Georgia Community Association “Priority Lien” Bill – A New Year, Another Chance

For years now, there has been an ongoing push to try to pass a bill in the Georgia legislature that would give community associations that are subject to the Georgia Property Owners Association Act (as opposed to “common law associations”) and condominium associations a special “Priority Lien.”  In 2013, the push continues.  The proposed legislation would allow Georgia associations to collect up to 6 months of past due assessments at a foreclosure sale, if any assessments were due at the time of foreclosure. In 2013 expect this push to continue.  Similar bills have been adopted in 18 states and the District of Columbia in the wake of the home foreclosure crisis.
This would be a huge help to associations. Often assessments are one of the first bills to go unpaid when a homeowner gets into financial trouble and at the time of a foreclosure there may be significant amounts overdue. As the law currently stands the lien of the association for the past due assessments is wiped out in condominiums and associations subject to the Georgia Property Owners Association Act (and generally in common law associations too). Associations typically have no other income stream and so this can really hurt the association’s ability to fund its obligations, often to the detriment of the other property owners that are members of the association.
However, bank lobbyists have lobbied extensively against the passage of such a bill and stand strongly opposed to its adoption.
Also, if such a bill were passed, the distinction between “common law associations” and Georgia Property Owners Association Act associations (aka “POA Act associations” or “statutory associations”) would continue to grow.

This is a situation that bears watching, especially if you are a member of an association that would be affected by such a change in the law.

By: Amy H. Bray, a partner in our Commercial Real Estate Department

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