Chasing Ghosts: Collecting Assessments When the Owner Has Passed Away

By Elliot H. Berton, Esq.
Gawthrop Greenwood, PC

It’s an uncomfortable topic that’s also unflagging in its burden upon community associations: What happens when a unit owner has passed away? Recovering assessments can be challenging in these situations. Community association lawyer Elliot H. Berton recently shared strategies and procedures for recovery during a breakout session at CAI Keystone’s Community Live Annual Conference and Expo. Here are his key tips — in an easy-to-read checklist — to help minimize your loss of assessments.

For Starters…

As rudimentary as it sounds, a Google search for an obituary can be one of your first (and easiest) steps. We also recommend you:

• Reach out to an emergency contact to check on the owner’s wellness and status of their unit.
• Check on wellness with the owner’s neighbors, if necessary.
• You can also conduct a database search for the owner and potential heirs:
  • https://www.legacy.com
  • https://www.findagrave.com
  • https://www.accurint.com
  • https://omnitrace.com/heir-search
  • https://heirpros.com
  • https://heirsearch.com
• Ask your association’s counsel to check the County Register of Wills’ Database

Should We Refer the Account to Counsel?

First, consider the following:

• Is anyone paying the assessments?
• Is the unit being maintained? (Heated? Grass cut?)
• Has contact been made with the owner’s family or representative?
• Is there a realtor involved?
• Have you heard from the mortgage company?

What Can An Association Do?

Pennsylvania law prohibits lawsuits against the deceased. This means the association:

• Cannot file an action in the local Magistrate’s Court.
• Cannot file an action for breach of the governing documents.
• May not recover assessments from the deceased owner’s personal property, bank accounts or tenant rent.
• May not legally compel the owner’s family to pay assessments (though voluntary payments may be accepted or encouraged).

 However, the association may enforce an assessment lien against the Unit:

• Unpaid assessments are a lien against the Unit, 68 Pa.C.S. §§ 3315(a) & 5315(a)
• “Assessments” includes special assessments, fines, late charges, interest and reasonable attorney’s fees. It is permissible to continue assessing late charges, interest and legal fees.
• “The association’s lien may be foreclosed in like manner as a mortgage on real estate.” 68 Pa.C.S. §§ 3315(a) & 5315(a)

Should the Association Foreclose the Lien?

The lien enforcement process is expensive, and a cost benefit analysis should first be completed. Considerations include:

• If there is a mortgage, what is the approximate loan balance?
• Has the mortgage holder started to foreclose?
• Are there tax or municipal liens?
• If there is little or no “equity” in the unit, are there other reasons to enforce a lien anyway?
• Mortgage foreclosure can easily take more than one year.
• Unit vacancy or lack of maintenance is always a concern. Counsel should explain timing and estimated costs to enforce an association lien.

What is the Lien Enforcement Process?

If there is an executor or estate administrator, this process is easier:

• The association files a lien enforcement proceeding in Common Pleas Court, naming the executor or estate administrator as the defendant.
• The lien enforcement complaint is served to the executor or administrator.
• After a judgment is entered, the unit may be placed on the County Sheriff’s sale list.
• Notice of unit sale is served on the executor/administrator, other lien holders, and advertised in legal publication and one newspaper.
• A sale is conducted, often via online auction but varies by jurisdiction.
• Counsel should provide the association board with an analysis of bidding and sheriff’s sale distribution procedures.
• Often, enforcing the lien inspires the executor to list and sell the unit. The association lien is paid from sale procedures.

If there is no estate, the process is slower and more expensive:

• The association files a lien enforcement proceeding in Common Pleas Court naming “presumed and unknown heirs” as the defendant.
• The owner’s surviving family members will be “presumed heirs,” and any person or entity that might have a legal interest in the owner’s assets is considered “unknown heirs.”
• Service upon presumed heirs is either by sheriff, or if out of state, by completed certified mail. If that does not work, then presumed heirs are served by advertising after a court order.
• Service upon unknown heirs is via newspaper advertising after a court order.
• A motion must be filed asking the Court to order service by advertising.
• After service is completed, judgment may be entered, and the unit can be placed on a county sheriff’s sale list.
• Notice of a unit sheriff’s sale is served on presumed heirs as well as unknown heirs, meaning double advertising.
• The sale is conducted, often via online auction but varies by jurisdiction.
• Counsel should provide a bidding analysis and detail the sheriff’s distribution procedures.

Elliot H. Berton focuses his practice on the protection of condominium and homeowners’ associations in state and bankruptcy courts. Drawing on his extensive experience representing banks, financial service companies and other creditors, he advises community association clients on negotiation and documentation of loans, service and other association contracts, assessment recoveries and other financial issues. Elliot also assists associations with transition from declarant control, operational issues, governing document amendments and interpretation, and defense litigation. For more information, contact Elliot at eberton@gawthrop.com or 610-889-0700.