South Carolina Community Association Law Blog

New Fannie Mae Underwriting Guidelines For Condominium Developments

Ryan McCabe — Sun, 07 Feb 2010 04:20:00 GMT

    Effective March 1, 2009, Fannie Mae adopted new underwriting guidelines which will make financing more difficult to obtain for purchasing condominiums. Fannie Mae may refuse to accept mortgages in condominium buildings where 15% or more of the owners are delinquent in their assessments or where any one owner owns more than 10% of the condominium units.

    The new guidelines also permit Fannie Mae to exclude mortgages in existing condominium developments where more than 49% of the condominium units are being leased or rented. Fannie Mae has recently began requiring that 70% of the units be sold to non-investors before it will accept a mortgage. These underwriting guidelines will make it more difficult for condominium owners to sell their units.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Enforce Covenants Consistently to Avoid Waiver

Ryan McCabe — Tue, 09 Jun 2009 12:55:00 GMT

            The South Carolina Court of Appeals agreed with the Master-in-Equity and found an association waived its right to enforce certain covenants. See Arcadian Shores Single Family Homeowners Ass'n v. Cromer, 2007 S.C. App. LEXIS 98 (Ct. App. 2007).

            The Association's declaration of covenants allowed association members to construct fencing upon "submitting plans and specifications to and obtaining written approval of the plans by the Developer," and later by the Association. One member built a three foot high solid stucco wall instead of the three foot masonry lattice wall the plans called for. The Association sought to compel the owner to tear down the fence. See id. at *4.

            The Court concluded the Association waived the right to require approval of fencing plans and specifications, if any was granted by the declaration. See id. at *12.

            A waiver is the "intentional relinquishment of a known right." Id. at *13 (citing Gibbs v. Kimbrell, 311 S.C. 261 (Ct. App. 1993). An association does not necessarily have to ensure every lot looks identical to maintain its enforcement rights. However, a neighborhood scheme must be apparent.

            In this case, the Court found that the Association inconsistently enforced its right to require approval of fencing plans and specifications. Some members had obtained approval, others had not. Moreover, evidence showed that the Master himself visited the subdivision and could not determine the existence of a neighborhood theme. By repeatedly failing to require approval, the Association waived or lost its right to make plans and specifications conditional upon its approval. See id. at *14.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Gated Communities May Need to Remove or Replace Their Gates

Ryan McCabe — Tue, 19 May 2009 13:30:00 GMT

            On April 18, 2009, The Island Packet, a South Carolina publication based out of Bluffton and Hilton Head, reported the unfortunate death of one of the members of a gated community. The person had a heart attack. While the paramedics got to the community's gates in four minutes, they were held up for a few minutes because of not being able to open the gates right away. To read the full article, you may click here.

            This unfortunate and sad incident may serve as a strong incentive for state officials to consider disallowing the use of such "unmanned" gates. State authorities may exercise their general police power granted by the federal and state constitutions for the protection of the public health, welfare, and morals. See Denene, Inc. v. City of Charleston, 359 S.C. 85, 93 (2004). Such broad powers allow local authorities to enact legislation prohibiting the use of the gates. Even if no legislation has yet been enacted, communities should consider how to prevent potential incidents such as that in Bluffton to avoid risking liability to injured parties. It is also prudent to make sure that this type of incident does not occur so as to endanger a community association's valid and beneficial use of a gate.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

An Association Must Be Represented by a Licensed Attorney

Ryan McCabe — Wed, 13 May 2009 19:46:00 GMT

            Section 40-5-320 of South Carolina Code of Laws Annotated makes it unlawful for corporations and voluntary associations to "practice or appear as an attorney at law for a person other than itself in a court in this State or before a judicial body." S.C. Code Ann. Section 40-5-320(A)(1).

            South Carolina Supreme Court clarified the statute in Renaissance Enterprises, Inc. v. Summit Teleservs., Inc., 334 S.C. 649 (1999). The issue presented before the Court was "[w]hether a non-lawyer can represent a corporation in circuit and appellate courts." Id. at 651. Specifically, the question was whether a corporation's officer or designated employee may represent the corporation if he or she is not licensed to practice law in South Carolina.

