The theory behind condo liens is to provide a way for homeowners’ associations (HOAs) or condominium corporations to ensure payment of any unpaid assessments while enforcing compliance with community rules. There is, however, little consensus pertaining to the manner in which the liens get created, their priority, and the methods available for their enforcement. Instead, condo lien law belongs to the realm of jurisdiction, and relative to this, jurisdiction varies significantly by state and province, and even on a certain level by local ordinance. Both owners and the entities that govern the condo communities must understand these subtle distinctions.
Condo liens are in their inception a lien placed against an individual condominium unit asserting in which the lien holder claims that the owner owes a sum of money to the association. Generally, the debts consist of unpaid common expenses, special assessments for major repairs or improvements, fines for violation of the community’s governing documents (bylaws, rules, and regulations), and related expenses including late charges, interest, and attorneys’ fees in collecting these sums. The filings of such liens are usually authorized under the condominium act of the state or province, as well as the declaration or governing documents of any condominium project.
Arguably the most challenging jurisdictional difference is in the priority of the condo lien. In many jurisdictions, the condo lien is given by statute a super-priority so that it has first priority over all other liens recorded against the property except for first mortgages and sometimes liens imposed by the government such as property taxes. This super-priority is meant to secure the financial viability of the condominium association by assuring that it is able to collect on funds required for maintenance and operation of the common elements that benefit a majority, if not all, of the owners. However, there is a large divergence on the true extent of the super-priority, including, for instance, how much of an assessment it applies to (such as limited to three to six months of unpaid assessments) and over what types of liens it has priority (i.e., first mortgage liens or only second mortgages). Some jurisdictions may only provide a limited super-priority, while others have a somewhat broader scheme.
The procedure for establishing a condo lien also varies extensively. Generally, the procedure includes a number of steps with the intent of providing the delinquent owner with proper notice. Usually, a written notice of delinquency will be given, detailing the various amounts outstanding and the possible consequences should the amounts remain unpaid; these consequences would include the association filing a lien against the unit. The specific length of this notice period, along with manner of delivery, will generally be specified by statute. Should the owner neglect to pay the assessments within the time specified in the notice, the association will be entitled to record a notice of lien or certificate of lien for the property with the local land registry or recording office. This recorded lien thereby constitutes public notice to the world concerning the association’s claim against the property. The particular legal requirements for the form and filing of such notice vary from jurisdiction to jurisdiction.
In addition, methods for enforcing condo liens vary from jurisdiction to jurisdiction. The most common form of enforcement is through foreclosure. But procedures for foreclosure, whether judicial or non-judicial, and the time parameters can differ substantially. Some jurisdictions will require the full judicial procedure, with filings and hearings in court, while others limit the use of the non-juridical procedure to a number of isolated situations. Unit owners and their rights within the foreclosure procedure, including the right of redemption, tend to vary depending on those state or provincial laws.
Some jurisdictions may even permit other grounds beside monetary defaults to have a condo lien placed against property for violation of the community’s rules and regulations, so long as the governing documents empower such action and a method exists for levying fines and attaching them to the unit as a lienable debt. Yet such “violation liens” typically come with far more conditions regarding their enforceability and priority and are often weighed more heavily in the legal arena, depending on the specific jurisdictional framework.
With more and more people choosing the condominium lifestyle, a lucid and effective legal framework for condo liens would be an absolute necessity. These legal remedies for condo liens basically allow for condo developments to maintain their financial status and community standards. However, with the big jurisdictional differentials, it further points out how important it is to understand the particular laws about condo liens in the relevant state or province. Condo owners should rather be familiar with their association’s governing documents and the applicable legislation in order to identify their rights and obligations. Likewise, condominium associations must strictly adhere to the procedure prescribed by law for the establishment of condo liens, as well as for the enforcement thereof, so as to ensure at least the practical validity of the lien. In any event, recourse to legal counsel familiar with these particular jurisdictional laws is most often the better course for owners and associations alike when dealing with condo liens.
