In 2008, a condominium in Milford, like many in New Hampshire, was feeling the effects of the dramatic turn in the economy. Receivables were on the rise and unit owners who had always paid monthly assessments on time were suddenly having trouble. Consistent with its collection policy, the condominium association began efforts to compel payment from a unit owing approximately $1,200.00. The legal process would not go well. Despite filing liens and a small claim action, turning the collection action into needed cash proved difficult. The unit owner abandoned the unit and consequently, the association could not collect. Unpaid assessments continued to mount. By the end of 2011, the balance exceeded $10,000.00.
In September 2011, the association received a notice of foreclosure. Although it appeared that the past due assessments would go uncollected, the good news for the association was that there would finally be a new owner to begin paying assessments again. On November 1, 2011, the bank conducted the auction and purchased the unit. One last opportunity remained for the association to be paid.
In New Hampshire, a foreclosure deed must be recorded within sixty days of the auction sale. Although a deed recorded more than sixty days after the sale conveys title, the late recording presents an opportunity to creditors to intervene and create problems for the new owner. The foreclosure deed recording statute provides that failing to record the deed within the required sixty days shall render the sale void and of no effect as to any liens or encumbrances intervening between the day of the sale and the recording of the deed. Thus, by filing a lien after the day on which the foreclosure deed should have been recorded and before it actually is recorded, the property is transferred subject to the lien which means that the new owner is responsible for the lien.
On January 1, 2012, the foreclosure deed had not been recorded. Our office prepared and recorded a lien for the total $10,000.00 that was due from the owner who lost the unit to foreclosure. Unless the new bank owner chooses to incur the cost of a second foreclosure, the bank is now responsible for the full amount of the lien. Thus, an arrearage that the association could never hope to collect from the prior owner is now the responsibility of an owner who can and likely will pay the balance due. In the very least, the bank will likely make an offer to resolve the outstanding balance due.
With foreclosures at record levels, banks and foreclosing parties are overwhelmed with work. The untimely recording of the foreclosure deed occurs far more frequently than one might think. In 2011, our office collected in excess of $40,000.00 from a number of bank owners simply because foreclosure deeds were recorded late. If the deed is recorded on time, this opportunity is lost. However, it is worth counting off those sixty days from the auction. It certainly was for the Milford condominium.