Courts have long interpreted the D.C. Condominium Act as creating a super-priority lien on a condo unit, in favor of the condo association, for the most recent six months’ worth of the unit owner’s unpaid assessments. This lien was held superior to any other lien, and it was bulletproof – its priority remained, for example, even if the association’s foreclosure ads specifically called out superior liens. Those liens were extinguished by a foreclosure on the association’s six-month, super-priority lien.

Amendments to the Act in 2017 gave rise to some uncertainty as to the ongoing application of these principles. The amended Act requires an association to notify the unit owner that an impending foreclosure sale either (a) is limited to the six-month super-priority lien or (b) is for more than that and, therefore, subject to a superior deed of trust. Following the passage of the amendments, questions arose regarding lien priority and regarding the survival of a superior deed of trust in various circumstances.

In Wonder Twins v. 450101 Housing Trust, decided in November 2024, the D.C. Court of Appeals held that the most recent six months of unpaid assessments continue to give rise to a super-priority lien, and that “a condominium association foreclosing on only that six-month portion extinguishes any deed of trust, regardless of the asserted terms of the sale.” The buyer at foreclosure in that scenario takes the property free of the lender’s lien.

The Court also held, though, that when an association forecloses on unpaid assessments dating back more than six months, the association still has payment priority for its six months’ worth of super-priority assessments, but the superior deed of trust is preserved. In this scenario, if the lender is not paid in full out of the foreclosure proceeds, the buyer takes the property subject to the lender’s lien. And, if the lender is paid in full, the association may have recourse to amounts above the lender’s claim, since it foreclosed on both its super-priority and its subordinate liens. 

How a condo association chooses to proceed under these principles will depend on the facts and figures of the particular case. Notice, however, that the association gets paid for its six months’ worth regardless of which option it chooses (unless the price at foreclosure is inadequate to pay even that amount, of course). Note, too, that the price paid at foreclosure is likely to be higher if the association forecloses only on its unpaid assessments for the past six months, i.e., if the lender’s lien is being extinguished by operation of the statute.

Lenders may consider engaging with condo associations proactively upon becoming aware of distress at the property, given the significant differences in interests and outcomes that can result from the association’s procedural choices.