[Cite as Settlers Walk Home Owners Assn. v. Phoenix Settlers Walk, Inc., 2015-Ohio-4821.]



                                    IN THE COURT OF APPEALS

                           TWELFTH APPELLATE DISTRICT OF OHIO

                                           WARREN COUNTY




SETTLERS WALK HOME                                     :
OWNERS ASSOCIATION,                                                CASE NOS. CA2014-09-116
                                                       :                     CA2014-09-117
        Plaintiff-Appellee/                                                  CA2014-09-118
        Cross-Appellant,                               :
                                                                             OPINION
                                                       :                     11/23/2015
    - vs -
                                                       :

PHOENIX SETTLERS WALK, INC., et al.,                   :

        Defendants-Appellants/                         :
        Cross-Appellees.
                                                       :


         CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
                             Case No. 09CV76003


Scott G. Oxley, 325 North Main Street, Suite 204, Springboro, Ohio 45066, for plaintiff-
appellee/cross-appellant, Settlers Walk Home Owners Association

Dinsmore & Shohl, LLP, Susan D. Solle, 1100 courthouse Plaza, SW, 10 North Ludlow
Street, Dayton, Ohio 45402, for defendant-appellant/cross-appellee, Phoenix Settlers Walk,
Inc., et al.

William G. Deas and Tami Hart Kirby, One South Main Street, Suite 1600, Dayton, Ohio
45402, for defendant-appellant/cross-appellee, First Financial Bank, N.A.

Patricia J. Friesinger, 33 West First Street, Suite 600, Dayton, Ohio 45402, defendant-
appellant/cross-appellee, Phoenix Harbor Cove, Inc.



        S. POWELL, J.

        {¶ 1} Defendants-appellants/cross-appellees,                 First    Financial     Bank,   National
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Association (First Financial Bank), its successor in interest, Phoenix Harbor Cove, Inc.

(Harbor Cove), Phoenix Settlers Walk, Inc. (Phoenix), and plaintiff-appellee/cross-appellant,

Settlers Walk Home Owners Association (Settlers Walk HOA), appeal from various decisions

issued by the Warren County Court of Common Pleas on matters regarding assessments

levied against real property located within the Settlers Walk residential community. For the

reason outlined below, we affirm in part and reverse in part.

      {¶ 2} is a large residential community located in Springboro, Warren County, Ohio

that is divided into multiple smaller neighborhoods, such as the Cove and Stonebridge, which

are subject to a declaration of covenants, conditions and restrictions, and reservation of

easements (Declaration). It is undisputed that the Declaration was recorded with the Warren

County Recorder's Office on February 5, 1996. As relevant here, the Declaration contains

the following provisions that allow assessments to be levied against property owners for

common and neighborhood expenses.

             9.5 Lien for Assessments. The Association shall have a lien for
             any Assessment levied against a Unit, for fines imposed against
             an Owner or Occupant, and for interest, costs and reasonable
             attorney fees.

             9.5.1 Creation. The lien for Assessments is created by this
             Declaration and shall be a charge and a continuing lien on each
             Unit which shall run with the land. All persons or entities
             acquiring an interest in a Unit after the filing of this Declaration
             take such interest subject to the lien.

             9.5.2 Effective Dates. The lien for the Common Expenses and
             Neighborhood Expenses for each Unit shall be effective on the
             first day of the fiscal year of the Association. The lien for other
             Assessments shall be effective on the first day of the month
             following the notice of it [sic] levy on the Owners affected.

             9.5.3 Perfection. Recording of this Declaration constitutes notice
             and perfection of the lien.

             9.5.4 Notice of Lien. The Association may file a notice of lien

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with the Recorders of Warren County and/or Montgomery
County. Such notice shall not be required for the Association to
enforce its lien.

9.5.5 Priority of the Lien. The lien created by this Section shall
be prior to all liens and encumbrances recorded subsequent to
this Declaration except the lien for real estate taxes and
assessments and the lien of any bona fide first Mortgage filed of
record.

9.5.6 Subordination and Mortgagee Protection. The lien of any
Assessment levied pursuant to this Declaration (and charges,
interest, costs and attorney fees) shall be subordinate to, and
shall in no way effect the rights of the holder of a first mortgage
made in good faith for value received; provided, however, that
such subordination shall apply only to Assessments, or
installations therefor, which have become due and payable prior
to the date of Sheriff's sale of such Unit pursuant to a foreclosure
or the date of a deed in lieu of foreclosure. Such sale or transfer
shall not relieve the mortgagee or the purchaser of a Unit at such
sale from liability for any Assessments becoming due, nor from
the lien of any such subsequent Assessment.

9.5.7 Extinguishment of the Lien. A lien for unpaid Assessments
is extinguished unless proceedings to enforce it are instituted
within five (5) years after the full amount of the Assessment
becomes due. If an Owner of a Unit subject to a lien files a
petition for relief under the United States Bankruptcy Code, then
the period of time to enforce the Association's lien shall be tolled
until thirty (30) days after the automatic stay under Section 362
of the Bankruptcy Code is lifted.

