Under Pennsylvania Law, the homeowner’s association of a condominium has access to some very stringent remedies, that to to seek to collect the unpaid assessments levied against any of the homeowners in the condominium association. One of the strongest remedies that the homeowners association has is the use of a lien against a unit for the unpaid assessment fees. The lien is granted to the association pursuant to 68 Pa.C.S.A. § 3315 of the Uniform Condominium Act (“UCA”). The lien can be foreclosed upon to permit the association to recover the unpaid assessments by way of a sale of the unit against which the lien attaches.
The statutory lien afforded by the UCA can definitely be a useful tool for an association to use to collect their unpaid assessments, but the correct procedure that the association must use to perfect the lien has seemed a bit murky in the past. Many associations would seek to originally file the homeowners association declaration with the Recorder of Deeds in the county in which the condominium is located, which, as a matter of law, entitles the homeowners association to a lien against any condominium unit owner on the date(s) on which assessments become unpaid. In addition to the lien created by recoding the declaration, the typical practice in Pennsylvania was to file for an additional lien in the Prothonotary’s office of the county in which the condominium is located. The homeowners association would then seek to file a foreclosure action at the docket number that has been issued as a result of filing the lien with the Prothonotary. A review of the Commonwealth Court of Pennsylvania’s decision in London Towne Homeowners Association v. Karr, 866 A.2d 447 (Pa. Commw. 2004) seems to provide a guideline for the proper mechanism by which a homeowners association should both perfect and ultimately foreclose upon the condominium liens they have obtained, and, surprisingly, the procedure that should be followed appears to contradict the typical procedure that is currently followed as a matter of practice.
In the Karr case, William Karr, a member of the London Towne planned community, was assessed a number of penalties which ultimately led to the London Towne Homeowners Association obtaining a lien against Mr. Kerr as a result of the declaration which the London Town Homeowners Association had filed in the Allegheny County Recorder of Deeds Office. The London Towne Homeowners Association then sought to file a second lien with the Prothonotary of Allegheny County prior to initiating foreclosure proceedings against Mr. Karr. Mr. Karr ultimately sought to strike the second lien which was filed by the London Towne Homeowners Association with the Allegheny County Prothonotary. The Commonwealth Court analyzed the Uniform Planned Community Act (“UPCA”) to determine whether the second lien should be stricken.
Although the Karr case analyzed the UPCA, which is obviously an act different from the UCA, the analysis would likely apply to an interpretation of the UCA as well. This is because the sections of the UCA and the UCPA which set forth the right to a lien and the procedure to perfect a lien are nearly identical. If you review 68 Pa.C.S.A. § 5315, which establishes the right to a lien and the procedures to perfect a lien under the UCPA, and 68 Pa.C.S.A. § 3315, which establishes the right to a lien and the procedures to perfect a lien under the UCA, you can see that both sections are identical aside from the insertion of a single additional paragraph in the UCPA which says, “(c) Liens having equal priority.–If the association and one or more associations, condominium associations or cooperative associations have liens for assessments created at any time on the same real estate, those liens have equal priority.” 68 Pa.C.S.A. § 5315. Because both statutes are so similar, it would be absurd to assume that Pennsylvania courts would interpret the language in the UCA any differently from the Superior Court’s interpretation set forth in Karr.
The Pennsylvania bankruptcy courts have also addressed the issue of when a condominium lien has been perfected, and in interpreting Pennsylvania law, the bankruptcy court appears to agree with the holding of Karr that a condominium lien is perfected simply by recording the condominium’s declaration with the appropriate Recorder of Deeds office. See, In re Johnson, 108 B.R. 81 (Bankr. W.D. Pa. 1989). This would also indicate that no additional lien needs to be filed prior to seeking to foreclose on the condominium lien.
Although there have been differences in opinion regarding the procedure to properly obtain and foreclose on a condominium lien pursuant to the Uniform Condominium Act, the Karr case appears to set forth a set of guidelines which condominium homeowners associations should look to in order to properly obtain a lien and foreclose on the same. The process set out in Karr shows that a condominium homeowners association should simply record their declaration with the Recorder of Deeds in order to perfect a lien. The homeowners association can then seek to file a Complaint in foreclosure which properly identifies the location of the recorded declaration in order to foreclose on a unit owner who has a past due balance for fees or dues. The old process of filing an additional lien with the Prothonotary appears to be redundant, and this prior practice should likely no longer be followed.