193 A.3d 762
D.C.2018Background
- In 2007 Putty financed condominium Unit 305 with a deed of trust now held by Capital One; she later defaulted.
- By December 2012 the Parker House Condominium Association recorded a lien for ~11 months of unpaid assessments and advertised a foreclosure sale “subject to the first deed of trust.”
- In January 2013 the Association sold the unit at foreclosure to 4700 Conn 305 Trust (the Trust) for $11,000; sale documents stated the sale was subject to Capital One’s deed of trust.
- Capital One sued in 2015 for judicial foreclosure; the Trust counterclaimed to quiet title and for slander of title, arguing the Association’s foreclosure extinguished Capital One’s deed of trust.
- The trial court granted summary judgment for the Trust, enforcing the sale contract term that the purchaser take the unit subject to the deed of trust; the District of Columbia Court of Appeals vacated that judgment and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a condominium-assessment lien that covers more than six months must be treated as a single junior lien that extinguishes super-priority status | Capital One: § 42-1903.13(a)(2) limits super-priority to six months; if sale seeks more, no super-priority applies | Association/Trust: The statute splits the lien into a six-month super-priority portion and a junior portion; enforcing both in one sale does not forfeit the super-priority portion | The court held the lien is effectively split; enforcing amounts beyond six months does not eliminate the six-month super-priority lien, so foreclosure can extinguish the first deed of trust if proceeds insufficient |
| Whether an association may expressly sell "subject to" a first deed of trust while enforcing the super-priority lien | Capital One: Association may preserve the mortgage by selling subject to it | Association/Trust: Anti-waiver provision prevents subordinating the super-priority lien to preserve the mortgage | Court held anti-waiver bars subordinating the super-priority lien; even an express sale term preserving the mortgage cannot prevent extinguishment if the super-priority lien is enforced |
| Whether subsequent 2017 statutory amendments alter the 2013 sale’s legal effect | Capital One: The 2017 amendment shows the Council intended super-priority only for sales limited to six months | Trust: The amendment is a notice provision and does not change the 2013 statute’s meaning | Court declined to apply the 2017 amendment retroactively and found it does not alter the 2013 statute’s construction for this sale |
| Whether the 2013 sale should be invalidated on equitable/contract grounds given low price and contradictory sale terms | Capital One: Sale should be invalidated because purchaser agreed to take subject to mortgage; equity favors Capital One | Trust: Sale was valid and determined to extinguish the mortgage | Court left this factual/equitable question to the trial court on remand to decide whether the sale was invalid and whether Capital One preserved the challenge |
Key Cases Cited
- Liu v. U.S. Bank Nat’l Ass’n, 179 A.3d 871 (D.C. 2018) (held anti-waiver provision prevents association from subordinating super-priority lien to preserve a first deed of trust)
- Chase Plaza Condo. Ass’n v. JP Morgan Chase Bank, N.A., 98 A.3d 166 (D.C. 2014) (interpreted § 42-1903.13 to split assessment liens and held foreclosure enforcing super-priority lien can extinguish junior mortgage if proceeds insufficient)
- Hargrove v. District of Columbia, 5 A.3d 632 (D.C. 2010) (noting that a subsequent legislature’s view is a hazardous basis to infer intent of an earlier one)