9.5.8 Estoppel Certificate. Upon request of any mortgagee or
Owner and upon payment in full of all Assessments and other
charges permitted by this Declaration that are due to the
Association, the Association shall execute and deliver such
mortgagee or Owner an Estoppel Certificate. Such certificate
shall be in recordable form and shall note the payment of the
outstanding Assessments and charges and that the Association
is estopped from the enforcement of its lien with respect to
Assessment and charges becoming due and payable prior to the
date of the Certificate. The Association may charge a
reasonable fee for the preparation of such certificate.

9.5.9 Delinquency and Acceleration. Any installment of an
Assessment provided for by this Declaration shall become
delinquent if not paid on the due date as established by this

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             Declaration or by the Board. With respect to each installment of
             an Assessment not paid within five (5) days of its due date, the
             Board may, at its election, require the Owner to pay a reasonable
             late charge, costs of collection, reasonable attorney fees and
             interest at the rate provided by Section 1343.03 of the Ohio
             Revised Code (and as amended from time to time). Interest
             shall be calculated from the date of the delinquency to the date
             full payment is received by the Association. If any installment of
             an Assessment is not paid within thirty (30) days of its due date,
             the Board may, at its election, declare all of the unpaid balance
             of the Assessment without further notice or demand to the
             Owner. The Association may enforce the collection of the full
             Assessment and all charges thereon in any manner authorized
             by law or this Declaration. The filing of any petition for relief
             pursuant to the United States Bankruptcy Code by an Owner
             whose Assessment has been accelerated shall operate as a
             restoration of the Assessment to its prior status as if it has been
             accelerated.

             9.5.10 Remedies Cumulative. A suit to recover money judgment
             for unpaid Assessments and charges may be maintained without
             foreclosing or waiving the right to enforce the lien. A foreclosure
             may be maintained notwithstanding the pendency of any suit to
             recover a money judgment.

             9.5.11 Personal Obligation. The Assessments, including fines, if
             any, payable by each Owner, together with any penalty, interest,
             costs and reasonable attorney fees shall be the personal
             obligation of the Owner of the Unit at the time incurred. The
             personal obligation shall not pass to any successors in title
             unless expressly assumed by them.

      {¶ 3} In early 2008, Martin-Coffman Development Company, Inc. (Martin-Coffman)

sold approximately 50 of its lots located within the Settlers Walk residential community to

Phoenix. Thereafter, on March 7, 2008, Phoenix took deeds to these various properties in

lieu of foreclosure. It is undisputed that Martin-Coffman had not paid any assessments on

the subject properties for the years 2003 through 2007. It is also undisputed that Settlers

Walk HOA did not record any lien notice with the Warren County Recorder's Office with

respect to Martin-Coffman's unpaid assessments.

      {¶ 4} On December 17, 2009, Settlers Walk HOA filed a complaint against Phoenix

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seeking to collect on the unpaid assessments Martin-Coffman had not paid for the years

2005 through 2007, as well as those assessments Phoenix had not paid for the year 2009.

Settlers Walk HOA subsequently amended its complaint on two separate occasions seeking

to collect additional unpaid assessments for the years 2003 through 2007 and 2009 through

2013. Phoenix generally denied Settlers Walk HOA's claims made as part of its various

complaints.

      {¶ 5} On April 9, 2013, First Financial Bank, Settlers Walk HOA and Phoenix entered

into an escrow agreement to facilitate the sale of a number of lots Phoenix owned within the

Cove and Stonebridge neighborhoods. The escrow agreement states, in pertinent part:

              A. A dispute among the parties exists as to certain Homeowner
              Association assessments for various properties, said dispute
              resulting in litigation captioned Settlers Walk Home Owner's
              Association v. Phoenix Settlers Walk, Inc. et al., Case No.
              09CV76003 (the "Lawsuit") in the Common Pleas Court of
              Warren County, Ohio (the "Court").

              B. In order to facilitate the sale of lots 21, 22, 36, 39, 38, 37
              (collectively, "Stonebridge Lots") and lots 36, 76, 84, 86, 87, 88
              ("Cove Lots") the parties to the Agreement have agreed to
              escrow $30,789.00 with Escrow Agent as hereinafter provided.

              NOW, THEREFORE, for good and valuable consideration, the
              receipt and sufficiency of which is hereby acknowledged, the
              parties agree as follows:

              1. Escrow. At the closing of the sale of the Stonebridge Lots
              and Cove Lots, the proceeds derived from the purchase price
              shall be escrowed as follows:

              a) All pre-2009 [Settlers Walk HOA] fees and late charges in the
              total amount of $30,789.00 (the "Escrow Funds") shall be
              withheld in escrow by Escrow Agent and disbursed in
              accordance with the terms and conditions of this Agreement.

              b) All 2009 and post-2009 [Settlers Walk HOA] fees, late
              charges, and attorney fees in the total amount of $64,003.00
              shall be paid to [Settlers Walk HOA]. Phoenix's payment made
              pursuant to this Section does not constitute a resolution and/or

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              waiver of a disputed claim. Phoenix expressly reserves the right
              to dispute the amount, validity, and/reasonableness of the
              [Settlers Walk HOA] late charges and attorney fees paid
              pursuant to this Section in the course of the Lawsuit.

