## Facts

- Anne M. Will owned a condominium unit in The Mill Condominiums in Ludlow, Vermont.
- Will failed to pay condominium assessments, and the Mill Condominium Owners’ Association initiated a nonjudicial foreclosure under 27A V.S.A. § 3-116.
- The Association, through its attorney, conducted a foreclosure sale and set an upset price equal to unpaid assessments, interest, and costs ($3,510.10).
- The Association and prospective purchasers believed a $45,000 mortgage encumbered the unit; the mortgage had actually been discharged.
- The purchasers were the only bidders and bought the unit for $3,510.10; the unit’s fair market value was approximately $70,000.
- Will sued for declaratory relief to set aside the foreclosure sale and deed; the trial court confirmed the sale and granted defendants summary judgment.

## Issues

1. Whether a constitutional challenge to applying the nonjudicial foreclosure procedure to condominium assessment liens was preserved for appeal.
2. Whether the sale could be voided for mutual mistake based on the parties’ shared but erroneous belief about an outstanding mortgage.
3. Whether 27A V.S.A. § 3-116(i) imposes a “commercially reasonable” requirement on condominium lien foreclosure sales, including for associations formed before UCIOA’s enactment.
4. Whether the foreclosure sale of Will’s unit was commercially reasonable.

## Decision

- The constitutional challenge was waived because it was not raised in the trial court.
- Mutual mistake did not void the sale because Will was not a party to the sales contract between the Association and the purchasers, and the Association’s attorney did not represent Will.
- Section 3-116(i) requires condominium associations to conduct foreclosure sales in a commercially reasonable manner, and the requirement applies even to pre-UCIOA associations.
- The sale was not commercially reasonable given the extreme price disparity, reliance on a nonexistent mortgage, and deficient sale information and procedures.
- The Supreme Court vacated summary judgment for defendants and remanded for entry of judgment voiding the foreclosure sale and deed.

## Legal Principles

- Arguments not raised in the trial court, including constitutional claims, generally may not be raised for the first time on appeal.
- Mutual mistake permits avoidance of a contract only by a contracting party; a nonparty affected by a transaction generally cannot rescind the contract on that ground.
- Under 27A V.S.A. § 3-116(i), a condominium association foreclosing an assessment lien must conduct the sale in a commercially reasonable manner.
- The content of “commercial reasonableness” under § 3-116(i) may be informed by UCC Article 9 standards; the party conducting the sale bears the burden to show commercial reasonableness.
- A very low sale price relative to fair market value, coupled with misleading or materially incorrect information affecting bidding, can support a finding that a nonjudicial foreclosure sale was commercially unreasonable and therefore invalid.

## Conclusion

The Vermont Supreme Court held that UCIOA conditions the validity of condominium assessment lien foreclosures on a commercially reasonable sale, and it voided a nonjudicial foreclosure where the unit was sold for the amount of delinquent dues based on an erroneous belief about a mortgage and procedures that failed to yield a reasonable price.


Will v. Mill Condo. Owners' Ass'n, 176 Vt. 380, 848 A.2d 336 (2004)