Q&A: Settling Late Fees at Sale

Q I am on the board of a condo. We have a unit owner who is in arrears on maintenance and has cumulative late fees of several hundred dollars. The late fees result from being consistently late in making payments over the last few years and consistently being one month behind on maintenance payments during that same period. The unit is now for sale. Is it legal to insist that both maintenance and late fee be paid at the closing as a condition of selling?

—Better Late than Never

A “In a word, yes. Provided that the late fees were assessed in accord with the constituent documents of the Association, they are the equivalent of maintenance fees as a lien against the unit,” says Gary Daddario of Perkins & Anctil in Westford, Massachusetts. “Massachusetts General Laws Chapter 183A is the Massachusetts Condominium Statute (the “Statute”). At Section 6(a)(ii), the Statute provides that ‘any fees, attorneys’ fees, charges, late charges, fines, costs of collection and enforcement, court costs, and interest’ represent a lien against the unit from the time any such assessment becomes due. The Statute goes on to provide that any such charges shall be enforceable as ‘common expense assessments.’

“When title to a unit is transferring, such as by sale, a statement of account (referred to as the ‘6(d) certificate’) is requested. In the event that a unit owner pays current, the 6(d) certificate will display a ‘$0’ balance and be ‘clean’. Absent payment, the association may issue a ‘dirty’ 6(d) certificate which displays the balance due. If a purchaser buys a condominium unit with a ‘dirty’ 6(d) certificate or with no 6(d) certificate at all, then they have assumed the outstanding balance of the prior owner.

“Even where the balance due is disputed, Massachusetts courts have held that unit owners must first make payment and then subsequently seek reimbursement. Where a unit owner argued that the association’s refusal to provide a ‘clean’ 6(d) certificate jeopardized the sale of the unit, a Massachusetts Superior Court disagreed. The court held that the unit owner remained in control of the sale because they could pay the balance, obtain a ‘clean’ 6(d) certificate and, thereafter, seek reimbursement.”

Related Articles

Business Corporation Law Versus Conflicts of Interest

How Both Impact Boards

The New England Condo Expo

Help for Association Boards

Q&A: Snowman's Land

Q&A: Snowman's Land