The Ohio legislature enacted Amended Substitute Senate Bill 187, effective September 10, 2010, which defines various rights of a homeowners association for a planned community.  A “planned community” is generally defined as a community comprised of individual lots where there is an owners association governing the community or that assesses fees to its members in order to pay for maintenance of common areas in the community.

Similar to a condominium unit owners association, a planned community owners association may file a lien on an individual lot for unpaid assessments, or costs of maintenance, repair, or replacement incurred due to the willful or negligent act of an owner or occupant, or other costs or charges permitted by the declaration or bylaws.  The owners association is also entitled to recover its costs, including attorney fees, court costs and other expenses associated with its enforcement. 

An owners association lien becomes effective on the date that a certificate of lien is filed for record with the county recorder.  Hence, it is not entitled to “super-priority” and will be subordinate to previously recorded mortgages or other liens.  However, the owners association will be entitled to the appointment of a receiver while a foreclosure action is pending, to collect rental payments due on the property in the event it is occupied by a tenant.  Any rents collected by a receiver will be applied to the property’s share of the common expenses that accrue while the foreclosure is pending. Any net amount remaining will then be disbursed to the lienholders in order of their priority.

Weltman, Weinberg & Reis will work to ensure that the title company providing the title work for the foreclosure examines and discloses any recorded planned community declarations and bylaws, so that the owners association will be properly named and served with a summons in the case.  This will make sure that the sheriff’s deed issued following a sheriff’s sale in the case will convey clear title.

For a complete copy of the new Ohio Planned Community Law, go here.

If you have any questions or would like to discuss this issue in more detail, please contact Larry Rothenberg at 216-685-1135 or via email at lrothenberg@weltman.com. Larry is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “The Law of Distressed Real Estate”, published by The West Group. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan.