May 10, 2023
By Francesca Macchiaverna, as published by Legal Newswire
The term “dockominium” is not defined in the Georgia Condominium Act or Georgia case law. Dockominiums as an interest in land are derived from the Georgia Condominium Act, which defines “Property” as including “any real property and any interest in real property, including without limitations, parcels of air space.”
States adjacent to Georgia have defined the term “dockominium” through case law. The Florida Circuit Court defines a dockominium as “the water-based version of a condominium, allowing a buyer to purchase a boat slip with the right to use the common elements of the marina.” Courts in North Carolina and Tennessee define dockominium similar to the Florida definition. In North Carolina,a dockominium is “an individual boat slip space that a marina sells or leases long-term to an individual boater.” According to the Tennessee Court of Appeals, a dockominium is “a series of boat slips on a dock that can be sold individually” and is governed by the same rules as condominiums under the Tennessee Horizontal Property Act.
For purposes of collecting assessments, a dockominium is treated like real property. A condominium association can hold an owner of a condominium unit liable for unpaid assessments. The Georgia Court of Appeals states that, “To the extent that the condominium instruments provide, the personal obligation of the unit owner and the lien for assessments shall . . . include . . . [t]he costs of collection, including court costs, the expenses of sale, any expenses required for the protection and preservation of the unit, and reasonable attorney’s fees actually incurred[.]”
The Georgia Code provides that all assessments due and payable from the unit owner constitute a lien against the unit superior to all other liens, except the lien of any first mortgage or secondary purchase money mortgage covering the unit, provided that neither the grantee nor any successor grantee on the mortgage is the seller of the unit.
In accord with the public policy of the State of Georgia, condominium associations have sufficient power to enforce the collection of assessments, as otherwise, these entities would not be able to continue to function and meet their obligations without unfairly burdening the other members of the community.
The dockominium association owns and maintains the marina, but it may be difficult to meet its obligations if too many owners fail to pay their assessments. Assuming the association governing the dockominium has a unit owner past due on his or her assessments, and there is an automatic lien that travels with the Property under the Georgia Condominium Act, the association may reduce its lien for assessments to judgment. The Georgia Code states that “the lien[s] may be foreclosed by the association by an action, judgment, and foreclosure in the same manner as other liens for the improvement of real property.” By reducing the lien for assessments to a judgment, the association is creating a tool to collect assessments against a non-paying owner.
Here is where the fun starts. How does the association collect its judgment? The association can foreclose its judgment against the dockominium subject to liens that may have priority. Generally, the association will have a first priority lien that travels with the Property. However, the association’s lien may be subordinate to a purchase money mortgage or deed to secure debt.
An association may not want to foreclose its judgment against the dockominium unit if another lienholder has priority in the Property, as that lienholder must be paid the value of its lien before the association could take title to the Property through a sheriff’s sale.
At a sheriff’s sale, the sheriff can levy on the Property by selling the boat slip to pay the association’s judgment. If the association’s judgment is the only lien on the Property or the first priority lien, the association can foreclose its judgment with a credit bid up to the total amount of its judgment. The sheriff is entitled to commission for the sale, which is set by statute.
A sheriff’s sale is different than a non-judicial foreclosure sale. A non-judicial foreclosure sale would be cried out on behalf of a lender that had a power of sale in its deed to secure debt. An association foreclosing a judgment lien is not exercising a power of sale in a deed to secure debt because it may not have a mortgage or deed to secure debt. Whereas the association pursuing a sheriff’s sale must have a judgment at the time of sale, the lender may or may not have a judgment against the unit owner at the time of a non-judicial foreclosure sale. If the association is the lender on the dockominium sale, it may be possible to conduct a non-judicial sale of a boat slip. If the governing documents grant a power of sale to the association, that may allow the association to conduct a non-judicial sale of the dockominium as well.
Francesca Macchiaverna is a partner at HunterMaclean. She is an experienced litigator and represents clients in business-to-business commercial debt collection. She can be reached at 912.236.0261 or fmacchiaverna@huntermaclean.com.