            The Court noted that a corporate non-lawyer agent may represent the corporation in small claims actions only. Id. at 652. South Carolina Administrative Court Rule 405 authorizes a non-lawyer corporate officer, agent, or employee to represent the business in civil magistrate's court proceedings. Id. at 651. However, the Supreme Court found that no such authorization is granted in circuit and appellate courts within our state. Id. at 653.

            Therefore, an association's director or any other of its agents may not offer legal representation on behalf of the association unless he or she is authorized to practice law in South Carolina. Doing so without an attorney license would constitute unlawful practice of law and subject the association representative to civil liability.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

The Fair Housing Act as a Limit on Restrictions Imposed by Associations

Ryan McCabe — Wed, 06 May 2009 14:19:00 GMT

            The Fair Housing Act ("FHA") prohibits either disparate treatment or disparate impact. For discriminatory treatment, an association must be shown to intentionally discriminate against a protected class. Disparate impact, however, does nor require proof of discriminatory intent. Even if a rule or restriction is nondiscriminatory on its face, if impacts a protected class differently than other classes, it may be found in violation of the FHA.

           An association may impose certain restrictions upon its members and their individual lots, usually within the scope of the association's Declaration of Covenants. The Indiana Supreme Court was presented with one such restriction in light of the limitations of the FHA. See Villas West II of Willowridge Homeowners' Ass'n v. McGlothin, 885 N.E.2d 1274 (Ind. 2008). Villas West II of Willowridge Homeowners' Association ("Association") prohibited owners from leasing their properties. An owner leased her property in violation of the covenant. When the Association brought suit against the owner to enforce restriction, the owner counterclaimed alleging that the covenant violated the FHA.

            The Supreme Court stated that insufficient evidence was presented to form a conclusion that the Association intended to discriminate against a certain class. The court then noted a prior decision by the 7th Circuit which listed four factors that would entitle an alleged victim to relief under the FHA: (1) the strength of the plaintiff's showing of discriminatory effect; (2) evidence of discriminatory intent; (3) defendant's interest in enforcing the covenant; and (4) whether plaintiff is seeking affirmative relief or simply a prohibition upon defendant's interference with individual property owners.

            The Supreme Court rejected, however, the Seventh Circuit's four-factors test. Instead, the court adopted a so-called prevailing test: the plaintiff must first show that a less restrictive alternative is more efficient and fair; defendant must then dismiss such alternatives.

            Accordingly, the jurisdiction where an association is located may dictate the impact that the FHA may have on an association's powers to enforce its covenants. Being aware of the prevailing or majority test used in determining disparate intent or impact may serve as a guideline for imposing and delineating restrictions.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Assessments Due Upon Foreclosure

Ryan McCabe — Mon, 13 Apr 2009 13:30:00 GMT

            Section 27-31-210 of South Carolina Code of Laws annotated provides: Where the mortgagee of any mortgage of record or other purchaser of an apartment obtains title at the foreclosure sale of such a mortgage, such acquirer of title, his successors and assigns, shall not be liable for the share of the common expenses or assessments by the co-owners chargeable to such apartment accruing after the date of recording such mortgage but prior to the acquisition of title to such apartment by such acquirer."

            Thus, a lender who forecloses on a property or a buyer at a foreclosure sale does not need to start paying association assessments until the lender or purchaser obtain title to the property, which does not occur until the end of the foreclosure process. This means that associations are usually unable to collect any assessments while a property is being foreclosed, which sometimes takes six or more months.

            Associations have an incentive to advocate changes in the law that would either impose an obligation to pay assessments at an earlier stage or attempt to shorten or accelerate the foreclosure process. However, in light of the current economic situation and established foreclosure procedures, chances of any meaningful changes any time soon are arguable.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

A Possible South Carolina Homeowner's Association Act

Ryan McCabe — Tue, 07 Apr 2009 17:29:00 GMT

            On January 13, 2009, Bill 30 was introduced in the South Carolina Senate. The bill's sponsor is Senator Derrell Jackson. Bill 30 is a proposal to amend the Code of Laws of South Carolina, 1976, by adding a new chapter entitled "South Carolina Homeowners' Association Act."

