What the subordination rule actually costs a board

The practical consequence of losing the exception is straightforward and expensive. Where the common-charge lien is subordinate to a recorded first mortgage, a foreclosure of that mortgage can wipe the association's lien out. The board's arrears do not disappear as a debt of the former owner, but as a charge against the unit they are gone — and the former owner is, in the usual case, the reason there were arrears in the first place.

Which means the association's realistic recovery in a mortgage foreclosure is limited to whatever surplus exists after the mortgagee is paid, plus whatever it can collect personally. Our New York collections and liens page covers the lien mechanics, and our foreclosure page covers what happens when the mortgagee moves first.

Three things that follow for a New York board

Establish what your building is actually used for, in writing. Not what the declaration says. Not the tax class. The certificates of occupancy, the current tenancies, and any residential use of any unit. If any part of the building is in residential use, proceed on the assumption that § 339-z's exception is unavailable.

Stop letting arrears age. If the lien is subordinate, time is not on the association's side: every month of unpaid common charges is a month of exposure that a mortgage foreclosure can erase. The board's leverage is at its highest early, and a 2025 statutory change now requires ninety days' written notice before the association commences its own foreclosure — which means the practical clock on starting a collection action is longer than it was.

Know what the six-year rule does to old arrears. A separate 2026 Second Department decision, Board of Managers of Grandview Condominiums v Medina, 2026 NY Slip Op 00341, modified a common-charge foreclosure to cut off everything accrued more than six years before commencement. Its statement of the rule:²

“However, this action was subject to a six-year statute of limitations (see CPLR 213 [2]). Separate causes of action accrued for each monthly common charge that was not paid, and the statute of limitations began to run on the date each monthly common charge became due.”

Each month is its own claim with its own clock. An association carrying arrears back to 2005 in its ledger is carrying a number, not a recoverable one.

The other half of Medina is good news for boards

The same decision sets out what a board has to put in front of a court to establish a prima facie case, which is a useful checklist:

“Based upon these submissions, the plaintiff established the validity of its authority to impose monthly common charges, the existence of the monthly common charges, Medina's failure to pay the charges, the validity of the lien, and the recording of the lien, which would permit a foreclosure.”

And it restates the statutory basis plainly: “Pursuant to Real Property Law § 339-z, a condominium's board of managers, on behalf of the unit owners, shall have a lien on each unit for the unpaid common charges. Real Property Law § 339-aa provides that a condominium's board of managers may file the lien and that '[s]uch lien may be foreclosed by suit authorized by and brought in the name of the board of managers, acting on behalf of the unit owners, in like manner as a mortgage of real property.'”

Five elements: authority to impose the charge, the charge itself, non-payment, a valid lien, and recording. A board whose bylaws, deed and ledger do not line up on those five is not ready to file.

One sourcing note

The Medina decision is an Official Reports decision of the Second Department, but the copy available to us was truncated at the top, so we do not have its printed decision date or its Appellate Division citation — only the slip opinion number, the lower court (Supreme Court, Queens County, Sally E. Unger, J., two orders dated August 1, 2023) and the panel. We are reporting the slip opinion number rather than guessing at the rest.

The category-level conclusion

For a New York condominium board, the state of the law after 17 Battery Place is this: the § 339-z exception is narrow, it turns on use rather than label, and partial residential use defeats it. Combined with the six-year per-month accrual rule, that means the association's lien is a short-lived, junior instrument in most New York buildings — which is an argument for collecting early and for treating the lien as a lever rather than as security. Our assessment limits page covers the cost pressures generating the arrears, and our estoppel and resale page covers the one moment a board reliably gets paid: the closing.

We do not predict how any individual dispute would come out, and neither of these decisions tells you whether your association's lien is senior or junior — that depends on your building's use, your recorded instruments, and facts a board establishes with counsel before it needs them.