# Bank of New York Mellon Trust Co. v. Sulejmanagic

> Oregon Supreme Court · February 11, 2021 · 367 Or. 537

URL: https://www.frixlaw.com/law-library/cases/10627380

## Case

- **Court:** Oregon Supreme Court
- **Decided:** February 11, 2021
- **Citations:** 367 Or. 537; 481 P.3d 293
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Nelson
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

537

Argued and submitted September 23, 2020; decision of Court of Appeals
reversed, judgment of circuit court reversed, and case remanded to circuit court
for further proceedings February 11, 2021

THE BANK OF NEW YORK MELLON
TRUST COMPANY, NATIONAL ASSOCIATION,
fka The Bank of New York Trust Company, N.A.,
as successor to JPMorgan Chase Bank,
as Trustee for Residential Asset Mortgage Product, Inc.,
Mortgage Asset-Backed Pass Through Certificates,
Series 2003-RS5,
Respondent on Review,
v.
Zahid SULEJMANAGIC et al.,
Defendants,
and
TANGLEWOOD HILLS
CONDOMINIUM ASSOCIATION,
Petitioner on Review.
(CC CV13071012) (CA A163269) (SC S067155)
481 P3d 293

Plaintiff Bank of New York Mellon Trust Company (bank) had filed a civil
action to foreclose a deed of trust on a condominium unit. Defendant Tanglewood
Hills Condominium Association (Tanglewood) had a lien against the same unit
for condominium assessments that had not been paid by the owner. After the
bank’s foreclosure action had been dismissed, Tanglewood gave notice of its lien
under ORS 100.450(7). More than 90 days later, the bank later had the foreclo-
sure action reinstated. Tanglewood contended that, under ORS 100.450(7), its
lien took priority over the bank’s interest because the bank “ha[d] not initiated”
a foreclosure action within 90 days, ORS 100.450(7)(c). The trial court rejected
Tanglewood’s argument and granted summary judgment for the bank. The Court
of Appeals affirmed. Held: (1) A condominium association’s proper notice under
ORS 100.450(7)(a) triggers an obligation on a first lienholder to act within 90
days, or the condominium association’s lien will take priority; (2) the bank here
did not act before the 90 days expired; (3) the bank could not rely on its previously
filed foreclosure action, as that action had been dismissed by general judgment
prior to Tanglewood’s notice, and the action remained dismissed throughout the
entire 90-day period; and (4) once the 90 days had elapsed without the case being
reopened or a new foreclosure action being filed, Tanglewood was granted prior-
ity over the bank’s interest by operation of ORS 100.450(7).
The decision of the Court of Appeals is reversed. The judgment of the cir-
cuit court is reversed, and the case is remanded to the circuit court for further
proceedings.
538 Bank of New York Mellon Trust Co. v. Sulejmanagic

En Banc
On review from the Court of Appeals.*
Ryan D. Harris, Vial Fotheringham LLP, Lake Oswego,
argued the cause and filed the briefs for petitioner on review.
John Thomas, McCarthy Holthus, LLP, Portland, argued
the cause and filed the brief for respondent on review.
NELSON, J.
The decision of the Court of Appeals is reversed. The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.

______________
* On appeal from Clackamas County Circuit Court, Michael C. Wetzel,
Judge. 299 Or App 261, 450 P3d 14 (2019).
Cite as 367 Or 537 (2021) 539

NELSON, J.
This case involves the relative priority of liens
against a condominium unit. Plaintiff Bank of New York
Mellon Trust Company (bank) held a deed of trust to the unit,
while defendant Tanglewood Hills Condominium Association
(Tanglewood) had a lien for condominium assessments that
had not been paid by the owner. Although the bank’s lien
would ordinarily take priority, Tanglewood contended that
its lien gained priority under ORS 100.450(7), because the
bank “ha[d] not initiated” a foreclosure action during a
90-day notice period prescribed by that statute. The trial
court rejected Tanglewood’s argument and granted sum-
mary judgment for the bank. The Court of Appeals affirmed.
Bank of New York Mellon Trust Co. v. Sulejmanagic, 299 Or
App 261, 450 P3d 14 (2019). On review, we reverse.
I. FACTS
When a condominium association has unpaid
assessments against a condominium unit, the association
may record and perfect a lien against the unit for those
assessments under ORS 100.450(1) and (2). In general, the
lien has priority over all other liens, except tax liens and a
first mortgage or deed of trust. See ORS 100.450(1)(a), (b).
In limited circumstances, however, the condominium asso-
ciation can also gain priority over the holder of the first
mortgage or deed of trust: if (among other things) the asso-
ciation gives the first lienholder formal notice of the unpaid
assessments, and the lienholder “has not initiated judicial
action to foreclose the mortgage * * * prior to the expiration
of 90 days following the notice[.]” ORS 100.450(7)(c). This
case requires us to determine whether the association gains
priority over a first lienholder whose foreclosure action had
been filed and dismissed before the notice period starts.
The facts relevant to the issue presented here are
essentially undisputed. The condominium unit at issue
had been purchased by Zahid Sulejmanagic in 2003.
Sulejmanagic gave a note to the bank’s predecessor-in-
interest, secured by a properly recorded deed of trust on the
unit. Sulejmanagic began failing to make payments on the
note in 2011.
540 Bank of New York Mellon Trust Co. v. Sulejmanagic

As a condominium, the unit was also subject to reg-
ular assessments by Tanglewood. In 2013, Sulejmanagic
began failing to pay those assessments. Tanglewood
recorded a lien against the condominium unit for the miss-
ing assessments on July 25, 2013, as it was permitted to do
by ORS 100.450(2). It is undisputed that Tanglewood’s lien
was junior to the bank’s interest, at least at that time. See
ORS 100.450(1)(b) (lien of condominium association is gen-
erally not prior to “first mortgage or trust deed of record”).
Five days after Tanglewood recorded its lien—on
July 30, 2013—the bank filed a judicial foreclosure action
against Sulejmanagic, a different homeowners’ associa-
tion, and “all other persons” having an interest in the con-
dominium unit. Tanglewood was not specifically named
as a party to that action. On December 11, 2013, the bank
and Sulejmanagic entered into a stipulated limited judg-
ment of foreclosure against Sulejmanagic alone. Because
Tanglewood, a junior lienholder, had not been named in
the action, the stipulated limited judgment of foreclosure
against Sulejmanagic alone would not have terminated
Tanglewood’s lien on the property or otherwise affected
the relative priorities and rights as between the bank and
Tanglewood.1
1
See Portland Mortgage Co. v. Creditors Protective Ass’n, 199 Or 432, 262
P2d 918 (1953), explaining that a completed foreclosure action that omits a junior
lienholder does not change the relative rights as between the foreclosing party
and the omitted lienholder:
“The omitted junior lienholder is in the same position as if no foreclosure had
ever taken place, and he has the same rights, no more and no less, which he
had before the foreclosure suit was commenced. * * *
“Just as the omitted junior lienholder retains the rights he had in the
property subject to the lien, so the senior mortgagee retains rights with
respect to the junior lienholder which are the equivalent of those held by him
before the foreclosure of his mortgage.”
199 Or at 440 (citations omitted). See also Erne v. Goshen Veneer, Inc., 249 Or 357,
362, 437 P2d 479 (1968) (quoting Portland Mortgage); Cody Hoesly, “Mortgage
Foreclosure,” 2 Oregon Real Estate Deskbook § 24.3-3(b)(4), 24-31 (2015) (omis-
sion of junior lienholder “does not invalidate a foreclosure judgment or sale, but
it does render the junior lienholder unaffected by the judgment and sale; the
junior lienholder retains his or her lien, right to foreclose that lien, and equity of
redemption” (citations omitted)).
For that reason, an Oregon commentator described a foreclosure action that
omitted a junior lien as creating a “Dracula” mortgage:
“[T]he * * * macabre effect of such a defective foreclosure [is]: the mortgage
is foreclosed and forever dead with respect to the mortgagor, the foreclosing
Cite as 367 Or 537 (2021) 541

Early the next year (January 2014), the bank filed
a first amended complaint for judicial foreclosure. This
amended complaint specifically named Tanglewood as a
party, a necessary step if Tanglewood’s claims on the prop-
erty were to be extinguished by the foreclosure.
On May 16, 2014, the trial court entered a general
judgment of dismissal as to Tanglewood. The dismissal,
pursuant to UTCR 7.020 for failure to prosecute, was with-
out prejudice. See ORS 18.082(5).
On or about October 1, 2014, Tanglewood sent the
bank written notice of Sulejmanagic’s default on assess-
ments under the provisions of ORS 100.450(7).2 Pursuant to
that statute, the bank had to have “initiated” a foreclosure
proceeding on or before 90 days following the notice—that
is, on or about January 1, 2015—for the bank to retain its
lien priority over Tanglewood. It is undisputed that the bank
took no action during that 90-day period, either to reinstate
its previously-dismissed foreclosure action, or to file a new
one.
It was not until May 4, 2015, that the bank first
moved for the trial court to reinstate the foreclosure action.
The trial court ultimately granted the motion. Tanglewood
answered the complaint and asserted that it now had prior-
ity over the bank pursuant to ORS 100.450(7).
Tanglewood and the bank would later move for
summary judgment (albeit at different times). Tanglewood
argued that the bank’s foreclosure action was not effective
to give it priority over Tanglewood’s lien, either because the
action had been filed before Tanglewood gave notice under

party, and all junior lienholders who are joined at the foreclosure action
as parties defendant. Yet, the same mortgage lives on as if no foreclosure
occurred with respect to any omitted junior lienholder whose interest is of
record. Hence, simultaneously, the mortgage is both alive and dead. * * *
[I]t is a living cadaver which the foreclosure sale purchaser acquires and
must cart around on a life support system for the benefit of any omitted junior
interest as long as the omitted interest remains outside foreclosure.”
George M. Platt, The Dracula Mortgage: Creature of the Omitted Junior Lienholder,
67 Or L Rev 287, 287 (1988) (footnote omitted).
2
The notice was sent to the bank’s predecessor-in-interest rather than the
bank itself, but the parties do not argue that that is of any legal significance to
our analysis.
542 Bank of New York Mellon Trust Co. v. Sulejmanagic