              2. Disbursement of Escrow Funds. Escrow Agent shall hold and
              disburse the Escrow Funds upon the earlier of, and in
              accordance with, (i) Phoenix, [First Financial Bank], and [Settlers
              Walk HOA's] mutual resolution of the Lawsuit, or (ii) any final
              judgment and/or any other applicable order of the Court.

After the sale of these lots was completed, an additional sum slightly in excess of $11,000.00

was then placed in escrow in order to facilitate the sale of two more lots, thereby raising the

total amount held in escrow to $41,956.66.

       {¶ 6} On September 18, 2013, a one-day bench trial was held before a magistrate. It

is undisputed that First Financial Bank did not appear at the trial. Following trial, on January

13, 2014, the magistrate issued a decision granting judgment to Settlers Walk HOA. In so

holding, the magistrate stated, in pertinent part, the following:

              Section 9.5 of the declaration of covenants creates a lien for
              unpaid assessments, enforceable in rem against each lot
              Phoenix owns, and enforceable in personam against Phoenix for
              assessments due since Phoenix took title. In rem enforcement is
              limited, however, to the amount owed for each separate lot. By
              stipulation, the lien held by [Settlers Walk HOA] is inferior in
              priority to First Financial Bank's mortgage interest.

              [Settlers Walk HOA's] lien for assessment for years 2003 and
              2004 have been extinguished pursuant to Section 9.5.7 of the
              covenants.

              [Settlers Walk HOA] is entitled to prejudgment interest at the
              statutory rate upon each unpaid assessment, and reasonable
              attorney's fees.

              [Settlers Walk HOA] may not assess monthly late fees for unpaid
              assessments, and is limited to a single late fee of $25.00 per lot
              for each unpaid yearly assessment.

       {¶ 7} On March 18, 2014, the magistrate issued a supplemental decision, wherein it


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found "[t]he $41,956.66 currently held in escrow is ordered released to [Settlers Walk HOA]

in partial satisfaction of Phoenix's * * * personal liability." Phoenix and First Financial Bank

then filed objections to the magistrate's decision. Settlers Walk HOA, however, did not file

any objections.

       {¶ 8} On March 28, 2014 and June 3, 2014, the trial court issued separate decisions

overruling both Phoenix and First Financial Bank's objections to the magistrate's decision. In

so holding, the trial court affirmed and adopted the magistrate's decision by also concluding

"Section 9.5 of the covenants creates a lien for unpaid assessments, enforceable in rem

against each lot owned by Phoenix, and enforceable in personam against Phoenix for

assessments due since Phoenix took title." The trial court further found that First Financial

Bank was not entitled to any of the $41,956.66 held in escrow. Specifically, the trial court

stated:

               The Court previously found, based upon the stipulation of the
               parties, that First Financial has first and best lien priority over the
               lots at issue in this case. However, that determination does not
               entitle First Financial to any funds held in escrow. The escrow
               agreement provides that the funds are to be disbursed upon
               either (1) the parties' mutual resolution of the lawsuit; or (2) any
               final judgment and/or any other applicable order of the Court.
               The escrow agreement does not provide for the disbursement of
               the funds to any specific party. Because Phoenix has a personal
               liability toward [Settlers Walk HOA], the Magistrate found, and
               this Court agrees, that the escrowed sum should be released to
               [Settlers Walk HOA]. Without any other evidence demonstrating
               First Financial's entitlement to the escrowed funds, this Court
               overrules First Financial's objection.

       {¶ 9} On June 6, 2014, the trial court issued a decision to correct an oversight in its

original decisions affirming and adopting the magistrate's decision. As part of this amended

decision, the trial court reiterated that upon the sale of any of the subject property owned by

Phoenix, "First Financial Bank is entitled to have its lien paid first as it holds first lien priority."


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       {¶ 10} On August 6, 2014, the trial court entered a final judgment entry, wherein it

incorporated its earlier decisions and found in favor of Settlers Walk HOA. Specifically, the

trial court granted judgment to Settlers Walk HOA "as against Phoenix 'in rem' only of a total

amount of $46,608.64" representing the unpaid assessments and late fees for the years

2005 through 2007 and "as against Phoenix 'in rem and in personam' for a total amount of

$74,204.38" representing the unpaid assessments and late fees for the years 2009 through

2013. The trial court then ordered the $41,956.66 held in escrow be released to Settlers

Walk HOA.

       {¶ 11} The parties now appeal from the trial court's various decisions, raising a total of

five assignments of error for review.

       {¶ 12} Phoenix's Assignment of Error No. 1:

       {¶ 13} THE TRIAL COURT ERRED IN FINDING THAT [SETTLERS WALK HOA]

PERFECTED AN ENFORCEABLE LIEN UNDER OHIO LAW BY RECORDING THE

[DECLARATION] WHEN THE SUBDIVISION WAS INITIALLY DEVELOPED.

       {¶ 14} In what appears to be an issue of first impression, Phoenix argues in its single

assignment of error that the trial court erred by finding Settlers Walk HOA perfected an

enforceable lien against the property that ran with the land by simply recording the

Declaration itself without ever recording a separate instrument notifying any potential bona

fide purchaser that Settlers Walk HOA had a lien on the property resulting from the unpaid

assessments. We agree.

