Home>Levelset Community>Legal Help>When a lien is placed on a Co-op is the lien enforceable on any and all unit sales? Or is it only enforceable for the unit in question where the work was performed?
When a lien is placed on a Co-op is the lien enforceable on any and all unit sales? Or is it only enforceable for the unit in question where the work was performed?
I cannot renew my license in time to file a lien on a unit I performed work on. The particular unit is scheduled for settlement. However, they have at least two other units up for sale.
1 reply
May 21, 2019
That's a great question, and co-ops can create some confusion when talking about property rights and mechanics liens. First, it's important to determine the ownership structure of the property in question.
For a traditional co-op, one entity (typically a non-profit) owns the entire property. Rather than sell individual units, like with a condominium, a co-op ownership entity sells the right to use a specific unit. So, it's more like an apartment, for the purposes of investigating lien rights in that sense - what's being granted is a right of use, not the ownership of the underlying property. However, under the definition of "owner" in the Washington DC Code, the owner of a right to use a co-op unit would likely be considered an "owner" for the purposes of the District's mechanics lien laws.
With that in mind, when work is performed but not paid for on an individual co-op unit, the extent of lien rights will likely depend on who authorized the work that was done. This is because when work is set out, lien rights will only arise to the extent of the "owner's" interest in the property. If the work was authorized by the ownership entity of the cooperative as a whole (rather than by an individual unitholder), then lien rights may arise against the co-op as a whole, rather than against a specific unit, because the owner's interest extends to the entire property. But, where work was set out by the owner of that individual unit, lien rights might only arise against the unit itself.
As for a mechanics lien being "enforceable...on unit sales" - it's important to recall how mechanics liens work in relation to the property title. While a mechanics lien will typically prevent the sale or transfer of the liened property, that's a result of the purchaser's (or their mortgage and/or title company's) wariness of buying property with a lien on it - not a matter of law. So, liened property can actually be transferred if the buyer or their mortgage or title company is not concerned about the lien. But, in order to give greater effect to the lien filing, putting a potential buyer on notice of the lien claim as well as the current owner of the property could help to put pressure on the current owner to pay the lien claim before transferring the unit.
Finally, it's worth noting that Washington DC is particularly strict about mechanics lien claimants being licensed, and a failure to maintain the proper licensure can be fatal to a lien claim in DC. In fact, it could prevent a lien from even being filed.