ORS 100.450(7), or because the dismissed action had not
been reinstated before the 90-day notice period expired.
The bank asserted that the statute only required it to “ini-
tiate” a foreclosure action; it had done so; and, therefore,
Tanglewood could not obtain priority.
The trial court agreed with the bank. It granted
summary judgment, and later entered a general judgment
of foreclosure.
Tanglewood appealed, renewing its argument that
it was entitled to priority. The Court of Appeals rejected the
argument and affirmed. Bank of New York, 299 Or App at
263. The court first rejected Tanglewood’s assertion that
the foreclosure action had to be filed after a condominium
association had given notice under ORS 100.450(7)(c). The
bank’s foreclosure action had been filed “prior to” the expira-
tion of the 90-day notice period, as was required by the plain
text of the statute. See 299 Or App at 269.
The court also rejected Tanglewood’s alternative
argument that the foreclosure action was ineffective to pre-
serve the bank’s priority because the action had been dis-
missed before Tanglewood gave formal notice and remained
dismissed during the entire 90-day notice period. The stat-
ute said nothing about the “status of any judicial action,” the
court concluded; if a foreclosure action had been initiated,
then the requirements of ORS 100.450(7)(c) were met. 299
Or App at 268.
Tanglewood sought review, which we allowed.
II. DISCUSSION
The issue presented here involves how the Oregon
legislature has balanced the complicated interplay between
the interests of condominium associations and first lien-
holders. Before turning to the specifics of how this state
has addressed the issue, it will be useful to provide some
background about the concerns that underlie this question.
(As we will explain shortly, the text, context, and legislative
history of ORS 100.450(7) reflect many of the same concerns
identified nationally.)
Cite as 367 Or 537 (2021) 543

A. Overview of National Debate on Condominium Associa-
tion Priority for Unpaid Assessments
For decades, there has been extensive commen-
tary nationally regarding the appropriate priority that
should be given to condominium association assessments.
See, e.g., Stewart E. Sterk, Maintaining Condominiums and
Homeowner Associations: How Much of a Priority?, 93 Ind
LJ 807 (2018); Andrea J. Boyack, Community Collateral
Damage: A Question of Priorities, 43 Loy U Chi LJ 53 (2011);
Daniel Goldmintz, Lien Priorities: The Defects of Limiting
the “Super Priority” for Common Interest Communities,
33 Cardozo L Rev 267 (2011); James L. Winokur, Meaner
Lienor Community Associations: The “Super Priority” Lien
and Related Reforms under the Uniform Common Interest
Ownership Act, 27 Wake Forest L Rev 353 (1992); Henry
L. Judy & Robert A. Wittie, Uniform Condominium Act:
Selected Key Issues, 13 Real Property, Probate & Trust J 437
(1978). The Uniform Law Commission has addressed the
issue at least twice, first in the Uniform Condominium Act
(1978), then in the Uniform Common Interest Ownership
Act (1982). See Sterk, 93 Ind LJ at 815.3
In brief, the problem is a conflict between compet-
ing interests. On the one hand, a condominium association
imposes assessments on the unit owners so as to maintain
the public spaces and other amenities of the units. If one unit
owner is not paying those assessments, then an increased
burden falls on the other unit owners, who must make up
the shortfall through increased assessments. A shortfall
in assessments can also harm the value of all the condo-
minium units, in that necessary maintenance and upkeep
may not be done. See Boyack, 43 Loy U Chi LJ at 61-62,
102 n 249; Judy & Wittie, 13 Real Property, Probate & Trust
J at 474-75.
On the other hand, the first lienholder for a con-
dominium unit is typically a bank or other lender who had
financed the owner’s purchase of the unit. Laws that impair
the value of the lender’s security will impair lending itself,
making condominium units more difficult to build, sell, and

3
Neither uniform act has been adopted in Oregon.
544 Bank of New York Mellon Trust Co. v. Sulejmanagic

resell. That, in turn, harms the value of condominiums gen-
erally. See Report of the Joint Editorial Board For Uniform
Real Property Acts, The Six-Month “Limited Priority Lien”
for Association Fees Under the Uniform Common Interest
Ownership Act, 2 (June 1, 2013) (online at https://www.
uniformlaws.org/viewdocument/jeb-urpa-report-the-six-
month-li) (accessed Feb 2, 2021); Winokur, 27 Wake Forest
L Rev at 359; Judy & Wittie, 13 Real Property, Probate &
Trust J at 476.
The situation becomes most problematic when prop-
erty values are falling, often because of a poor economy.
The first lienholder has a positive incentive not to foreclose,
as “a lender purchasing at foreclosure will be liable for all
subsequent assessments,” while holding a property that
may take a substantial time to resell. Boyack, 43 Loy U
Chi LJ at 103; see also Goldmintz, 33 Cardozo L Rev at 281
(“[E]ven in the best of times, lenders may move slowly to fore-
close on the property since they then become immediately
liable for assessment payments.” (Footnote omitted.)). A lien-
holder who delays foreclosure, by contrast, gives the market
time to go back up without becoming liable for the assess-
ments in the meantime. See Goldmintz, 33 Cardozo L Rev at
281-82 (explaining some first lienholder incentives); see also
Boyack, 43 Loy U Chi LJ at 103 (same). At the same time, the
poor economy may mean that more of the unit owners are
in default on the assessments, imposing substantial finan-
cial burdens on the remaining unit owners while endanger-
ing the solvency of the condominium association itself. See
Boyack, 43 Loy U Chi LJ at 60-61; Goldmintz, 33 Cardozo
L Rev at 282.
Various solutions have been proposed over the
decades. The Federal Housing Administration’s model condo-
minium act in 1962 provided that condominium assessments
had priority over all liens except first liens (and tax liens).
See Sterk, 93 Ind LJ at 813 (discussing Federal Housing
Administration, Form No. 3825, Apartment Ownership Act
(1962)). The Uniform Condominium Act and the Uniform
Common Interest Ownership Act both gave condominium
assessments a “super priority” over first liens—but limited
it to six months’ worth of unpaid assessments. See id. at 815.
Another proposed solution has been to give a condominium
Cite as 367 Or 537 (2021) 545