            The reasoning behind the proposal is the increased number of disputes between associations and their members. The bill would increase the transparency of an association's operations by requiring that association officers maintain certain documentation. Additionally, the law designates the Department of Consumer Affairs as the state agency to handle and monitor associations' dealings.

            While state regulation of associations may arguably provide efficient and fair resulution of arising disputes, constitutional issues such as the right to privacy unavoidably come to mind. You may form your own opinion by reading the full text of the proposal on the South Carolina Statehouse website.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Issues Concerning the Enforcement of Claims against Declarants

Ryan McCabe — Mon, 06 Apr 2009 16:13:00 GMT

            An association board knows about the difficulties that arise when attempting to collect assessments and fines due. A similar problem emerges when a declarant or developer transfers the property to the association and abandons its continuing duties. The association is then forced into bringing claims against the declarant to recover for defects, maintain common areas, and enforce any other remaining obligations.

            Mark L. Hankin addresses some of the issues related to a suit by an association against a declarant in the February 2009 issue of the Habitat. Mark L. Hankin, Brand New Board and Shoddy Construction: A Case Study, HABITAT, Feb. 2009. One such issue is the legal status of the declarant. The type of entity is a factor in determining who may be held liable as a declarant. In Hankin's example, the two partners facing potential liability were pointing fingers to each other. Such disagreements may be a distraction to the claim that may delay payment or repair. The association should focus on pursuing all parties possibly liable.

            While a conflict among defendants may impede immediate remedy, defendants in disagreement may be helpful in resolving the liability issue. The more defendants blame each other, the more facts they reveal that determine the parties at fault. In addition, remember, many times all defendants are jointly and severally liable: any of them are liable for the entire amount.

            As Hankin points out, litigation is usually necessary to resolve an association's claims against declarant. The conflict may last years and the resolution may only partially meet the owners' needs. In addition, recovery never includes legal fees.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Collection of Assessments in Lieu of the Federal Racketeering Act

Ryan McCabe — Fri, 20 Mar 2009 12:53:00 GMT

            Virginia Discrict Court for the Western District ruled that an association did not violate the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Miller v. Dogwood Valley Citizens Assoc., Inc., C.A. No. 3:06cv00020, U.S. Dist. Ct., W.D. Va., Aug. 28, 2008. The association levied special assessments against association members without knowing or realizing that it did not have the authorization to do so. When two members sued the association for wrongfully pursuing foreclosure proceedings on delinquent properties, a court ruled that the association could not have levied special assessments.

            The members then sued the association for alleged violations of the RICO act. The district court first noted that RICO liability only extends to "unlawful activities that pose a special threat to social wellbeing." RICO makes it unlawful to conduct or participate in the conduct of an enterprise using racketeering activity or collection of unlawful debt. The association, however, legitimately believed it had authority to collect debt. Once a court ruling was issued notifying the association of lack of such authority, the association stopped any attempts to collect special assessments. No violations under RICO occurred.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

An Association Need Not Present a Homeowner with Copies of Governing Documents to Be Able to Enforce Them

Ryan McCabe — Wed, 18 Mar 2009 20:44:00 GMT

   Board of Directors of Hill & Dale Homeowners Association, Inc. v. Cappello, 852 N.Y.S.2d 586 (2007).

            The defendant fell behind on her monthly common charges payment ($429.18 per month) on her condominium and the Homeowners’ Association (Association) filed a breach of contract suit for the unpaid common charges, late charges, interest, and attorney fees. Although defendant agreed that she owed $429.18, defendant argued she did not owe the plaintiff late fees, interest or attorney fees as set out in the condominium’s by-laws and declarations because she was never provided a copy of those documents. The lower court agreed and ordered her to only pay the plaintiff $429.00, plus costs.

            On appeal, the court disagreed with the lower court and held that defendant is presumed to be aware of the condominium by-laws and declarations since they were recorded in the Clerk of Court’s office and therefore, the defendant would have discovered those documents through a diligent title examination prior to the purchase of her condominium. The judgment of the lower court was reversed and a new trial was ordered.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Plaintiff Liable for Defendant's Attorney's Fees upon Covenant Interpretation

Ryan McCabe — Mon, 16 Mar 2009 12:43:00 GMT

            Andrews v. Sandpiper Villagers, Inc., 215 Ore. App. 656, 170 P.3d 1098 (2007).