       {¶ 15} We begin our analysis by discussing the applicable standard of review. Here,

the facts are generally not in dispute. Instead, the issue is whether Settlers Walk HOA

perfected an enforceable lien against the subject property by simply recording the

Declaration itself without ever recording a separate instrument notifying any potential bona
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fide purchaser that it had a lien on the property resulting from the unpaid assessments. As

this is a question of law, we review Phoenix's contention under a de novo standard of review.

Wilson v. AC & S, Inc., 169 Ohio App.3d 720, 2006-Ohio-6704, ¶ 61 (12th Dist.). In

conducting a de novo review, "this court independently reviews the record without giving

deference to the trial court's decision." Roberts v. Mike's Trucking, Ltd., 12th Dist. Madison

Nos. CA2013-04-011 and CA2013-04-014, 2014-Ohio-766, ¶ 24.

       {¶ 16} Ohio is what is known as a "race/notice" state. To that end, R.C. 5301.25(A)

provides, in pertinent part:

              All deeds * * * and instruments of writing properly executed for
              the conveyance or encumbrance of lands * * * shall be recorded
              in the office of the county recorder of the county in which the
              premises are situated. Until so recorded or filed for record, they
              are fraudulent insofar as they relate to a subsequent bona fide
              purchaser having, at the time of purchase, no knowledge of the
              existence of that former deed * * * or instrument.

       {¶ 17} "Under this statute, a bona fide purchaser for value is bound by an

encumbrance upon the property only if he has constructive or actual knowledge of the

encumbrance." Cox v. Estate of Wallace, 12th Dist. Butler No. CA97-06-078, 1987 WL

32746, *2 (Dec. 31, 1987), citing Tiller v. Hinton, 19 Ohio St. 3d 66 (1985). Recordation

gives constructive notice to all persons dealing with the land of properly recorded instruments

in the chain of title. Deutsche Bank Natl. Trust Co. v. Hill, 5th Dist. Perry No. 14CA00021,

2015-Ohio-1575, ¶ 29. Therefore, "if a lienholder fails to record an encumbrance on real

property, the lienholder will not have the benefit of being able to claim constructive notice of

the lien against a subsequent purchaser." Daniely v. Accredited Home Lenders, 8th Dist.

Cuyahoga No. 99208, 2013-Ohio-4373, ¶ 12.

       {¶ 18} A lien on real property for payment of a debt is a right to have the debt satisfied

out of the land, if not otherwise paid. However, as the Ohio Supreme Court has stated,
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"there can be no lien unless there is a debt[.]" Choteau, Merle & Sandford v. Thompson &

Campbell, 2 Ohio St. 114, 124 (1853). "Thus, a lien cannot exist in the absence of the debt,

the payment of which it secures." Westin Hills West Three Townhome Owners Ass'n v.

Federal Nat. Mortg. Ass'n, 283 Neb. 960, 966 (2012), citing Dean Realty Co. v. City of

Kansas City, 85 S.W.3d 83 (Mo.App.2002). In other words, although there are many types

and classes of liens, "all have this characteristic of being secondary to an existing obligation,

usually a debt. If there is no debt the lien ceases to have life or existence for its function has

vanished[.]" Hughes Plumbing and Heating, Inc. v. Rhoad, 3d Dist. Hancock Nos. 5-79-4

and 5-79-5, 1979 WL 207953, *2 (May 22, 1979).

       {¶ 19} In the present case, the undisputed facts show that at the time the Declaration

was recorded on February 5, 1996, there existed no actual lien upon the subject property as

no assessment had been charged, much less stood unpaid or delinquent. In turn, although

advocating for this court to affirm the trial court's decision, we find Settlers Walk HOA did not

have a perfected and enforceable lien on the subject property that ran with the land merely

by saying so as part of the recorded Declaration. Again, as the Ohio Supreme Court has

stated, "there can be no lien unless there is a debt[.]" Choteau, 2 Ohio St. at 124.

Therefore, in accordance with the provisions found in R.C. 5301.25(A), once the

assessments went unpaid and a debt was established, Settlers Walk HOA should have

recorded a separate instrument with the county recorder to perfect its lien and provide notice

to any subsequent bona fide purchaser that it had a lien on the subject property. Settlers

Walk HOA simply did not do that here.

       {¶ 20} In reaching this decision, we note that the trial court relied on the Second

District Court of Appeals decision in Premiere Mortg. Co., Inc. v. Fetter, 2d Dist. Montgomery

No. 12539, 1992 WL 24893 (Feb. 12, 1992), for the proposition that the Declaration "controls
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where there is no statute on point regarding the creation of the type of lien [Settlers Walk

HOA] seeks to enforce." The Second District's decision in Fetter, however, has not been

cited by any court to support this position. Moreover, the Second District's decision in Fetter

does not in any way address the Ohio Supreme Court's earlier pronouncement that "there

can be no lien unless there is a debt[.]" Choteau, 2 Ohio St. at 124. Therefore, while we

agree that the Declaration may allow for the creation of a lien once a debt was established

after an assessment had gone unpaid, pursuant to R.C. 5301.25(A), the mere creation of a

lien is insufficient to bind any subsequent bona fide purchaser. This is because until an

instrument evidencing the lien is "so recorded or filed for record, they are fraudulent insofar

as they relate to a subsequent bona fide purchaser having, at the time of purchase, no

knowledge of the existence of that former deed * * * or instrument." R.C. 5301.25(A).