association a super priority over first liens for all amounts of
unpaid assessments. See id. at 809-10 (so arguing).
B. Oregon’s Legislative Solution: ORS 100.450
With that background, we turn to the legislative
solution adopted in Oregon. The dispute in this case involves
the relative priority of liens under ORS 100.450. That
statute consists of two parts: a general rule and a specific
exception.
The general rule is that, while a condominium asso-
ciation’s lien will take priority over a number of other liens
automatically, it does not take priority over a first mortgage:
“The lien is prior to a homestead exemption and all other
liens or encumbrances upon the unit except:
“* * * * *
“(b) A first mortgage or trust deed of record[.]”
ORS 100.450(1)(b) (excluding certain exceptions not relevant
here). It is not disputed that the bank’s interest is a first
trust deed of record.
The statute goes on to provide that, when certain
limited conditions are met, a condominium association lien
will obtain priority over a first mortgage or deed of trust:
“(7) Notwithstanding the priority established for a
lien for unpaid assessments and interest under subsection
(1) of this section, the lien shall also be prior to the lien of
a first mortgage or trust deed of record for the unit and the
undivided interest in the common elements, if:
“(a) The association of unit owners for the condo-
minium in which the unit is located has given the lender
under the mortgage or trust deed 90 days prior written
notice that the owner of the unit is in default in payment of
an assessment. * * *
“* * * * *
“(c) The lender has not initiated judicial action to fore-
close the mortgage or requested issuance of a trustee’s
notice of sale under the trust deed or accepted a deed in
lieu of foreclosure in the circumstances described in ORS
546 Bank of New York Mellon Trust Co. v. Sulejmanagic

100.465 prior to the expiration of 90 days following the
notice by the unit owners’ association.”
ORS 100.450(7).4
The dispute here concerns whether ORS 100.450(7)
gave Tanglewood’s lien priority over the bank’s lien.
Specifically, the issue turns on what ORS 100.450(7)(c)
means when it requires a foreclosure action to be filed “prior
to the expiration of 90 days following the notice.”
Tanglewood presents two arguments. Its first con-
tention is that ORS 100.450(7)(c) requires a lender to act,
not just before a date, but after a date—specifically, after
the date of the condominium association’s notice. There is no
question that the statute sets an end date: The lender must
act no later than 90 days after the notice, or it will lose pri-
ority to the condominium association. Tanglewood contends
that the statute also sets a start date, and that any foreclo-
sure action initiated by the lender prior to the condominium
association’s notice will be ineffective to stop the association
from taking priority.
Alternatively, Tanglewood maintains that the bank’s
foreclosure action failed to meet the requirements of ORS
100.450(7)(c) because the action was dismissed at the time
Tanglewood gave notice, and the bank took no steps to rein-
state it during the 90-day notice period.
For its part, the bank responds that ORS 100.450
(7)(c) does not set a start date. The statute applies only when
a lender “has not initiated” the foreclosure action. Here, it
notes, it had already initiated the foreclosure action when
Tanglewood sent its notice. As for Tanglewood’s alternative
argument, the bank asserts that nothing requires the fore-
closure action to remain pending during the notice period.
Accordingly, the bank contends, Tanglewood has not gained
priority for its lien.
To resolve the issue, we must determine the legisla-
tive intent behind ORS 100.450(7)(c). In doing so, we consider
4
There are other requirements for a condominium association to obtain pri-
ority over a first mortgage, but it is not disputed that those conditions have been
met in this case.
Cite as 367 Or 537 (2021) 547

the text, context, and any relevant legislative history under
the methodology articulated in PGE v. Bureau of Labor and
Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993), and
State v. Gaines, 346 Or 160, 171-72, 206 P3d 1042 (2009).
1. Text
Beginning with the text, a condominium associa-
tion’s lien will take priority over the first lien only if:
“The lender has not initiated judicial action to foreclose
the mortgage[5] * * * prior to the expiration of 90 days follow-
ing the notice by the unit owners’ association.”
ORS 100.450(7)(c).
Tanglewood relies on the particular phrasing of that
subsection, asserting that the words “following the notice”
should be read to set a start date for when the lender must
initiate the foreclosure proceeding. That is, Tanglewood
reads that text to require that the foreclosure action be ini-
tiated “following the notice” by the condominium association
under ORS 100.450(7).
Strictly speaking, the phrase “following the notice”
does not support Tanglewood’s contention. What must “fol-
low[ ] the notice” is “90 days.” The entire final clause is a
calculation method: Take the notice date and add 90 days to
determine what the statute denominates as the “expiration”
date.
The text provides that something must occur “prior
to the expiration” of the defined date. The phrase “prior to”
is defined to mean “in advance of : before.” Webster’s Third
New Int’l Dictionary 1804 (unabridged ed 2002). “Prior to”
is here used as a prepositional phrase, the object of which is
the “expiration [of 90 days following the notice].” “Prior to”
means only before; it does not limit how long before.
The text thus provides for an expiration date, and
it requires courts to determine whether certain events have
occurred “prior to” that expiration date. One such event is