            The plaintiff in this case argued that the Architectural Review Committee (ARC) incorrectly interpreted the wording of the Sandpiper Village Homeowner’s Association Codes, Covenants and Restrictions (CCRs). The plaintiff asserted that under the CCRs she did not have to trim back her vegetation since her neighbor’s property was not a designated ocean view lot, as indicated to her by the ARC chairperson. However, the plaintiff did not indicate when the ARC chairperson made that statement to her nor if she was the ARC chairperson at the time the statement was made.

            The Court of Appeals for the State of Oregon held that despite a stylistic change made by the Homeowner’s Association (HOA) attorney that changed “ocean view” to “designated ocean view lots”, the evidence supported the defendant’s argument that the original intent of the CCRs to maintain un-obstructed ocean views had never changed. Additionally, the plaintiff was ordered to pay the defendant’s attorney fees and costs.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Drafting Covenants

Ryan McCabe — Tue, 10 Mar 2009 19:17:00 GMT

                Webster v. Ocean Reef Community Assoc., Inc., 994 So. 2d 367 (Fla. Dist. Ct. App. 2008).

            A Florida district court of appeals held that an Association's covenants that regulated sales of property could not be used to regulate gifts of property. The governing documents of the Association provided that a lot purchaser had to be approved as a member of the Association to be able to buy the lot.

            Plaintiff was the beneficiary of a trust created by an Association member and her husband. The Association member conveyed its lot to the trust by quitclaim deed. The trial court held that the transfer to the trust was a gift because no value was given in return. While the governing documents of an Association create a contractual relationship between the Association and its members, the provisions of the documents in question were inapplicable in this case. The Association could not present any express provision that required approval by the Association of anyone who took property through a donation.

            Covenant interpretation is crucial to their enforcement. Associations should therefore be cautious when drafting their governing documents to ensure that their plans and wishes will be met.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Generating Income to the Association during Uncertain Economic Times

Ryan McCabe — Tue, 10 Mar 2009 18:59:00 GMT

            During the current economic times, associations find it more and more difficult to collect assessments. Because people lose jobs, this assessment income turns into foreclosures and bankruptcy.

            Associations may consider other avenues for collecting income. For example, instead of collecting fixed assessments from all residents of the community, an association may want to charge a fee for using the common ammenities such as the pool and tennis courts. Also, fees may be charged for parking or for having a certain number of vehicles per unit.

            Some associations deviate from the typical one-year rental agreement and offer 30-day rent terms with an additional fee. Residents may also consent to raising money by posting advertisement such as fliers on common association areas. In addition, an association's website may be a means to cut costs and also to increase awareness about the association's services and opportunities.

            Remember, always make sure the association's actions are authorized by its governing documents.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

An Association Should Have Workers' Compensation Insurance

Ryan McCabe — Tue, 10 Mar 2009 18:37:00 GMT

Workers' compensation insurance shields an employer from liability arising out of suits brought by employees. Whether an association has actual employees or not, the association should have workers' compensation insurance. Even an injured employee of a contractor hired by the association may bring a claim against, and recover damages from, the association.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Buying a Condominium Is Getting More Expensive

Ryan McCabe — Tue, 10 Mar 2009 13:16:00 GMT

            The Chicago Tribune reports that Fannie Mae, the mortgage giant, has increased fees for obtaining a 30-year fixed loan to purchase a condominium. Unless a buyer makes a downpayment of 25% of the purchase price or more, a fee of .75% of the loan amount will be added. For example, for a condominum with a price of $300,000, a buyer must make a minimum downpayment of $75,000 to avoid an additional fee on the loan.