Settlers Walk HOA cannot employ language in the Declaration in order to supersede this

well-established Ohio law.

       {¶ 21} The trial court also relied upon the Ohio Supreme Court's decision in Wayne

Building & Loan Co. of Wooster v. Yarborough, 11 Ohio St.2d 195 (1967), for the proposition

that "Ohio's common law provides that one may encumber real property in exchange for

future advances without the necessity of filing additional instruments when such advances

are made." In support of this claim, the trial court cited to the following passage:

              Therefore, it is held that where nonobligatory advances are made
              after the commencement of construction and not in accordance
              with Section 1311.14, Revised Code (or are not shown to have
              been actually used in the construction for which liens are
              claimed), under a mortgage contemplating future advances
              which was recorded prior to such commencement of
              construction, the lien of such advances is held subsequent in
              priority to the mechanics' liens arising from such construction.

Id. at 219.


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       {¶ 22} The case at bar, however, is not about nonobligatory advances after the

commencement of any construction on the subject property, nor does this case relate in any

way to any mechanic's liens that should arise out of such construction. In turn, contrary to

the trial court's findings, this is not a case about future advances from a mortgagee, but

rather, yearly assessments against the subject property levied by a home owners association

for common and neighborhood expenses. Therefore, we fail to see how the Ohio Supreme

Court's decision in Yarborough, nor any of the other cases cited by the magistrate to support

this position, applies to the case at bar.

       {¶ 23} We further note that this case should not be confused with our recent decision

in Christopher Michael Homes, L.L.C. v. Treillage Residence Owners' Assn., Inc., 12th Dist.

Butler No. CA2013-12-238, 2014-Ohio-4754. As part of that decision, this court stated,

without any further comment, that "[a]ccording to the Declaration, the recording of the

Declaration constituted notice and perfection of any lien, and Treillage was permitted to

enforce liens absent a filing of notice with the Butler County Recorder." Id. at ¶ 22. Whether

that was in fact true, however, was not at issue in that case for it is undisputed that Treillage

Residence subsequently filed an instrument evidencing its liens on the subject property once

the assessments went unpaid in accordance with R.C. 5301.25(A). Therefore, both Settlers

Walk HOA and Phoenix's reliance on our decision in Treillage Residence is misplaced.

       {¶ 24} Finally, we acknowledge that these types of issues that arise today have

generally been resolved through the enactment of Ohio's Planned Community Law as found

in R.C. Chapter 5312. For instance, as provided by R.C. 5312.12:

              (A) The owners association has a lien upon the estate or
              interest in any lot for the payment of any assessment or charge
              levied in accordance with section 5312.11 of the Revised Code,
              as well as any related interest, administrative late fees,
              enforcement assessments, collection costs, attorney's fees, and
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             paralegal fees, that are chargeable against the lot and that
             remain unpaid ten days after any portion has become due and
             payable.

             (B) All of the following apply to a lien charged against a
             property pursuant to this section:

             (1) The lien is effective on the date that a certificate of lien is
             filed for record in the office of the recorder of the county or
             counties in which the lot is situated, pursuant to authorization by
             the board of directors of the owners association. The certificate
             shall contain a description of the lot, the name of the record
             owner of the lot, and the amount of the unpaid assessment or
             charge. It shall be subscribed to by the president of the board or
             other designated representative of the owners association.

             (2) The lien is a continuing lien upon the lot against which each
             assessment or charge is made, subject to automatic subsequent
             adjustments reflecting any additional unpaid interest,
             administrative late fees, enforcement assessments, collection
             costs, attorney's fees, paralegal fees, and court costs.

             (3) The lien is valid for a period of five years from the date of
             filing, unless it is sooner released or satisfied in the same
             manner provided by law for the release and satisfaction of
             mortgages on real property or unless it is discharged by the final
             judgment or order of a court in an action brought to discharge the
             lien as provided in this section.

             (4) The lien is prior to any lien or encumbrance subsequently
             arising or created, except liens for real estate taxes and
             assessments of political subdivisions and liens of first mortgages
             that have been filed for record prior to the recording of the lien,
             and may be foreclosed in the same manner as a mortgage on
             real property in an action brought by the owners association.

      {¶ 25} However, pursuant to R.C. 5312.02(C), "[n]othing in this chapter invalidates any

provision of a document that governs a planned community if that provision was in the

document at the time the document was recorded and the document was recorded prior to

the original effective date of this chapter," in this case, September 10, 2010. Therefore,

because the Declaration at issue in this case was recorded on February 5, 1996, nearly 15

years before the effective date of R.C. Chapter 5312 on September 10, 2010, Ohio's Planned

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Community Law does not apply here.

