HOAleader.com - Tip of the Week - January 22, 2010
Published: Mon, 01/18/10
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Mechanic's Liens: What You Must Know, and How to Avoid Them
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Your project to add parking to your homeowners association has
been fraught with problems from day one. You've argued with the
contractor over all the additional charges that seem to
materialize out of thin air. Your board is sick and tired of
dealing with the constant frustrations and decides it will simply
nod and smile to the contractor until the project's done. Then
it'll simply refuse to pay all the additional charges the
contractor is trying to impose.
This week's tip explains why that's like sending an engraved
invitation to a contractor to file a mechanic's lien against
your HOA, which is a very bad idea.
"A mechanic's lien is a statutory lien that allows certain types
of vendors to have a lien against real property when they've
performed construction-type services that benefited that real
property," explains Matt Zifrony, who advises homeowners and
condo associations at Tripp Scott, a Ft. Lauderdale law firm,
and who's also the president of a 3,000-home association. "It's
a pretty powerful tool contractors have if someone they've done
work for refuses to make payments."
It's powerful because many lenders refuse to lend for properties
with liens attached to them. They'll require the lien be paid
before any new loan may close. So if a pool construction company
slaps a lien against your association, and your board later
wants to secure a loan to build a clubhouse, it's likely your
association won't be able to secure financing until the pool
lien is removed from the association's title.
To avoid a mechanic's lien dispute, start by using a proper
contract. "Where I've seen issues, there seems to be a bad habit
of a contractor giving a board a verbal or written quote, but
the board doesn't sign a written contract," says Jeff Vinzani,
an attorney at Nexsen Pruet LLC in Charleston, S.C., who
represents associations.
"All the board has is a quote that doesn't spell out what to do
if there's a default: What will the contractor do if he's not
on time? How will payments be made? Can there be a holdback if
the contractor doesn't do what he's supposed to do? Have a
lawyer draft a real contract instead of what the contractor
offers, which often isn't a real contract and doesn't have
any depth to it."
To learn the 6 steps you can take to protect your HOA against
mechanic's liens, see our new article:
http://www.hoaleader.com/members/380.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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HOA Boards: What Are You Resolving to Do Better in 2010?
This week's tip deals with ways other HOA and condo board
members and association managers and attorneys suggest that you
can resolve to do better in 2010.
Click here to read full article:
< http://www.hoaleader.com/members/384.cfm >
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HOA Finances: 6 Steps to Protect Your Association Against
Mechanic's Liens
Before your HOA or condo board withholds payment in a dispute
with a contractor, you should be fully aware that you risk having
a mechanic's lien filed against your homeowners association. Here,
we explain mechanic's liens and offer tips for resolving
disputes with contractors in a way that avoids liens.
Click here to read full article:
< http://www.hoaleader.com/members/380.cfm >
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HOA Finances: Do You Abuse Your "Miscellaneous" Account?
Keep an eye on how you use the "miscellaneous" line item in your
HOA budget. If you're not careful, you could waste precious condo
or homeowner association funds and possibly violate your
fiduciary duty to act in the best interest of the homeowners
association.
Click here to read full article:
< http://www.hoaleader.com/members/379.cfm >
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Discussion Forum Follow-Up: What's a Reasonable Late Fee?
A reader on the HOAleader.com discussion board asks a simple
question that has vexed many boards: What's a reasonable late fee?
Here's a brief primer.
Click here to read full article:
< http://www.hoaleader.com/members/382.cfm >
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Is Your HOA Management Company Double Dipping?
This week's tip deals with saving money by digging into your
management company's relationships with the vendors it
recommends for association projects.
Click here to read full article:
< http://www.hoaleader.com/public/378.cfm >
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