Pennsylvania Superior Court Upholds Mortgage Priority in HOA Foreclosure Dispute

Several months ago, shareholder Ben Hoen brought your attention to the case of Foxfield at Naaman’s Creek vs. Raechelle Eventoff, in which a property was sold at a sheriff’s sale and the proceeds were distributed to the homeowners’ association (HOA). The trial court ruled that the senior mortgage lien was not a priority lien to the HOA lien and, therefore, was divested. 

The mortgage holder appealed, and upon review, the appellate court overturned the lower court’s decision.

The appellate court found that the Pennsylvania Uniform Planned Community Act does not limit the term “first mortgage” to the original purchase money mortgage but rather refers to the most senior recorded mortgage on the property at the time. Since the mortgage in this case was recorded before the HOA assessment became delinquent, it retained priority and should not have been divested. As a result, the court reversed the trial court’s decision, reinstating the mortgage lien.

This ruling is a significant and welcome development, reaffirming that mortgage priority is determined based on the order of recording. It strengthens protections for mortgage lenders in foreclosure actions involving HOAs, ensuring greater clarity and consistency in similar cases.

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We are constantly monitoring this ruling. If you have any questions about this topic or would like to learn more about Weltman’s real estate default solutions, please contact Ben at any time.

This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.