       {¶ 26} In light of the foregoing, we find the trial court erred by finding Settlers Walk

HOA perfected an enforceable lien against the subject property by simply recording the

Declaration itself without ever recording a separate instrument notifying any potential bona

fide purchaser that it had a lien on the property resulting from the unpaid assessments. The

trial court, therefore, erred by requiring Phoenix to pay any unpaid assessments and late fees

imposed for the years 2005 through 2007 prior to Phoenix purchasing the subject property in

2008. Accordingly, Phoenix's single assignment of error is sustained and the trial court's

decision holding otherwise is reversed.

       {¶ 27} Settlers Walk HOA's Assignment of Error No. 1:

       {¶ 28} THE TRIAL COURT ERRED [AS] A MATTER OF LAW BY FINDING THAT

[SETTLER'S WALK HOA] MAY ONLY CHARGE ONE LATE FEE PER ASSESSMENT OF

$25.00.

       {¶ 29} In its first assignment of error, Settlers Walk HOA argues the trial court erred by

affirming and adopting the magistrate's decision finding it could only charge Phoenix one late

fee for each unpaid yearly assessment levied against it for each separate lot that Phoenix

owned. However, as the record reveals, Settlers Walk HOA never filed any objections to the

magistrate's decision, let alone an objection to the magistrate's decision finding "that the

HOA may charge only one late fee per assessment." In fact, as part of its memorandum in

opposition to Phoenix's objections to the magistrate's decision, Settlers Walk HOA actually

requested the trial court to adopt the magistrate's decision and enter judgment consistent

with the magistrate's decision in its favor.

       {¶ 30} By failing to file any objections to the magistrate's decision, we find Settlers

Walk HOA waived the right to assign as error on appeal any issue regarding the magistrate's
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decision finding it could only charge Phoenix one late fee for each unpaid yearly assessment

levied against it for each separate lot that Phoenix owned. Civ.R. 53(D)(3)(b)(iv) (entitled

"waiver of right to assign adoption by court as error on appeal"); Vilardo v. Sheets, 12th Dist.

Clermont No. CA2005-09-091, 2006-Ohio-3473, ¶ 14 (appellant "waived the right to assign

as error on appeal the trial court's adoption of any finding of fact or conclusion of law" where

he failed to enter objections to the magistrate's decision).1 Therefore, Settlers Walk HOA's

first assignment of error is overruled.

        {¶ 31} Settlers Walk HOA's Assignment of Error No. 2:

        {¶ 32} THE TRIAL COURT ERRED BY FINDING [FIRST FINANCIAL BANK] HAD A

FIRST PRIORITY LIEN OVER [SETTLERS WALK HOA].

        {¶ 33} In its second assignment of error, Settlers Walk HOA argues the trial court

erred by affirming and adopting the magistrate's decision finding it held an inferior lien priority

position to First Financial Bank's mortgage interest. The magistrate, however, found the

parties had entered into a pretrial stipulation that First Financial Bank held a mortgage

interest that had priority over that of Settlers Walk HOA. Again, Settlers Walk never filed any

objections to the magistrate's decision, let alone an objection to the magistrate's decision

finding the parties had entered into such a pretrial stipulation. Therefore, although Settlers

Walk HOA now claims the magistrate "wrongly stated that a stipulation existed," we find

Settlers Walk HOA also waived the right to assign this as error on appeal. Accordingly,

Settlers Walk HOA's second assignment of error is likewise overruled.

        {¶ 34} First Financial Bank's Assignment of Error No. 1:


1. The Ohio Supreme Court recently addressed the distinction between the concepts of "waiver" and "forfeiture"
in State v. Rogers, 143 Ohio St.3d 385, 2015-Ohio-2459. However, because Civ.R. 53(D)(3)(b)(iv) still refers to
a "waiver" as opposed to a "forfeiture" of the right to assign an issue as error on appeal when a party failed to
object to a magistrate's decision on that issue, we will continue to apply the language in the rule as it is currently
written.
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       {¶ 35} THE TRIAL COURT ERRED AS A MATTER OF LAW BY FAILING TO

PROVIDE      FIRST     FINANCIAL      BANK,     NATIONAL       ASSOCIATION         WITH     THE

OPPORTUNITY TO PRESENT EVIDENCE AT THE TRIAL REGARDING THE ESCROWED

FUNDS.

       {¶ 36} In its first assignment of error, First Financial Bank argues the trial court erred

by not allowing it to present evidence at trial. However, as the record makes clear, First

Financial Bank did not attend the trial despite having notice of the September 18, 2013 trial

date. First Financial Bank, therefore, clearly had the opportunity to present evidence at the

trial but forwent that opportunity by choosing not to attend the trial. Nothing about this

indicates the trial court somehow erred as First Financial Bank now suggests. Accordingly,

First Financial Bank's first assignment of error lacks merit and is overruled.

       {¶ 37} First Financial Bank's Assignment of Error No. 2:

       {¶ 38} THE TRIAL COURT ERRED AS A MATTER OF LAW BY HOLDING THAT

FIRST FINANCIAL BANK, NATIONAL ASSOCIATION, DESPITE ENTERING INTO AN

ESCROW AGREEMENT AND HAVING A FIRST PRIORITY MORTGAGE LIEN, WAS NOT

ENTITLED TO CERTAIN ESCROW PROCEEDS FROM A THIRD-PARTY SALE OF

PROPERTY THAT WAS THE SUBJECT OF THE UNDERLYING FORECLOSURE ACTION.