5
At oral argument, it was noted that this case involved judicial foreclosure
of a deed of trust rather than a mortgage. The parties do not argue that that fact
is relevant to our analysis.
548 Bank of New York Mellon Trust Co. v. Sulejmanagic

whether the first lienholder has “initiated judicial action
to foreclose the mortgage.” ORS 100.450(7)(c). The relevant
definition of “initiate” is “to begin or set going : make a
beginning of : perform or facilitate the first actions, steps, or
stages of.” Webster’s at 1164.6
The text alone, then, is unclear regarding the time
by which the first lienholder must act. It defines only the end
of the action period.
2. Context
We must evaluate the statutory text in its context.
Here, Tanglewood is on firmer ground. The first lienholder
must act before the 90-day period expires, but the clear
expectation of the statute is that the first lienholder’s action
will be prompted by the notice itself.
ORS 100.450(7) as a whole sets out extensive
requirements by which a condominium association’s lien
for unpaid assessments can obtain priority over a first lien-
holder. The relevant provisions of ORS 100.450(7) are as
follows:
“Notwithstanding the priority established for a lien for
unpaid assessments and interest under subsection (1) of
this section, the lien shall also be prior to the lien of a first
mortgage or trust deed of record for the unit and the undi-
vided interest in the common elements, if:
“(a) The association of unit owners for the condo-
minium in which the unit is located has given the lender
under the mortgage or trust deed 90 days prior written
notice that the owner of the unit is in default in payment of
an assessment. The notice shall contain:
“(A) Name of borrower;
6
We are unpersuaded by Tanglewood’s reliance on Welker v. TSPC, 332 Or
306, 27 P3d 1038 (2001), which interpreted different text and context. In that
case, this court had interpreted a statute requiring a notice of appeal to be filed
“ ‘within 30 days after’ ” a motion for new trial was resolved, id. at 311 n 2 (quoting
former ORS 19.026(2) (1995)), and the court concluded that the notice of appeal
could not be filed before the motion had been resolved. The court explained that
time to file an appeal does not start until either the trial court rules on the new
trial motion or the motion is deemed denied. Id. at 312. Prior case law—which
is statutory context—had expressly held that a premature notice of appeal was
“jurisdictionally defective.” Id. at 312-13. The notice of appeal thus had to be filed
“within”—that is, inside the boundaries of—the 30-day period.
Cite as 367 Or 537 (2021) 549

“(B) Recording date of trust deed or mortgage;
“(C) Recording information;
“(D) Name of condominium, unit owner and unit des-
ignation stated in the declaration or applicable supplemen-
tal declaration; and
“(E) Amount of unpaid assessment.
“(b) The notice under paragraph (a) of this subsection
shall set forth the following in 10-point type:
“________________________________________________
“NOTICE: The lien of the association may become prior to
that of the lender pursuant to ORS 100.450.
“________________________________________________
“(c) The lender has not initiated judicial action to fore-
close the mortgage or requested issuance of a trustee’s
notice of sale under the trust deed or accepted a deed in
lieu of foreclosure in the circumstances described in ORS
100.465 prior to the expiration of 90 days following the
notice by the unit owners’ association.
“(d) The unit owners’ association has provided the
lender, upon request, with copies of any liens filed on the
unit, a statement of the assessments and interest remain-
ing unpaid on the unit and other documents which the
lender may reasonably request.
“(e) The borrower is in default under the terms of the
mortgage or trust deed as to principal and interest.
“(f) A copy of the notice described in paragraph (a) of
this subsection, together with an affidavit of notice by a
person having knowledge of the facts, has been recorded in
the manner prescribed in subsection (3) of this section. The
affidavit shall recite the date and the person to whom the
notice was given.”
In summary, the statute imposes an initial set of
obligations on the condominium association, which must
give 90 days’ written notice to the first lienholder that the
owner is in default on the assessments. ORS 100.450(7)(a).
If the condominium association does so (and if the owner
is in default on the first mortgage or deed of trust, ORS
100.450(7)(e)), then the burden for action shifts to the first
550 Bank of New York Mellon Trust Co. v. Sulejmanagic

