In a recent unpublished opinion, MDK General Construction, LLC v. Aspen Grove Owners Association Case No. 85704-5-I Division One of the Court of Appeals, appealed the trial court’s grant of summary judgment in favor of Aspen Grove Owners Association (“the “Owners Association”) dismissing MDK’s materialmens’ lien against the Owners Association.
MDK was hired as a subcontractor for extensive renovations at the Aspen Grove Condominium, a 96 unit condominium. Specifically, MDK was hired to “perform construction services in the form of exterior siding and related work.” The party to the contract was the Owners Association, and that entity was named in a lien foreclosure action. The lien foreclosure action was instituted because the General Contractor failed to pay MDK for its subcontract work on the exterior.
The Owners Association asserted the defense that it was not the proper party because it was not an owner of any of the real property in question. The Court addressed the statutory provisions of both Chapter 64.34 RCW (the Condominium Act”) regarding the creation of a condominium and Chapter 60.04 RCW addressing materialmen’s liens. RCW 60.04.051 specifies the property subject to the lien as to “ the extent of the interest of the owner at whose instance, directly or through a common law or construction agent the labor, professional services, equipment, or materials were furnished.” (Emphasis added).
MDK’s work was not for any specific condominium unit, but was performed on the exterior of the property. In analyzing the claim in light of the Condominium Act, the Court determined that the exterior of the property was a “common area” owned proportionally by each of the condominium owners as an undivided percentage. The Court also determined that that the Owners Association was not a property owner but was acting as the agent for the individual owners in entering into the contracts.
Since the Owners Association was not a property owner subject to the lien statute, and since the Owners Association was the only named defendant (exclusive of the general contractor and bond company who were not party to the appeal), MDK failed to name and serve the proper owner(s) within the 90 day period following the filing of the case in Superior Court. Hence, the lien was not a proper lien and the Owners Association prevailed on its summary judgment clearing the lien.
The important lesson from this case is (a) obtain a litigation guaranty from the title company before filing a lien foreclosure suit against any owner, but particularly a condominium; (b) serve each and every unit owner, lender of record, and any other parties having an interest in the property listed in the litigation guaranty. Had MDK taken those steps its lien most likely would have survived.[1] Although this could involve naming a multitude of parties, failure to do so will result in an adverse outcome.
[1] If the title company omits any necessary parties there might be a claim against the title company.