            The article points out that because of these price increases, many people turn to the Federal Housing Administration (FHA) for low-down-payment loans. This change merely shifts the risk from Fannie Mae to FHA. See the FHA and Fannie Mae websites for more information.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Possible New Homeowners' Association Responsibilities and Fees

Ryan McCabe — Fri, 06 Mar 2009 13:38:00 GMT

A new bill in the South Carolina Senate (S. 1283) outlines new responsibilities and fees for homeowners' associations. To read more, see Matthew Zeikel, HOA Members Need to Know about Proposal, The SunNews.com, Mar. 1, 2009.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Express Covenants by Reference and Equitable Servitudes by Implication?

Ryan McCabe — Tue, 24 Feb 2009 14:31:00 GMT

                Birdwood v. Bulotti Construction, Inc., 175 P.3d 179 (Idaho 2007).

            An association sued one of the owners seeking to enforce the declaration of covenants and restrictions. The owner wanted to divide its lot in four parts, but the covenants limited the lot’s use to single family and household. Initially, the owner sought the consent of all owners to divide its lot, acting as if the covenants indeed restricted the lot’s use. Later, the owner changed its position, claiming that the developer, the seller of the lot, never signed the covenants document.

            The district court found that the covenants did not bind defendant because nobody in the chain of title of Lot 15 signed them. On appeal, the court stated that the fact that developer drafted the covenants did not alone subject the property to the restrictions. Also, the court rejected plaintiff’s argument that developer ratified the covenants when the developer referred to the plat in the deed of conveyance. The court then held that defendant was not estopped from denying that the covenants applied to Lot 15 because defendant changed its position. The court noted that defendant could be estopped from changing its mind only if that change would harm plaintiff. The only harm of the plaintiff, however, resulted from not signing and adopting the covenants.

            The court also rejected the plaintiff’s argument that an equitable servitude should stop defendant from dividing its lot. An equitable servitude is a covenant that results by implication from the language of the deeds or the conduct of the parties. The facts in this case, however, did not support an implication that the covenants apply. The common grantor, the developer, did not include restrictions or covenants in the deeds of the others to allow them to argue that the restrictions apply to defendant by implication.

            Accordingly, the court of appeals affirmed the district court’s judgment for defendant.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Application of Restrictive Covenants: Must the Covenants Be Expressly Laid Out in the Deed?

Ryan McCabe — Mon, 23 Feb 2009 13:41:00 GMT

            Rakowski v. Committee to Protect Homeowners’ Rights and Preserve Our Park, 252 S.W.3d 673 (Tex. App. 2008).

            A committee to protect subdivision homeowners’ rights and preserve park sued the subdivision association and developer. The committee sought to prevent he association from selling the park to the developer, who intended to use it for commercial purposes. The district court ruled for the developer and the association in finding that the association, as the holder of title, had the right to sell the park. However, judgment in favor of the plaintiff found that the subdivision’s restrictive covenants prohibited any commercial use of the park. Both parties appealed.

            The first issue that the association and developer (appellants) raised on appeal was whether the subdivision restrictive covenants applied to the park, mandating a recreational use only. The appellants claimed the restrictions did not apply to the park because the park was not within the platted boundaries of the subdivision; the restrictions were not in the deed that transferred the park to the association; the restrictions’ enabling language stated they applied to the subdivision only; and subsequent owners could buy without restrictions.

            The court first stated that while the park may be outside the subdivision tract, it is clearly part of the plan or scheme of the development because the recorded map mentions it as “recreational area.” Also, even if the restrictions were not in the deed, a property may become subject to restrictions in other ways: by grant; express reference in conveyance documents; or constructive knowledge of the restrictions. The court also dismissed the enabling language and subsequent purchasers contentions, finding that none of the provisions supported the conclusion that the recreational use restriction did not apply to the park.

            The second issue on appeal was whether the association had title to the park. The committee claimed the association did not have title because the person who transferred the title did not have conveyable interest. The association responded that the committee had no standing to challenge the ownership of the park because it had no claim to ownership of the park. The court agreed with the association. For the committee to have a real interest or standing to contest these issues, the association had to own the park, which the committee denied. Because the committee’s challenge could not be sustained unless the committee was found without standing, the court affirmed that the association owned the park.