lienholder. The first lienholder now has 90 days to take one
of the actions specified by ORS 100.450(7)(c). If the first lien-
holder does not do so, then it loses its first priority to the lien
for unpaid assessments.
In context, the 90-day period in ORS 100.450(7)(c)
is the same 90 days mentioned in ORS 100.450(7)(a) in con-
nection with the written notice. The notice triggers the first
lienholder’s obligation to act. It creates a window for action
by the first lienholder that begins with the date of the notice
and ends 90 days later. That is inherent in the fact that the
notice is called a “notice.” The obvious purpose of the notice
is to prompt action by the first lienholder.
As noted, the bank did not act within the 90-day
period following the notice. This case, however, presents a
slightly different question, which is whether the bank’s ear-
lier foreclosure action negated its obligation otherwise to act
during that 90 days. For help with that question, we turn to
the legislative history.
3. Legislative history
What is now ORS 100.450(7) was originally enacted
as section 19 of Senate Bill (SB) 1135 (1989). See Or Laws
1989, ch 595, § 19 (amending former ORS 94.195, renum-
bered that year as ORS 100.450). The bill had been pro-
posed by the Oregon State Bar’s Real Estate and Land
Use Section. See Minutes, Senate Committee on Business,
Housing and Finance, SB 1135, Apr 17, 1989, 7-8 (statement
of Gene Grant, Oregon State Bar) (explaining that bill was
being submitted by Bar’s Real Estate Section and not Bar as
a whole).
Section 19 was considered at least potentially the
most controversial part of the bill, so it was the subject
of extensive explanation by Rich Vial, the Chair of the
Legislative Subcommittee of the Real Estate and Land Use
Section. His explanation largely tracks the policy concerns
that have been expressed nationally, as described above.
Vial explained that, as a matter of general policy, it
was important for first lienholders to retain their priority,
so that lenders would be willing to lend for condominium
Cite as 367 Or 537 (2021) 551

purchases and resales.7 At the same time, however, the mem-
bers of a condominium association are economically interde-
pendent when it comes to the payment of assessments. If one
condominium owner is not paying those assessments, then
the other condominium owners must pay more to make up
the difference.8
Vial added that the Oregon legislature had pre-
viously considered whether to give condominium associa-
tions a super priority for unpaid condominium assessments,
similar to that found in the Uniform Condominium Act.
Lenders had opposed that solution, however, and the bill
was defeated.9
Section 19 of SB 1135 reflected a compromise between
condominium associations and lenders.10 It was intended to

7
Mr. Vial stated:
“The priority of a first mortgage, of a prior recorded mortgage or trust deed,
is something that most condominium associations recognize is important, to
give lenders the comfort to make loans on condominiums in the first place,
which is necessary for people to get resales. Everybody feels good about that.”
Tape Recording, Senate Committee on Business, Housing and Finance, SB 1135,
Apr 17, 1989, Tape 72, Side A.
8
Tape Recording, Senate Committee on Business, Housing and Finance,
SB 1135, Apr 20, 1989, Tape 77, Side A (statement of Rich Vial) (noting the “hard-
ship on the [other] unit owners, who must absorb the costs that aren’t being paid
by that unit owner”).
9
Mr. Vial explained:
“[T]he reason why [section 19 is] controversial is that its birthplace was the
Uniform Condominium Act, which has been adopted by about 24 states and
does provide that the lien of a condominium association is prior to all other
liens, including first mortgage and trust deeds of record. Now we, several
sessions ago, in response to some concerns that had been raised by certain
associations, thought that was a good idea. The lenders lobby reeducated us
in that respect, we’re grateful that they did, and we have come up with what
we feel is not a super priority, but is a compromise that allows the association
to protect itself in certain circumstances.”
Tape Recording, Senate Committee on Business, Housing and Finance, SB 1135,
Apr 17, 1989, Tape 72, Side A. See also Tape Recording, House Committee on
Judiciary, Subcommittee on Civil and Judicial Administration, SB 1135, May 17,
1989, Tape 101, Side A (statement of Dave Barrows, representing the Oregon
League of Financial Institutions) (noting that lenders’ lobby had opposed prior
legislation and committee had agreed with them).
10
Mr. Vial stated that, “in talking with the lenders’ lobby, we have come
up with a compromise solution that we feel is good.” Tape Recording, Senate
Committee on Business, Housing and Finance, SB 1135, Apr 20, 1989, Tape 77,
Side A. The lenders’ lobby confirmed that. Dave Barrows, representing the Oregon
552 Bank of New York Mellon Trust Co. v. Sulejmanagic

address a narrow situation: one in which a lender refused to
initiate foreclosure because the value of the condominium
was less than the amount of the debt, and so the lender was
waiting for market prices to rise.11

Tanglewood notes that the legislative history con-
firms that the notice provision was to require the first lien-
holder to take some action after receiving the notice. A “Brief
Section Summary” of the bill, submitted to the legislature
by Rich Vial, stated:
“Lender may retain priority by filing an action or taking
other appropriate steps to enforce its lien rights if done
within 90 days of receipt of the notice.”

