Categories:

Now you link it, then, you won’t

I’ve been reading long, gas-filled recorded documents like Declarations of Easements and Restrictive Agreements for so long that my eyes instinctively roll back in disgust as I recognize the familiar stack of paper. These instruments are particularly prevalent in shopping centers and industrial and office parks, and in mixed-use projects that incorporate a variety of commercial product types. They oblige the owner to maintain and repair, clean up after a fire or other accident, insure the common area of ​​each lot, and other miscellaneous obligations related to their respective parcels. The statements they routinely make, courtesy of the Declarant, say threats for breach of this and that obligation, including a property owner’s failure to reimburse the Declarant or another intervening property owner (referred to here as an “intervener”) if they should step in and do the work. maintenance, repair, cleaning, payment of delinquent taxes or special contributions, granting of civil liability insurance, etc. The instrument generally provides that the failure to reimburse the intervener for fixing the mess neglected by the uncooperative or uncompromising landowner will constitute grounds for imposing a lien for reimbursement against the wrongdoer’s parcel that “may be seized in the manner of a mechanical lien”. Here is an illustration:

The sums that remain unpaid in accordance with article [number] golden section [number]together with interest calculated at three percent (3%) above the prime rate charged by Wells Fargo Bank, NA, or any successor thereof, or the highest annual interest rate permitted by law (whichever is less). ), may be secured by a lien on the delinquent owner’s parcel and may be perfected in accordance with the laws of the State of Arizona, such lien shall retain the priority of title to this Agreement and may be enforced within one (1) year of the date the bond is perfected.

It sounds terribly impressive, although that text does not describe the type of link contemplated. I am thinking, however, that this is utterly inapplicable nonsense, lofty statement of remedial purpose notwithstanding. First point: the way to link perfection is not expressed, perhaps for a good reason. There are only two means in Arizona to perfect a lien on commercial real property (excluding fixture filings and a certificate of purchase creating a lien for the payment of taxes and assessments on “financed” real property) validly held by a non-governmental entity : Through Mechanic’s Lien Statutes and Mortgage/Trust Deed Statutes. I can dispose of the last avenue for a wannabe link in a nutshell. A consensual lien against real property must be signed by its owner or by someone authorized by law to do so on behalf of that owner. The mere fact of participating in a larger CC&R-governed property development, however assertive these may be, does not constitute a grant of authority by the landowner sufficient to constitute an intervenor in his proxy to legitimize the registration of a dignified foreclosure, mortgage type bond.

Second Point: It is assumed, since there is no “deed of trust by proxy” available to a co-owner in a “restricted” commercial development, that someone contemplated such a lien perfectible and enforceable under our State’s mechanic’s lien regime which is found in Chapter 7 of Title 33 of the Arizona Revised Statutes. Superficially, one further assumes that the aggrieved party first files a Notice and Claim of Lien, followed by a lawsuit to be commenced within the period set forth in the Declaration after the date of filing of that Notice. Oh! Apollo 13 to Houston: We have a problem.

Number One: The Mechanic’s Bond Bylaws [A.R.S. §33-992.01(B)] require, “as a necessary prerequisite to the validity of any lien claim,” that a 20-day preliminary notice be given to the owner, any general contractor, or any construction lender. See also ARS §33-981(D). There is one small and very limited exception to this requirement: the subcontractor who is physically on the parcel where the work is being performed. So says the statement requires, in the event of a loss, that the affected owner of that damaged lot has to make repairs or “scrape the improvements” to remove an eyesore. If the negligent owner fails to do so, and the intervener takes over, unless the obliging owner was physically performing the work on the lot himself, there are no enforcement rights to the mechanic’s lien, regardless of what the statement says. . Take a look at Performance Funding, LLC v. Arizona Pipeline Trade Trust Funds, 203 Ariz. 21, 49 P.3d 293, a 2002 Arizona Court of Appeals decision, for the final word (currently) on that limited exception to satisfy the state’s 20-day notice service statute.

Number two involves the timing aspect of the challenger bonus execution described in the statement; While CC&R writers can choose any deadline they like by which the intervener can seek reimbursement against the wrongful owner, Arizona courts will not accommodate the claimant unless they meet the mechanic’s lien’s execution deadline, assuming the comptroller even goes that far, which I doubt he will. In Arizona Department of Water Resources v. Rail N Ranch Corporation, 156 Arizona. 363, 752 P.2d 16 (1987), our Court of Appeals filed DWR when it tried to foreclose, after two years, on an alleged lien under a state statute that provides that “the [department’s] lien shall have the force and effect of a mechanic’s lien” and “may be enforced in the same manner.” may not substitute its own period of limitations on enforcement, inconsistent with the “incorporated” legal scheme ( Note, however, that the appellate court did not declare the DWR lien void from its inception; it simply dismissed the department’s untimely application of its alleged lien.)

The third issue is whether it is fantastic to believe that a receiver can use Title 33 Chapter 7 liens. You do not have to be a licensed contractor to take advantage of the lien under Sections 33-983(A) or ARS -987 (subject to compliance with 20-day notice, etc.) for this essential reason: Both statutes provide that “a person working” on the lot of another person may print a bond. The words “contractor” and “subcontractor” and persons licensed as “architect” appear throughout Chapter 7; so the legislature understood the distinction between licensed and unlicensed individuals and businesses. That is what the Court of Appeals held in Performance Funding, LLC v. Arizona Pipeline Trade Trust Funds; union funds did not have to be authorized to impose the lien, although they could not enforce what they filed.

So can you do something about this CC&R mess and bring to life what looks like an unenforceable provision in your return? Well, do you need to do anything else in Arizona, if, as a filer or other owner subject to CC&Rs, the receiver can get a money judgment on a non-reimbursement claim, and can record that lien against the offending owner, lien your title until the intervener is paid? It is not enough to simply leave a “statement lien” (assuming the respondent records an item listed in the lien notice that is based on ARS Sections 33-983(A) or -987, and that the notice of lien service 20 days was properly done, along with the text of the statement) ride like a cloud over the title deed to the other owner’s property. Under common law, once the lien expires (after six months without filing a lawsuit), it is deemed unenforceable and becomes an “unfounded lien” under the provisions of ARS Section 33-420.

Leave a Reply

Your email address will not be published. Required fields are marked *