and a hearing, reasonable fines, and under § 3-102(a)(18) it may suspend rights and privileges, though it may not deny access to the unit except as § 3-116(q) allows, may not suspend the vote, may not bar the owner from seeking election to the board, and may not withhold a service where doing so would endanger health, safety or property. Section 3-116(g) preserves a straight action against the owner for the money and allows the association to take a deed in lieu of foreclosure.

Once a foreclosure begins, the association must give the notice required by statute to all lienholders whose interest would be affected, or reasonable notice where no statutory requirement applies, under § 3-116(j). The owner's practical defences are the § 3-116(m) preconditions, the three-year limit in § 3-116(f), and the commercial reasonableness standard in § 3-116(p), and the fee-shifting in § 3-116(h) means an owner who prevails recovers costs and reasonable attorney's fees. Time-share owners have their own protection in § 3-116(q), which bars an association of time-share unit owners from denying access for nonpayment unless the owner is delinquent on budgeted common expense assessments and written notice of the total delinquency is sent no less than 30 days after the due date and no later than 30 days before the first date of use.