League of Financial Institutions and also speaking on behalf of Mr. Bronner of
the Oregon Bankers Association, stated:
“[Last session, w]e resisted strongly any movement of unpaid homeowners’
assessments and fees ahead of our prior recorded mortgage * * *. And the
Housing Committee agreed with our position and that was not in the big
package. We think this time we have worked out a reasonable position that
will protect the interests of both the homeowners’ associations and the lend-
ers and the amendments that Mr. Vial has suggested to section 19 improve it
even more. And we strongly endorse the bill and hope the subcommittee will
send it to the full committee.”
Tape Recording, House Committee on Judiciary, Subcommittee on Civil and
Judicial Administration, SB 1135, May 17, 1989, Tape 101, Side A.
11
Mr. Vial outlined the problem as follows:
“The problem was this: The value of condominiums were going down,
and have continued to go down unfortunately in this state. The person who
got to the point where they couldn’t keep up their assessments on their con-
dominium unit frequently also couldn’t pay their mortgagee. * * * Now, had
the mortgagee stepped in at that point and either foreclosed or taken a deed
in lieu of foreclosure, there would have been no problem, because then we’d
have a responsible party paying the assessments. But what happened, and
what continues to happen * * *, is that [the lender] won’t take title to the unit.
They stand back, and they wait until the value comes back up, so that if they
foreclose or take title to the unit through a deed in lieu, and begin paying
assessments, they’re able to recover their mortgage in a sale, the value is
there, they know they’re not going to be sitting there paying the assessment
for very long.
“* * * [W]hen the lender intentionally lets the unit sit vacant, or lets the
defaulting owner stay there, * * * does nothing about taking title, and the
owner of the unit is judgment-proof—it’s not going to do the association any
good to try and collect from [the owner] because they’re judgment proof—
we’ve got nobody to look to to collect the assessments, and the entire financial
cohesive structure of the condominium is impaired.”
Tape Recording, Senate Committee on Business, Housing and Finance, SB 1135,
Apr 17, 1989, Tape 72, Side A.
Cite as 367 Or 537 (2021) 553

Testimony, Senate Committee on Business, Housing and
Finance, SB 1135, Apr 17, 1989, Ex H, at 4.
The legislative history also shows that the purpose
of the notice provision was to prompt an inactive first lien-
holder to start a foreclosure proceeding:
“[I]f the lender takes a deed in lieu of foreclosure or initiates
a foreclosure action or notices a trust deed sale during that
period of time, their lien remains in first position. We’ve
accomplished—that is, the association has accomplished—
what it needed to, which is getting the process going, get-
ting someone in there who can pay that assessment. That’s
the purpose for this section.”
Tape Recording, Senate Committee on Business, Housing
and Finance, SB 1135, Apr 20, 1989, Tape 77, Side A (state-
ment of Rich Vial).
In an exchange at the same hearing, Mr. Vial con-
firmed that the notice was not intended to give condominium
associations a “spur” to force first lienholders to speed exist-
ing foreclosure actions. The initiation of the foreclosure pro-
ceeding was enough, and condominium associations could
protect their interests after that without aid from the notice
provision:
SEN. JIM BUNN: “Can a lender that does not want
to foreclose because of the reasons you gave earlier simply
initiate judicial proceedings and then back off * * * ?
VIAL: “Once the judicial proceedings are initiated,
then the condominium association has the opportunity to
be involved in those proceedings and our feeling is that the
association will have the ability to then push that along as
quickly as they can. Certainly the possibility of a lender
stretching that out may be there, but we’re not concerned
about that risk. We feel that this is sufficient at this time.”
Tape Recording, Senate Committee on Business, Housing
and Finance, SB 1135, Apr 20, 1989, Tape 77, Side A.
To put it another way: The legislation was drafted to
address the situation in which a lender had not started fore-
closure. The notice was intended to cause the first lienholder
to take action to put the property into the hands of someone
who would begin paying condominium assessments. The
554 Bank of New York Mellon Trust Co. v. Sulejmanagic

statute was not expected to apply if the first lienholder had
already taken one of the actions listed in ORS 100.450(7)(c).
4. Summary of text, context, and legislative history
The text, context, and legislative history allow us to
draw the following conclusions.
First, the general rule is that, unless ORS 100.450(7)
applies, a first lienholder will retain its priority. That is spe-
cifically set out in ORS 100.450(1)(a) and confirmed by the
legislative history.
Second, ORS 100.450(7) contemplates that the con-
dominium association’s notice (if the other requirements are
met) will trigger a 90-day period for action by the first lien-
holder. The first lienholder must ordinarily take one of those
actions within that 90-day period, or it will lose its priority
to the lien for unpaid assessments.
Third, and relatedly, ORS 100.450(7)(c) assumes
that the first lienholder has not taken any of the listed
actions, which would lead to a new owner taking posses-
sion of the property. ORS 100.450(7)(c) requires the first
lienholder to “initiate” a foreclosure action, implying that
no foreclosure action is already pending, just as it requires
a first lienholder with a deed of trust to “request issuance of
a trustee’s notice of sale,” implying that no such notice has
already been requested.
Fourth, the text, context, and history do not show
any intent to “invalidate” or ignore a pending foreclosure
action. To the contrary, the legislative history shows an
affirmative expectation that a condominium association will
be able to protect its interests adequately in a pending fore-
closure proceeding, without any additional need to invoke
ORS 100.450(7).
5. Application of principles to this case
We now turn to how those principles should be
applied on the facts of this case.
Factually, the relevant events are as follows. First,
the bank had initiated a foreclosure action. Second, that
foreclosure action was then dismissed. Third, while the
Cite as 367 Or 537 (2021) 555

