Case Update: Venue in GA Condo Lien Foreclosure   1 comment

Recently, the Court of Appeals of Georgia visited a matter of first impression in Georgia: the determination of proper venue for a suit to foreclose on a condominium association’s lien. In the case of Foster v. Wilmington Plantation Owners Association, Inc., 2010 WL 2163926 (Ga.App.), decided on May 28th, 2010, the Court of Appeals held that a condominium association’s action to foreclose on its assessment lien is not an action respecting land for the purpose of determining venue.

In Foster, the association brought two actions in an effort to collect condominium assessments arising from four different units. At the point at which the suit was filed, the units had been owned by one party, who had conveyed two of the four units to one person and then conveyed the remaining two units to someone else. This “original owner” no longer actually owned a unit, but had taken back a mortgage in connection with one of the conveyances. The actions were brought against the original owner of the units and against the subsequent owners of the units. The trial court dismissed the original owner’s improper venue motion and the original owner filed an interlocutory appeal.

The Court of Appeals relied on the language of the O.C.G.A. Section 44-3-109 (a portion of the Georgia Condominium Act) to determine the manner for interpreting the association’s lien rights to determine which venue rules apply. It relied heavily, in particular, on the statement in O.C.G.A. Section 44-3-109(c) that the association’s lien for assessments may be foreclosed in the same manner as other liens for the improvement of real property under O.C.G.A. Section 44-14-360, et seq. O.C.G.A. Section 44-14-360, et seq. deals with mechanic’s and materialman’s liens (liens for the improvement of real property).

According to O.C.G.A. 44-14-361.1(a)(2), while a claim of lien may be filed in the county where the property is located, an action to foreclose the lien must be filed in the county where the defendant resides.

Further, the Appellate Court pointed out that the original owner, by taking back a mortgage on some of the units, did not become a “joint obligor”. If the original owner had been a joint obligor, it would have allowed application of the rules regarding proper venue for such parties, allowing the case to be tried in a county of proper venue for any one of the joint obligors. See O.C.G.A. Section 9-10-31(a). However, the Court of Appeals focused in on the wording of the Georgia Condominium Act in determining that the original owner’s rights as a mortgage holder did not qualify it to also be considered a unit owner, as defined in O.C.G.A. Section 44-3-71(29).

It is important to note that the entire venue argument would be different if the suit was not an action to foreclose the association’s lien, but an action for the assessments (money damages).

By: Amy H. Bray, a partner in our Commercial Real Estate Department.

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