Mechanic's Liens and Condominium Property
posted by Michael Fortney | Apr 6, 2015 09:08 AM in Construction Law:Mechanic's Liens, Attested Accounts, and Bonds
The mixed ownership interests in condominium property present a unique twist for the attachment and scope of mechanic's liens. This is because individual condominium unit ownership typically is from the drywall in while the condominium association owns the property from the studs out. When an improvement is made to condominium property, an issue arises as to what does the lien attach and to what ownership interests. Ohio law has addressed these issues in R.C. Chapter 5311.01.
R.C. 5311.13(A) provides that a mechanic's lien with respect to a unit of a condominium property and the undivided interest in the common elements arise in the same manner and under the same conditions as liens with respect to any other real estate. Therefore, mechanic's liens are created in the same manner as other liens. However, there are unique exceptions.
For work and material furnished to an individual condominium unit, lien rights exists for improvements contracted for by the condominium unit owner. However, a lien may attach to an individual condominium unit even if the condominium unit owner did not contract for the work, if: 1) the work was authorized by the board of directors of the condominium association and 2) was necessary in the opinion of the board for public safety or to prevent damage to or destruction of any other condominium property. R.C. 5311.13(B). So, for example, a lien will exist against the individual condominium unit for roof work approved by the board to prevent and/or preserve condominium property. If the work or materials furnished is for the improvement of two or more units, each individual condominium unit is encumbered thereby in proportion to the individual owner's ownership interest to the common elements as a whole. R.C. 5311.13(D).
For work and material furnished for the common elements to condominium property at the direction of the board of directors, lien rights exist to secure payment against the interests of all owners’ units and their respective undivided interest in the common elements. R.C. 5311.13(C). The lien against an individual unit may be released by the payment of the proportionate amount of the obligation secured by the lien.
For work and materials furnished in the development of condominium property, but prior to the time that a declaration is filed to dedicate the development as a condominium association, the lien is enforceable against the individual condominium units and against the common elements that the developer later conveys to the association (regardless of the property to which the lien originally attached). To the extent that the developer fails to convey the whole of the improved property to the association, the lien will continue to attach to the property that does not become condominium property. R.C. 5311.13(E).
The law further specifies that no lien will be enforceable against the purchaser of any condominium unit who purchased in good faith unless a mechanic's lien affidavit has been filed for record before the deed for the condominium unit is filed for record. R.C. 5311.13(F). This situation will arise if the work or materials are furnished, but the condominium is sold before a mechanic's lien is filed. In addition to this express good faith safe guard, condominium owner is also afforded the same paid-in-full defenses for residential property that are set forth in the general mechanic lien law.
For more information on the scope of Ohio Mechanic's Lien Law and how to preserve and protect your lien rights, contact the construction lawyers at Fortney & Klingshirn.
Revision History
- Nov 21, 2015 07:15 AM - Edit by Les Hughes