action was dismissed, Tanglewood gave notice under ORS
100.450(7). And fourth, the bank did not take any of the
actions prescribed by ORS 100.450(7)(c) during the 90 days
that followed.
As we have noted, the general rule is that the con-
dominium association’s notice puts the obligation on the first
lienholder to act within 90 days to retain its priority. That
general rule does not aid the bank.
In some cases, the first lienholder will already be
acting under ORS 100.450(7)(c). It may have initiated a
pending judicial foreclosure action, or it may have requested
the issuance of a trustee’s notice of sale, but the sale may not
yet be complete.12
In those situations, a notice by the condominium
association under ORS 100.450(7) will not be effective. The
notice is given to prompt a particular set of actions. The leg-
islative history confirms that there was no intent to allow
a condominium association to use the notice provision to
“force” the first lienholder to prosecute a foreclosure action
faster. If a foreclosure action is pending, then the condo-
minium association must protect its rights through the
foreclosure proceeding, not through the mechanisms of ORS
100.450(7).
Here, however, the bank had filed a foreclosure
action in the past, but that action was no longer pending
when Tanglewood sent its notice. The action had been dis-
missed by general judgment.
Based on what we have said, we conclude that
Tanglewood’s notice was effective. Again, the purpose of the
notice is to prompt a first lienholder to take action to get
the condominium unit into the hands of an owner who can
pay future assessments. A dismissed foreclosure action does
nothing to promote that end. Moreover, there is no pending
proceeding in which the condominium association could pro-
tect its interests.

12
The third possible action under ORS 100.450(7)(c)—accepting a deed in
lieu of foreclosure—is complete when performed, and thus cannot be “in process.”
556 Bank of New York Mellon Trust Co. v. Sulejmanagic

For purposes of ORS 100.450(7)(c), we conclude that
a foreclosure action that has been filed and dismissed is
functionally identical to a foreclosure action that was never
filed.
That is the situation presented here. The conditions
for ORS 100.450(7) (unpaid assessments and a default on
the first lien) had been met. Tanglewood sent a proper notice
under ORS 100.450(7), triggering the bank’s obligation to
take action. The bank did not act within 90 days, and it
cannot rely on a foreclosure action that had previously been
dismissed.
The bank argues that its action was later rein-
stated, and that reinstatement placed it back in the same
position as if the action had never been dismissed. We do not
agree. The foreclosure action had been filed and dismissed
before Tanglewood ever sent its notice. The action remained
dismissed until months after the 90-day notice period had
expired. During that period, the action was closed by general
judgment, and to all intents and purposes was a completed
matter. Once the 90 days elapsed without the bank rein-
stating the then-dismissed foreclosure action, the statute
expressly granted Tanglewood priority for its assessments.
The bank asserts that the reinstatement of the
foreclosure action “undid” Tanglewood’s statutory award of
priority. But nothing about ORS 100.450(7) suggests that
an existing grant of priority can be undone by the future
actions of an adverse party. Nor does the bank identify any
other statute, rule, or case that would support its conclusion.
The sole authority cited by the bank is the defini-
tion of “reinstate” from a legal dictionary:
“To place again in a former state or position; to restore .”
Black’s Law Dictionary 1539 (11th ed 2019). We agree that
the bank’s foreclosure action was restored. We do not agree,
however, that the reinstatement made the dismissed fore-
closure action pending during the 90-day notice period of
ORS 100.450(7). The definition from Black’s does not imply
that the action was never dismissed, or that the period of
dismissal was a legal nullity. The bank did not, for example,
Cite as 367 Or 537 (2021) 557

obtain an order that the case was reinstated nunc pro tunc.
Nor could it, as the bank does not dispute that the dis-
missal was legally correct at the time that it was entered.
See Gillespie v. Kononen, 310 Or 272, 276 n 7, 797 P2d 361
(1990).13
We would add that, as an issue of real property
law, there are notice issues that would give us pause before
reaching any other conclusion. ORS 100.450(7)(f) requires
a condominium association to record its notice with the
county recording officer, the same as a lien. See id. (notice
must be recorded same as in subsection (3) of statute); ORS
100.450(3) (notice “shall be recorded by the county recording
officer” and “indexed as other liens are required by law to be
indexed”).
III. CONCLUSION
This case involves a complex policy choice by the
legislature regarding when, and under what circumstances,
a lien for condominium assessments should take prior-
ity over a first mortgage or deed of trust. We agree with
Tanglewood that a condominium association’s notice under
ORS 100.450(7)(a) triggers an obligation on a first lienholder
to act within 90 days, or the condominium association’s lien
will take priority. In this case, the bank did not act before
the 90 days expired. Nor can the bank rely on its previously
filed foreclosure action, as that action had been dismissed
by general judgment prior to the notice, and it remained
dismissed throughout the entire 90-day period. Once the
90 days elapsed without the case being reopened or a new

13
As this court explained in that case:
“The function of a nunc pro tunc entry is to make a record of what was pre-
viously done, but not then entered; not to make an order now for then, but to
enter now for then an order previously made. The purpose of a nunc pro tunc
order is to supply an omission in the record of action actually taken but omit-
ted from the record through inadvertence or mistake, or to enter an order
which should have been made as a matter of course and as a legal duty. Such
an order is effective only when it records a previously omitted truth—it does
not create, but only speaks what has been done.”
310 Or at 276 n 7 (citations omitted).
In so noting, we do not finally determine whether even a nunc pro tunc order
reopening a foreclosure would be sufficient to avoid the priority granted by ORS
100.450(7).
558 Bank of New York Mellon Trust Co. v. Sulejmanagic

foreclosure action being filed, Tanglewood was granted pri-
ority over the bank’s interest by operation of ORS 100.450(7).
The decision of the Court of Appeals is reversed.
The judgment of the circuit court is reversed, and the case
is remanded to the circuit court for further proceedings.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10627380. Public record. Not legal advice.