R.I. Supreme Court Says HOA Lien Foreclosure Sale Extinguished Lender’s First Mortgage

Supreme Court of Rhode Island decision (December 4, 2015).

In August of 2011, the plaintiff in this action purchased a condominium at a foreclosure sale conducted by a condominium association as a result of the non-payment of association assessments by the former owner of the condominium and/or the former owner’s mortgage holder. The foreclosure sale did not generate sufficient proceeds to satisfy the first mortgage on the condominium. Subsequent to the foreclosure sale, the former owner’s mortgage holder commenced foreclosure proceedings against the unit for non-payment of the mortgage debt that was secured by a first mortgage on the condominium. Thereafter, the plaintiff filed this action against the lender, PNC Bank, seeking to quiet title in plaintiff’s name and declaratory / injunctive relief in order to prevent the lender from continuing with its foreclosure sale. The trial court ruled that the lender’s first mortgage survived the association’s lien foreclosure sale and dismissed the plaintiff’s action. The plaintiff filed an appeal of that decision.