Can contractor lien HOA members?

Started by BarbaraG4 • 7 replies • 1147 views

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BarbaraG4 (Nebraska)
Posts: 11

Posted:

Hypothetical question: If an HOA contracts for a construction project, and a dispute arises with the contractor on the cost, where the HOA refuses to pay the increased cost, can the contractor put a lien on all of the properties in the neighborhood? I would think that if a corporation (HOA) is doing the business, the contractor would probably be able to lien the corporation assets (a little land), but not the individual members of corporation. Is this not accurate? Could they put a lien on every lot in the HOA?

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By BarbaraG4 on 10/25/2008 3:54 AM
Hypothetical question: If an HOA contracts for a construction project, and a dispute arises with the contractor on the cost, where the HOA refuses to pay the increased cost, can the contractor put a lien on all of the properties in the neighborhood? I would think that if a corporation (HOA) is doing the business, the contractor would probably be able to lien the corporation assets (a little land), but not the individual members of corporation. Is this not accurate? Could they put a lien on every lot in the HOA?

The big, "it depends." The lien is not placed on individuals but on the property for which the work is done. If you are a townhome community with shared walls, then a lien could be placed on the individual units for work done for the association.

It is doubtful that a lien could be placed on every unit in an association for work done on common elements. However, stranger things are done. And there is nothing that prevents in advance such a lien from being filed, although it could be subject to a lawsuit later.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Some more information for you: laws in every state are different, but most follow the Uniform Commercial Code so they are similar. For more information, you might want to check out a case in California, Burton v. Sosinsky, 203 Cal.App.3d 562, in which contractors who filed fraudulent liens were held liable for the owner's damages. Punitive damages could also be sought successfully if the filings were truly malicious and not merely stupid.

SusanW1 (Michigan)
Posts: 5,202

Posted:

I would think that the corporation "assets" would first be financial, anyway. They would come after money. In the end, the court probably would access the homeowners to come up with the settlement.

The last thing they would want as payment would be a building or homes.

But - I'm not a lawyer . . .

KirkW1 (Texas)
Posts: 1,665

Posted:

I would agree with others with the one thing being that if it is small enough for small claims court, that would probably be a faster means to the money for no more money. With a judgment the contractor can go to the HOA account. With the correct timing he is sure to get what he needs even if you don't have a reserve account.

I would suggest that you try to resolve the dispute. But the contract should specify the costs and have clauses dealing with unforeseen contingencies. Normally they specify things like material costs as a separate line item because the contractor can't control what they do.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Individual homeowners MIGHT be liable for actions under the corporation's responsibilites. Our HOA was sued, collectively and individually, but it never got that far. I think a good lawyer would not let it go that far.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

1. How much $$$ is in dispute?
2. How much $$$ does the HOA have in checking and reserves?
3. Was the work thus far done on common elements?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Barbara,
Tell us about the "hypothetical" project. You said the HOA had a contract. What happened to the terms of the contract? Was there something added to the work without the HOA being notified? How did it end up being more than the original signed contract. Was there a definite cost or was it open to work services provided. I hope not the later.

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