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Introduction to Liens
There are several types of liens, which are a legally binding deed raised against someone who is in debt. One type of lien can be imposed on a person’s property for failure to pay a debt that can be from a loan, or for services rendered to that person’s property such as repairs to their house or car or failure to make mortgage payments. This gives the person who instigated the lien security against the debt, as well as certain legal rights over the debtor’s personal property.
Here, we'll discuss what happens when a lien is put on a home, what is a lien on a house and what happens next in lien situations.
We begin with an overview of the types of liens that can be put on a person’s property.
Image Credit (Morgue File)
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Overview of Types of Liens
There are several types of legal liens which can be enforced in Europe and the United States:
- Mechanics Liens - Imposed as security for non-payment for work done on a person’s property.
- Tax Liens - Imposed by the government for non-payment of taxes.
- Demolition or Weed Liens- Imposed by the government to repair a property that has become a danger to the general public.
- Attorneys and Judgment Liens - Imposed to secure non-payment of services of the legal profession.
- Maritime Liens - Imposed by Admiralty Law, for non-payment of port taxes, for example.
Types of Liens (http://real-estate.lawyers.com/Real-Estate-Liens.html)
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What Is a Lien, and What Happens Next?
Looking at the list of the types of liens in the preceding section, below, we'll examine a Mechanics Lien. This is a legally binding document raised by someone for non-payment of a debt from another individual.
The mechanic's lien is raised and recorded in the County Recorder’s Office by an unpaid tradesman or contractor and can cause several serious problems to the debtor.
Problems Caused to the Debtor by a Mechanics Lien:
- A mechanics lien is relatively easy to place and record, often done without any evidence, so the sytem is often abused.
- The instigator can request a foreclosure, which can force the debtor to sell the property to pay off the money owed.
- The homeowner may have to pay the original amount of money owed again; even though he has already paid the contractor in full. This can happen if the contractor has not paid the suppliers or his workers; the householder is still responsible under law for these debts.
- The lien is also recorded on the house title, and could possibly hinder the sale of the property by ‘clouding’ the title and even if the debt is paid off, potential buyers may still be wary.
Filing a Mechanics Lien in Court:
Following the recording of a mechanics lien in the County Recorder’s Office, the instigator has 90 days to file a subsequent lawsuit in court.
After this 90 day period, the lien will become obsolete but still remain on the house title, unless the instigator issues a release of lien. Nonetheless, if the lien is not released, the house owner can apply to have the lien erased from the title and may be eligible to claim court fees.
If the lawsuit is successful, the debtor can be ordered by the court to sell his property and pay off the debt. However, if counter claims are made it can turn out an expensive business, one to be avoided if possible.
- Legal Process of a Mechanic's Lien (http://construction-laws.com/mechanics%20liens.htm#whatisamechanicslien)
- Legality of Mechanics Liens (http://www.cslb.ca.gov/consumers/legalissuesforconsumers/mechanicslien/WhatIsAMechanicsLien.asp)
- Image Credit (Morgue File)
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There are several types of liens that can be placed and recorded in the County Recorder’s Office. We have been examining a Mechanics Lien, which is specifically raised against a debtor’s property as collateral for a debt. The lien is attached to the house title, which ‘clouds’ the deed and may prevent future sale of the property to cautious buyers. The lien process is similar for non-payment of taxes and mortgage payments.
Liens are often treated as lawsuits unless they are expired, and must be filed in the court within 90 days of being recorded, where if successful, can order the selling of the debtor’s property, to pay off the debt. This can be an expensive business if the debtor is successful in throwing doubt on the legality of the claim when considering legal costs and court filing fees.
Because there are many types of liens, it's important to realize what happens when a lien is put on a house, what is a lien on a house, and the various circumstances that could occur if the lien was placed as collateral for a debt truly owed and remains unpaid.