Super Lien Status Update

Many of Ohio's condominium and homeowner association board members and residents have been inquiring as to the status of the "Super Lien" legislation. Thanks to everyone for your interest, help and support! We are happy to report that the process is moving forward, and we hope to have the bill introduced into the Ohio legislature soon.

Over 30 individuals came forward and presented the Super Lien Information Packet to legislators all around the State of Ohio. Many of these legislators expressed a strong interest in sponsoring and introducing the proposed law. Now that the Ohio General Assembly has returned from its late summer recess and finishes up the state's operating budget, we are very optimistic that the "Super Lien" will be introduced soon. When this happens, we will post an update on this website.

Once the legislation is introduced, we will contact all of the volunteers who signed up to be part of the "Super Lien" team. At that time, we will need as many letters, phone calls, and personal appeals to legislators as possible to ensure that the General Assembly is aware that this legislation is vital to Ohio's community associations.

Again, we will keep you informed with any updates regarding the "Super Lien" or any other condominium or homeowner association law changes.

Uncooperative Owner Forced to Comply with Association's Remodeling Rules and Pay Attorney's Fees

On September 17th, in the case of Acacia on the Green v. Gottlieb, (No. 92145), the Ohio 8th District Court of Appeals affirmed the trial court’s ruling and held that a Unit Owner must receive the Association’s permission prior to engaging in a construction project, and failure to do so requires the Unit Owner to pay all of the Association’s legal fees (which in this case amounted to $18,442.55). Arguing on behalf of the Association was Kaman & Cusimano, LLC Attorney Cullen (CJ) Cottle.

The Court cited Ohio Revised Code Section 5311.081(B)(5) which states: The Board of Directors may “adopt rules that regulate the use or occupancy of units, the maintenance, repair, replacement, modification, and appearance of units, common elements, and limited common elements when the actions regulated by those rules affect common elements or other units.”

In this case, the Defendant had extensive electrical, plumbing, cabinetry and flooring work done to his unit without the prior authorization of the Board. The Acacia on the Green Declaration required prior written approval prior to making any structural improvements to a Unit, and the Board passed a rule requiring each Owner to obtain a permit from the Board prior to construction. The Association repeatedly tried to be accommodating to the Unit Owner by sending multiple notices and attempting to resolve the matter with him without litigation. However, the Association was left with no other choice but to litigate after the Unit Owner started another new project after being notified of his failure to obtain a permit from an earlier remodeling project. In ruling for the Association, the Court of Appeals found that the statute applied to the Unit Owner and the Declaration and rule provisions were reasonable.

Additionally, the Court found that the Ohio law required the Defendant to pay all of the Association’s attorney’s fees. According to Revised Code Section 5311.19(A): “All unit owners, their tenants, all persons lawfully in possession and control of any part of a condominium property, and the unit owners association of a condominium property shall comply with all covenants, conditions, and restrictions set forth in a deed to which they are subject or in the declaration, the bylaws, or the rules of the unit owners association, as lawfully amended. Violations of those covenants, conditions, or restrictions shall be grounds for the unit owners association or any unit owner to commence a civil action for damages, injunctive relief, or both, and an award of court costs and reasonable attorney’s fees in both types of action.”

Based on this provision, the Appeals Court held that the defendant is required to pay all of the Association’s attorney’s fees relating to the enforcement of the Declaration and Rules, which total $18,442.55!

Ultimately, this case is another victory for Ohio’s condominium associations. Unit Owners must follow the condominium statute in the Ohio Revised Code, AND the provisions of each association’s Declaration; and more importantly, failure to comply will require the violating Unit Owner to pay all of the Association’s legal fees – even to the tune of $18,000!

To read the entire opinion, click here: http://www.sconet.state.oh.us/rod/docs/pdf/8/2009/2009-ohio-4878.pdf

Associations Left Empty-Handed After Foreclosure

This past weekend, the Cleveland Plain Dealer ran a front page story on condominium sales in Ohio. Stagnant condo sales often have a negative impact on the association and the surrounding condominium community. In response, Ohio's community association boards have been working tirelessly to preserve their community's property values and community spirit. Reporting on these actions, the paper published another story about how Ohio's condominium associations are asking legislatures for help by joining 13 other states and enacting a condominium "super lien." According to the story by Michelle Jarboe:

CLEVELAND, Ohio -- Condo associations in Ohio want legislators to put them first in line for money when homes in their buildings are foreclosed upon.

The recession, the housing slump and job losses have meant more foreclosures and delinquent monthly fees for condos. Owners pay these fees - ranging from a few hundred dollars to more than $1,000 a month - to cover landscaping, building maintenance, utilities and other services. When owners stop paying, associations with tight budgets have two options: cut services or raise fees for all residents.

This year, the boards that represent condo communities have asked the Ohio General Assembly for relief in the form of "superliens."

Traditionally, the bank that provides the mortgage on a home has the primary lien, giving it first priority on money from a sale of the property during the foreclosure process. But when a home is sold after a foreclosure, the sale price may not cover the mortgage, especially after several years of declining home prices. In those cases, the bank recoups only part of its investment. And other lienholders, including the condo association, are left empty-handed.

Superlien laws generally require that the condo association be paid up to six months of delinquent fees before the primary lender and other creditors receive money. Such laws have been approved in at least 13 states and the District of Columbia. Ohio condo associations hope lawmakers here will take up the issue this fall.

In Northeast Ohio, most condo associations are fairly healthy, said David Kaman, a[n]... attorney who represents homeowners associations. But some associations, staggering under the weight of unpaid fees, left their swimming pools closed this summer, cut back on landscaping and started talking about payment plans with their utility companies and service providers.

"Right now, the condos in Ohio are keeping their head above water," Kaman said. "But if the economy continues to get worse, we could see that change. By enacting this legislation now, we will avoid condos' drowning."