            The dissent stated that the committee did not lack standing to contest any issues concerning the park’s ownership based on the committee’s position as to who owns the park. Also, the dissent found that the trial court erred in granting summary judgment to the association because there were still issues of fact as to whether the transferor of the park had conveyable interest in it.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

An Association's President Lacks Standing to Bring a Derivative Suit on Behalf of the Association

Ryan McCabe — Thu, 19 Feb 2009 12:42:00 GMT

            Oates v. Larkin, 23 Mass. L. Rptr. 390 (2007).
            Superior Court of Massachusetts, at Suffolk.

            The Primary Association included four associations: three residential and one commercial. The residential units were under the control of the owners. The developer still had control of the commercial association. Seven managers ran the Primary Association: three were presidents of each of the residential associations, and the developer appointed four managers for the commercial association. The plaintiff, Keith Oates, is the president of one of the residential associations (“the Association”) suing on behalf of its members. Once in control of the condominiums, the Association members reported several construction defects such as drainage on balconies, problems with heat pumps and thermostats in units, inadequate roof fans, and other nonconformities. After several attempts to have the nonconformities cured, plaintiff filed suit against the developer, the commercial association managers, the contractor, and the architect.

            Plaintiff sought indemnification from the commercial association managers for the cost of bringing the suit, claiming breach of fiduciary duty. Plaintiff also claimed negligence and breach of contract by all other defendants.

            The developer and his appointed managers claimed that president Oates lacked standing (had no personal injury or real interest) to bring a derivative suit—a suit by an entity’s member on behalf of the entity. The court agreed: the Association, not Oates, was a member of the Primary Association and therefore the real party in interest. But the court did not find a dismissal necessary. It directed that the complaint be amended to change the plaintiff’s name to that of the Association. Although Oates could make the decision to sue and engage counsel, he was not authorized to sue on the Association’s behalf.

            The contractor claimed the complaint should be dismissed for the following reasons: there was no contract between the Association and the contractor; the claim of negligence was based on economic loss only; the time limit to file either claim had expired; and Oates failed to meet the requirements of a derivative suit. The court sided with the contractor on the lack contract argument. The contract was between the developer and the contractor and showed no intent that the Association be a third party beneficiary of the contractual performance.

            As to the negligence claim, plaintiff had to show personal injury and property damage beyond the negligent construction. Because the court could not conclude that the complaint did not set any facts to support a negligence allegation, it addressed the timeliness of the claim. The court considered the statute of repose, which barred any claims brought after six years of the earlier of occupancy or substantial completion. Because there were many different certificates of completion, the court could not determine the applicable occupancy date and could not dismiss on that basis.

            Also, the statute of limitations barred any claims brought three years after the owner should have discovered the defects. The court could not find that there were not any facts supporting a timely claim and could not dismiss on that ground. Also, the court did not dismiss the complaint because it disagreed that the plaintiff did not meet the derivative action requirements that the contractor specified.

            Finally, the court allowed the architect to join the contractor’s motion to dismiss, which meant the architect was asking for the same relief as the contractor. Thus, the court denied the developer’s and managers’ motion to dismiss as long as the complaint was to be amended to change the plaintiff name to that of the association. The motion to dismiss for lack of contractual relationship was allowed, and the motion to dismiss on the other grounds was denied.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

A Mechanic's Lien for Mowing, Trimming, Edging, and Street Cleaning?

Ryan McCabe — Thu, 12 Feb 2009 01:43:00 GMT

The Kentucky Court of Appeals reversed a lower court's order granting a mechanic's lien on the Association's common property. Steeplechase Subdivision Homeowners Association, Inc. v. Thomas, No. 2006-CA-002146-MR (Ky. Ct. App. 2008). Thomas, the appellee, filed a mechanic’s lien on common property of a subdivision because of unpaid invoices for mowing, trimming, edging, and street cleaning. The deputy master commissioner entered judgment against the subdivision in the amount of the lien. The subdivision appealed claiming that a lien was not permitted for Thomas’s services because the services did not permanently improve the value of the property. The court of appeals agreed with the subdivision’s argument and read the Kentucky statute to require a permanent benefit onto a property for a lien to be allowed. Thomas’s services did not permanently enhance the value of the subdivision property. Therefore, the court reversed and remanded the judgment.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.