MISSISSIPPI LEGISLATURE

2021 Regular Session

To: Judiciary, Division A

By: Senator(s) Suber, McCaughn

Senate Bill 2610

AN ACT TO DEFINE TERMS; TO PROVIDE THAT A PROPERTY OWNER'S ASSOCIATION HAS A STATUTORY LIEN ON A UNIT FOR ANY ASSESSMENT ATTRIBUTABLE TO THAT UNIT OR FINES IMPOSED AGAINST ITS UNIT OWNER; TO STATE THE PRIORITY OF THE LIEN; TO PROVIDE THAT A LIEN IS EXTINGUISHED UNLESS PROCEEDINGS TO ENFORCE THE LIEN ARE FILED WITHIN THREE YEARS OF THE ASSESSMENTS BECOMING DUE; TO PROVIDE THAT AN ASSOCIATION MAY FILE AN ACTION TO FORECLOSE A LIEN ONLY UNDER CERTAIN CIRCUMSTANCES; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:     SECTION 1.  As used in this act:

          (a)  "Assessment" means the sum attributable to each unit and due to an association pursuant to the association's declaration.

          (b)  "Association" or "property owners' association" has the meaning prescribed in Section 89-1-69.

          (c)  "Common elements" means any real estate within a subdivision which is owned or leased by the association, other than a unit, and any other interests in real estate for the benefit of unit owners which are subject to the declaration.

          (d)  "Common expenses" means expenditures made by, or financial liabilities of, the association, together with any allocations to reserves.

          (e)  "Declaration" means any recorded document, however denominated, in favor of or enforceable by an association of owners of a subdivision, or other nonprofit association, that restricts or conditions the use of real estate, or imposes obligations on the owner of the real estate with respect to maintenance or operational responsibility for the common areas, architectural control, maintenance of the real estate, or services for the benefit of the real estate or other property subject to the declaration, including the common areas.

          (f)  "Dispose" or "disposition" means a voluntary transfer to a purchaser of any legal or equitable interest in a unit, but the term does not include the transfer or release of a security interest.

          (g)  "Real estate" means any leasehold or other estate or interest in, over, or under land, including structures, fixtures, and other improvements and interests that by custom, usage, or law pass with a conveyance of land though not described in the contract of sale or instrument of conveyance.

          (h)  "Security interest" means an interest in real estate or personal property, created by contract or conveyance, which secures payment or performance of an obligation.  The term includes a lien created by a mortgage, deed of trust, trust deed, security deed, contract for deed, land sales contract, lease intended as security, assignment of lease or rents intended as security, pledge of an ownership interest in an association, and any other consensual lien or title retention contract intended as security for an obligation.

          (i)  "Unit" means a physical portion of subdivision designated for separate ownership or occupancy, the boundaries of which are created by the declaration or plat, including the unit's identifying designation.

     SECTION 2.  (1)  The association has a statutory lien on a unit for any assessment attributable to that unit or fines imposed against its unit owner.  Unless the declaration otherwise provides, reasonable attorney's fees and costs, other fees, charges, late charges, fines, and interest, and any other sums due to the association under the declaration, or as a result of an administrative, arbitration, or judicial decision are enforceable in the same manner as unpaid assessments under this section.  If an assessment is payable in installments, the lien is for the full amount of the assessment from the time the first installment thereof becomes due.

     (2)  A lien under this section is prior to all other liens and encumbrances on a unit except:

          (a)  Liens and encumbrances recorded before the recordation of the declaration;

          (b)  A first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent;

          (c)  Liens for real estate taxes and other governmental assessments or charges against the unit; and

          (d)  Mechanics' or materialmen's liens, or the priority of liens for other assessments made by the association.

     (3)  Unless the declaration otherwise provides, if two (2) or more associations have liens for assessments created at any time on the same property, those liens have equal priority.

     (4)  Recording of the declaration constitutes record notice and perfection of the lien.  No further recordation of any claim of lien for assessment under this act is required.

     (5)  A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within three (3) years after the full amount of the assessments becomes due.

     (6)  This act does not prohibit actions against unit owners to recover sums for which subsection (1) of this section creates a lien or prohibits an association from taking a deed in lieu of foreclosure.

     (7)  A judgment or decree in any action brought under this section must include costs and reasonable attorney's fees for the prevailing party.

     (8)  The association upon request made in a record shall furnish to a unit owner a statement setting forth the amount of unpaid assessments against the unit.  The statement must be furnished within ten (10) business days after receipt of the request and is binding on the association, the executive board, and every unit owner.

     (9)  The association's lien may be foreclosed in like manner as a mortgage on real estate as provided in Section 89-1-55.  In a foreclosure, the association shall give the notice required by Section 89-1-55.

     (10)  An association may not commence an action to foreclose a lien on a unit under this section unless:

          (a)  The unit owner, at the time the action is commenced, owes a sum equal to at least three (3) months of common expense assessments based on the periodic budget last adopted by the association and the unit owner has failed to accept or comply with a payment plan offered by the association; and

          (b)  The executive board votes to commence a foreclosure action specifically against that unit.

     (11)  Unless the parties otherwise agree, the association shall apply any sums paid by unit owners who are delinquent in paying assessments in the following order:

          (a)  Unpaid assessments;

          (b)  Late charges;

          (c)  Reasonable attorney's fees and costs and other reasonable collection charges; and

          (d)  All other unpaid fees, charges, fines, penalties, interest and late charges.

     (12)  If the only sums due with respect to a unit are fines and related sums imposed against the unit, a foreclosure action may not be commenced against the unit unless the association has a judgment against the unit owner for the fines and related sums and has perfected a judgment lien against the unit under Section 89-5-1 et seq.

     (13)  Every aspect of a foreclosure, sale or other disposition under this section, including the method, advertising, time, place and terms, shall be commercially reasonable.  SECTION 3.  This act shall take effect and be in force from and after July 1, 2021.