New Jersey Appellate Division Holds Foreclosing Lender Not Responsible for Condominium Association Fees after Winterizing the Property

The New Jersey Appellate Division recently affirmed that a lender who winterizes and secures a property during a foreclosure is not deemed a mortgagee in possession subject to condominium association fees, even if the lender performed “modest repairs” to the property.  See Union Hill Condo. Ass’n v. Wells Fargo Bank, N.A., 2017 WL 5478310 (N.J. Super. Ct. App. Div. Nov. 15, 2017).  There, the borrower became delinquent on both his mortgage loan and his condominium association assessments.  The lender commenced a foreclosure action and, the next year, the borrower passed away.  The lender winterized the property, changed the locks, landscaped the property and repaired a door and handrail.  The condominium association then filed an action alleging that the lender was a mortgagee in possession of the property and therefore responsible for the association fees.  The trial court rejected this argument, found that the lender was not a mortgagee in possession and held that the association’s sole remedy was through the condominium lien priority statute.  See N.J.S.A. 46:8B-21.

On appeal, the Appellate Division affirmed the lower court’s decision.  Citing Woodlands Community Association, Inc. v. Mitchell, 450 N.J. Super. 310 (App. Div. 2017), the Court stated, “actions by a mortgagee that merely protect its security in the property, such as changing locks, paying realty taxes, and ‘winterizing’ the property to prevent frozen pipes, [are] insufficient to make the mortgagee a lender in possession.”  Although the Court acknowledged that a lender that performs more extensive repairs may be deemed a mortgagee in possession, “the modest repairs to a door and a railing essentially comprise measures to keep the premises safe rather than capital investments.”

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at or Clarissa Gomez at