       {¶ 39} In its second assignment of error, First Financial Bank argues the trial court

erred by finding it was not entitled to any of the funds held in escrow pursuant to the escrow

agreement entered into between itself, Settlers Walk HOA and Phoenix. Yet, just as the trial

court found, the escrow agreement does not provide for the disbursement of the escrowed

funds to any specific party. Rather, the escrow agreement merely states that the "Escrow

Agent shall hold and disburse the Escrow Funds upon the earlier of, and in accordance with,

(i) Phoenix, [First Financial Bank], and [Settlers Walk HOA's] mutual resolution of the
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Lawsuit, or (ii) any final judgment and/or any other applicable order of the Court."

       {¶ 40} Because Phoenix still owes Settlers Walk HOA for the unpaid assessments

levied on the property for the years 2009 through 2013 in the amount of $74,204.38, we find

no error in the trial court's decision finding the escrowed sum should be released to Settlers

Walk HOA. As the magistrate found, First Financial Bank has "presumably been paid

everything it was owed[.]" After a thorough review of the record, we find nothing to indicate

the trial court's decision was improper. Therefore, because we find no error in the trial court's

decision, First Financial Bank's second assignment of error is also without merit and

overruled.

       {¶ 41} Judgment affirmed in part and reversed in part.


       PIPER, P.J., concurs


       M. POWELL, J., concurs in part and dissents in part.


       M. POWELL, J., concurring in part and dissenting in part.

       {¶ 42} I concur with the majority in its resolution of the assignments of error of Settlers

Walk HOA and First Financial Bank. However, I dissent from the majority's resolution of

Phoenix's assignment of error that the filing of the Declaration, without the filing of a separate

affidavit of lien, failed to perfect an enforceable lien for the assessments.

       {¶ 43} R.C. 5301.25(A) provides in pertinent part that:

              All * * * instruments of writing properly executed for the * * *
              encumbrance of lands * * * shall be recorded in the office of the
              county recorder of the county in which the premises are situated.
              Until so recorded or filed for record, they are fraudulent insofar
              as they relate to a subsequent bona fide purchaser having, at the
              time of purchase, no knowledge of the existence of that former
              deed, land contract, or instrument.


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       {¶ 44} R.C. 5301.25(A) says nothing as to what is required to create an encumbrance

upon real property. Rather, the statute sets forth the formalities necessary to transform an

encumbrance into a lien by providing notice of the encumbrance to subsequent bona fide

purchasers. R.C. 5301.25(A) requires only that the instrument creating the encumbrance be

in writing, properly executed, and recorded.         The Declaration satisfies these three

requirements and Phoenix does not argue to the contrary. Implicitly, Phoenix admits, and the

majority acknowledges, that the Declaration creates an encumbrance when they conclude

that the filing of a separate instrument would perfect the lien for the assessments, because

there can be no lien without a precedent encumbrance.

       {¶ 45} The essence of the majority opinion is that there is no lien because at the time

the Declaration was recorded, "no assessment had been charged, much less stood unpaid or

delinquent." Therefore, the majority posits, any lien sought to be perfected by the recording

of the Declaration is fraudulent as provided by R.C. 5301.25(A).

       {¶ 46} The majority cites the holdings of Choteau, Merle & Sandford v. Thompson &

Campbell, 2 Ohio St. 114 (1853), and Hughes Plumbing and Heating, Inc. v. Rhoad, 3d Dist.

Hancock Nos. 5-79-4 and 5-79-5, 1979 WL 207953 (May 22, 1979), for the proposition that

"there can be no lien unless there is a debt[.]" Choteau at 124. This is not surprising. By

definition, a lien is a security for the payment of a debt or performance of some other

obligation. See Clapp v. Huron Cty. Banking Co., 50 Ohio St. 528, 535 (1893), describing a

"lien" as a charge upon any "real or personal property [for] the payment of any debt or duty."

However, neither Choteau nor Hughes Plumbing addresses in any respect the issue here as

to whether it is necessary that the debt exist at the time of the recording of notice of the

encumbrance for the lien to be perfected.

       {¶ 47} Liens may be created in various ways. "A lien can be created by a contract with
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the owner of the property or someone authorized to act on his or her behalf, or by a statute,

or by operation of common law." 66 Ohio Jurisprudence 3d, Liens, Section 5 (2015). See

also Great Am. Ins. Co. v. Thompson Trust, 1st Dist. Hamilton No. C-040127, 2006-Ohio-

304, ¶ 13, fn. 5 (liens may only be created by agreement or by a fixed rule of law).

       {¶ 48} Article IX, Section 9.1, of the Declaration creates the various assessments and

provides, in pertinent part, that "Each Owner, by acceptance of a deed or recorded contract

of sale for any portion of the Properties, is deemed to covenant and agree to pay these

assessments."

       {¶ 49} Article IX, Section 9.5, of the Declaration, quoted in the majority opinion,

creates the lien for the assessments. Therefore, the lien for the assessments is created by

agreement.

       {¶ 50} In One Bratenahl Place Condominium Assn., Inc. v. Sliwinski, 8th Dist.

