20-1805

20-1805. Recording of lien by director

A. The director shall, as a condition to granting a permit to an applicant, record
with the county recorder of any county a notice of lien against the facility's properties
on behalf of all residents who enter into life care contracts with the applicant to
secure performance of the provider's obligations to residents pursuant to life care
contracts.

B. From the time of such recording there exists a lien for an amount equal to the
reasonable value of services to be performed under a life care contract in favor of each
resident on the land and improvements of the facility's properties owned by the provider,
not exempt from execution, which are listed in the notice of lien filed pursuant to
subsection C of this section and which are located in the county in which the notice of
lien is recorded.

C. The lien shall be perfected by the director by executing by affidavit the notice
and claim of lien, which shall contain:

1. The legal description of the lands and improvements to be charged with a lien.

2. The name of the owner of the property affected.

3. A statement providing that the lien has been filed by the director pursuant to
section 20-1805.

D. The lien may be released or partially released at the request of the applicant
if, in the judgment of the director, such release or partial release inures to the
benefit of the residents and the performance of the provider's obligations to the
residents.

E. The lien may be foreclosed by civil action. Any number of persons claiming
liens against the same property pursuant to this section may join in the same action. If
separate actions are commenced, the court may consolidate such actions. The court shall,
as part of the costs, allow reasonable attorney's fees for each claimant who is a party
to the action.

F. In a civil action filed pursuant to this section, the judgment shall be given in
favor of each resident having a lien who has joined in the foreclosure action for the
amount equal to the reasonable value of services to be performed under a life care
contract in favor of each resident. The court shall order the sheriff to sell any
property subject to the lien at the time judgment is given, in the same manner as real
and personal property is sold on execution. The lien for the reasonable value of
services to be performed under a life care contract shall be on equal footing with claims
of other residents. If a sale is ordered and the property sold and the proceeds of the
sale are not sufficient to discharge all liens of residents against the property, the
proceeds shall be prorated among the respective residents.

G. The liens provided for in this section are preferred to all liens, mortgages or
other encumbrances upon the property attaching subsequently to the time the lien is
recorded and are preferred to all unrecorded liens, mortgages and other
encumbrances. The amount secured by any lien having priority to the lien filed pursuant
to this section may not be increased without prior approval of the director.

H. The director shall file a release of the lien upon proof of complete performance
of all obligations to residents pursuant to life care contracts.

I. The director may subordinate any lien filed pursuant to this section to the lien
of a first mortgage or other long-term financing obtained by the provider, regardless of
the time at which the subsequent lien attaches.