Century Park Condominium Ass'n v. Norwest Bank Bismarck, Nat. Ass'n, 870270

• Decision Date: 07 March 1988
• Docket Number: No. 870270,870270
• Citation: 420 N.W.2d 349
• Parties: CENTURY PARK CONDOMINIUM ASSOCIATION, a corporation, Plaintiff and Appellee, v. NORWEST BANK BISMARCK, NATIONAL ASSOCIATION, a corporation, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 349

420 N.W.2d 349

CENTURY PARK CONDOMINIUM ASSOCIATION, a corporation Plaintiff and Appellee, v. NORWEST BANK BISMARCK, NATIONAL ASSOCIATION, a corporation Defendant and Appellant.

Civ. No. 870270.

Supreme Court of North Dakota.

March 7, 1988.

Rausch & Rausch, Bismarck, for plaintiff and appellee; argued by James P. Rausch.

Lawrence R. Klemin (argued), Bismarck, for defendant and appellant.

LEVINE, Justice.

Norwest Bank Bismarck, National Association, a corporation (the Bank), appeals from a summary judgment in an action by Century Park Condominium Association, a corporation (the Association), to recover unpaid assessments for common expenses levied on unconstructed condominium units. The judgment was based upon the court's determination that the Bank voluntarily purchased unconstructed condominium units, knowing that they were subject to assessments for common expenses. We reverse and remand.

In 1979, Dean and Deanna Kinnischtzke borrowed $150,000 from the Bank to construct a condominium project consisting of 22 condominium units in eight separate buildings. The promissory note evidencing the debt was secured by a real estate mortgage covering the land upon which the project was to be constructed. Fourteen of the 22 proposed units were constructed, sold, and released from the mortgage held by the Bank. Eight of the proposed units were never constructed, did not have foundations laid, and remain as vacant land.

The Kinnischtzkes defaulted and the Bank brought a foreclosure action. A foreclosure judgment was entered and a sheriff's sale was held. The Bank was the only bidder and a sheriff's certificate of sale was issued and recorded. After the redemption period expired, a sheriff's deed was issued to the Bank on February 8, 1984. The Bank did not record the sheriff's deed because of unpaid real estate taxes. The Bank was unable to find a buyer for the property. The land reverted to the county on October 1, 1985, upon expiration of the redemption period for nonpayment of the 1980 real estate taxes, and was subsequently deeded to the City of Bismarck.

The Association sued the Bank to recover unpaid condominium assessments for common expenses for the eight unconstructed units for the period from May 1984, through February 1986. The assessments sought were based on 100% of the assessment for constructed units.

The parties filed cross-motions for summary judgment. The trial court granted the Association's motion and judgment was entered in its favor for the assessments sought, ¹ interest, costs, and disbursements.

The Bank argues on appeal that the North Dakota Condominium Law neither permits assessments on unconstructed units nor provides personal liability for such assessments; that amendments to the condominium declaration are invalid; and that if it is liable for assessments at all, it should be liable for no more than 25% of the assessments under the original condominium declaration.

Section 47-04.1-01(1), N.D.C.C., defines a condominium as "an estate in real property consisting of an undivided interest or interests in common in a portion of a parcel of real property together with a separate interest or interests in space in a structure, on such real property." As to assessments for common expenses, Sec. 47-04.1-11, N.D.C.C., provides:

"47-04.1-11. Liens against units for common expenses--Removal from lien--Effect of part payment.--A reasonable assessment for common expenses made by the administrative body upon any condominium and made in accordance with the recorded declaration and bylaws shall be a debt of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs, and penalties, as such may be provided for in the declarations and bylaws, shall be and become a lien upon the condominium assessed when the administrative body causes such assessment to be recorded in the office of the register of deeds for the county in which such condominium is located. The notice of assessment shall state the amount of such assessment and other charges and the name of the record owner thereof. Such notice shall be signed by an authorized representative of the administrative body or as otherwise provided in the declarations and bylaws. Upon payment of said assessment and charges in connection with which such notice has been so recorded, or other satisfaction thereof, the administrative body shall cause a notice to be recorded stating the satisfaction and the release of the lien thereof."

Nothing in these statutes prohibits assessments on unconstructed units for common expenses or prohibits personal liability of owners for such assessments by agreement. Therefore parties may, by agreement, provide for assessments and personal liability. Both acts are authorized in the condominium declaration.

The Bank, which did not record its sheriff's deed to the property, argues that it never became the "record owner" as contemplated by Sec. 47-04.1-11, N.D.C.C., or the condominium declaration and therefore is not liable for the assessments. The argument is wholly unconvincing. The Bank's failure to record the sheriff's deed does not vitiate its record ownership evidenced by the recording of the sheriff's certificate of sale.

The trial court determined that because the Bank voluntarily purchased the property at public sale, it was bound as an owner by the condominium declaration provisions for assessment of common expenses on unimproved lots, regardless of knowledge as a mortgage holder at the time it loaned the money. The court ordered the Bank to pay the assessments sought by the Association, which were based on 100% of the assessments for constructed units. In our view, the Bank's purchase of the property was not "voluntary." Voluntariness implies choices [Jenkins v. Kaplan, 53 N.J.Super. 582, 148 A.2d 33 (1959) ] and reasonable alternatives [Wilson v. Voss, 361 So.2d 312 (La.App.1978) ]. "An act of necessity is not a voluntary act." Gulf Production Co. v. Continental Oil Co., 139 Tex. 183, 132 S.W.2d 553, 576 (1939). The...