Mortgages and Liens
The term “mechanic’s lien” describes a document that can be recorded with county government by an unpaid contractor or construction materials supplier. The recording of a mechanic’s lien relating to a property effectively prevents the owner from selling or refinancing the property without either paying the bill or establishing in court that the lien is invalid. When construction is performed for an individual owner on his/her condominium unit or planned development lot, the owner’s contractors and construction materials suppliers can record mechanic’s liens against that owner’s unit or lot, but cannot record mechanic’s liens against the common area or against any other owner’s unit or lot. When construction is performed for the association on the common area, the association’s contractors and construction materials suppliers can record mechanic’s liens against the common area and every unit or lot. An owner who learns that a mechanic’s lien has been recorded against his/her unit or lot should consult an attorney.
Most lenders will refuse to make mortgage loans on homes within condominium projects and planned developments unless there are special provisions in the governing documents to protect them. These provisions are designed to ensure that the basic rights and responsibilities associated with the home at the time the loan is made cannot be easily changed. The lender is particularly concerned about changes that might devalue the home such as an increase in the home’s assessment allocation, the removal of a parking or storage space, or an uninsured or underinsured loss. Most lenders review the mortgage protection provisions of the governing documents before they approve a mortgage within a condominium project or planned development.