Cuyahoga No. 102493, 2015-Ohio-3353, the Eighth District Court of Appeals contrasted the

provisions of Ohio's condominium and planned community statutes regarding the adjustment

of liens for after-acquired debts:

              Thus, the planned community lien statute expressly indicates
              that liens on a planned community lot are subject to automatic
              subsequent adjustments, and clearly describes the lien as a
              "continuing lien." By contrast, the condominium lien statute at
              issue here, R.C. 5311.18(A), is completely devoid of these
              phrases. Because the General Assembly expressly provided for
              automatic perfection of after-acquired debts in one statute and
              not in another, we are unconvinced that the current version of
              R.C. 5311.18(A) abrogates Zanders. Instead, in our view, the
              phrase "subject to subsequent adjustments," without more, refers
              to recorded liens that may be adjusted and modified accordingly
              with a later-filed lien. The language of R.C. 5311.18(A) neither
              references nor contemplates the automatic inclusion of new
              charges without the filing of an updated lien.

(Emphasis sic.) Id. at ¶ 16.


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        {¶ 51} The One Bratenahl court recognized that whether a statutory lien may include a

debt arising after the recording of an instrument evidencing a lien depends upon the terms of

the statute. There is no reason why this same logic ought not to apply to liens created by

agreement, as the lien here. That is, whether antecedent debt may be included in the lien is

subject to the terms of the agreement creating the lien.

        {¶ 52} In modern practice and forms of encumbrance, liens created by agreement are

commonly adjusted to include antecedent debts (i.e., the lien created by open-ended

mortgages is adjusted to include advances made after the recording of the mortgage; the lien

of home-equity line of credit mortgages comes and goes as advances are made and re-paid

and, frequently, there is no debt at the time of the recording of the home-equity line of credit

mortgage). The Second District Court of Appeals recognized this facet of liens created by

agreement and observed,

                 Since this lien is not created by statute, appellant had no greater
                 lien rights than those established in the Declaration. There is no
                 dispute that the Declaration is controlling.

Premiere Mortg. Co. v. Fetter, 2d Dist. Montgomery No. 12539, 1992 WL 24893, *2 (Feb. 12,

1992).2

        {¶ 53} Additionally, there is no statutory proscription that liens created by agreement

may not apply to an antecedent debt.3

        {¶ 54} Article IX, Section 9.5.2, of the Declaration provides that the lien for

assessments is effective "on the first day of the fiscal year of the Association" as to the lien


2. The majority insinuates that Fetter is not good law because it "has not been cited by any court to support this
position." However, Fetter has neither been overruled nor criticized since its 1992 release. It is more likely that
the lack of citation is due to the novelty of the issue involved, as the majority acknowledges at the outset of its
analysis ("In what appears to be an issue of first impression * * *").

3. As discussed below, for declarations executed and recorded on or after September 10, 2010, R.C. 5312.12
now requires the filing of a certificate a lien in order for the lien to be effective.
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for Common and Neighborhood expenses, and "on the first day of the month following

notice" of the levy for other assessments. Therefore, the Declaration specifically provides for

a lien for assessments levied antecedent to the recording of the Declaration. Once the

assessment is levied, the debt and the recording coincide and the Choteau debt requirement

is satisfied.

       {¶ 55} A lien may also secure performance of some obligation other than a debt.

Clapp, 50 Ohio St. at 535. See also Ross v. Franko, 139 Ohio St. 395, 397 (1942)

(generally, a lien is a charge upon property to secure the performance of an obligation such

as the payment of a debt). As stated, Article IX, Section 9.1, of the Declaration provides that

an owner agrees to pay the assessments by accepting a deed to a property subject to the

Declaration. Upon the recording of that deed, there is compliance with R.C. 5301.25(A) and

a lien is perfected securing performance of the obligation to pay the assessments, whenever

the assessments may be levied. In this regard, the Declaration is much like a home equity

line of credit mortgage, which, until an advancement of credit is made, secures the obligation

to repay subsequent advancements.

       {¶ 56} The majority and I differ only as to when the recording of the instrument proving

notice of the encumbrance and the debt or other obligation to be secured by the lien must

coincide. The majority is of the opinion that the debt must precede or be contemporaneous

with the recording of the lien instrument. It is my opinion that a lien arises whenever there is

a concurrence of the debt/obligation and the recording. In either case, the debt and its extent

may not be a matter of public record, thus requiring further inquiry by subsequent purchasers,

and the notice of the existence of the lien is of the same quality.

       {¶ 57} The Declaration complies with the formalities required by R.C. 5301.25(A). The

lien for assessments is created by agreement, provides for the inclusion of antecedent debt,
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and separately secures the performance of the obligation of an owner to pay the

assessments. Statutes do not prohibit liens created by agreement from securing the

payment of antecedent debt. Once the assessments are levied, a debt and the instrument

creating the lien coincide, consistent with the Choteau debt requirement.

       {¶ 58} Although I concur with the resolution of the assignments of error of Settlers

Walk HOA and First Financial Bank, with regard and respect for my colleagues in the

majority, I dissent from this resolution of Phoenix's assignment of error.




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