James R. Balmforth: Notice Of Lien And Interest Holders

A lien is a legal claim or a right against property. Liens provide security, allowing a person or organization to take property or take other legal action to satisfy debts and obligations. Liens are often part of the public record, informing potential creditors and others about existing debts. The debt is now secured, and the lender has a better chance of getting repaid. Liens are possible anytime somebody has a legal right to somebody else’s property.

They’re typically part of an agreement to purchase real or personal property (home and auto loans, for example). Liens can also exist as a result of legal action. When you borrow to buy a home, the property serves as collateral. In your loan agreement, you agree to allow the lender to foreclose on your home if you fail to meet certain requirements. For example, you need to make monthly payments, insure the property, possibly live in it as your primary residence for several years, and more. Auto loans are similar to home loans. One difference is that instead of forcing you out of your home (which doesn’t go anywhere), your auto lender can take your vehicle from you through repossession. You won’t necessarily know when or where this happens ahead of time—it can happen while you’re at home, at work, or while you’re out-and-about. Car title loans can also result in liens filed with your local Department of Motor Vehicles (DMV).

Local governments and the IRS sometimes collect unpaid taxes with liens. Tax liens are particularly troublesome—taxing authorities can attach liens to current and future assets, they can collect from bank accounts relatively easily, and they might even be able to jump to the front of the line and collect before other creditors. The IRS generally gets to collect before your lender, for example, and bankruptcy might not be sufficient to discharge unpaid taxes. Local governments in need of funding can be especially eager to collect, but the IRS sometimes moves slower. A mechanic’s lien is a formal notice, filed with a court of appropriate jurisdiction, indicating a financial interest in property. Sometimes referred to as a contractor’s lien or a construction lien, this form details money owed to the contractor for either services rendered or materials provided on a construction or home or building improvement project. Without one, a contractor runs the risk of not being paid for work performed or services provided. When a property owner doesn’t pay a bill for work done on the property, the mechanic’s lien gives the contractor a security interest in the property and preserves the claim for payment.

Contractors should be cautious not to fall into a false sense of security about a mechanic’s lien. For a lien to be legal, it must be perfected. Each state has their own requirements for how to perfect a construction lien. This form is designed to protect contractors who, by their products or services, enhance the value of property. Consequently, they are most commonly used in new construction or improvements to property. However, the cost of the rental of a portable latrine, or the installation and removal of a security fence, while perhaps necessary for the comfort and safety of the workers, may not be subjected to a mechanic’s lien. This is because the latter does not increase the value of the property, while the new roof does. There is a priority to liens against the property. Generally speaking, liens take priority based on the order they are filed. Consequently, a first mortgage takes priority over this form, as the mortgage was filed first. However, this form may take priority over a second mortgage, depending on when the mechanic’s lien and the second mortgage were filed. Most unsecured creditors, such as the holders of credit card debt, medical bills, and personal loans, must first file a lawsuit, win the action, and get a money judgment before obtaining lien rights. With the judgment in hand, a judgment creditor can place a judgment lien on your real estate and occasionally on personal property depending on the state in which you live. Usually, a property tax lien takes priority over all other mortgages or liens on the property, even if the property tax lien was placed on the property after the other liens. If the taxes are not paid, the government can have your property sold to pay the property taxes. The government must follow whatever procedure the state prescribes, and you may have the opportunity to pay the taxes and costs and get your property back even after the “sale.” If you don’t pay your taxes, to protect its mortgage, the lender will usually pay the taxes and add that to your mortgage debt. Liens are also “perfected” or “unperfected”.

Perfected liens are those liens for which a creditor has established a priority right in the encumbered property with respect to third party creditors. Perfection is generally accomplished by taking steps required by law to give third party creditors notice of the lien. The fact that an item of property is in the hands of the creditor usually constitutes perfection. Where the property remains in the hands of the debtor, some further step must be taken, like recording a notice of the security interest with the appropriate office. Perfecting a lien is an important part of the task of protecting the secured creditor’s interest in the property. A perfected lien is valid against bona fide purchasers of property, and even against a trustee in bankruptcy; an unperfected lien may not be. Movers are typically entitled to a mover’s lien under UCC § 7-307/308, to withhold a customer’s goods to secure payment. This is a possessory lien, and is the non-consensual type of lien (because it exists automatically under a statute instead of being affirmatively agreed upon). However, the concept of a mover’s lien is often abused in a moving scam known as a hostage load, whereby the moving company will fraudulently extort money not owed by the customer by refusing to deliver the goods unless the customer pays money inflated beyond the contractual estimate. Because the customer has an interest in obtaining their own goods, they are under duress to pay the ransom. Hostage loads in at least the interstate context are illegal under 49 U.S.C. 13905. The FMCSA regulates the moving industry and sometimes takes enforcement action by fining and/or deli censure of offending moving companies. Moving companies that deliberately engage in hostage-loading may also be considered to be engaging in racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act. Disputes between legitimate lien holding of chattels vs. hostage-loading can sometimes be averted by the customer including an advanced (before-the-fact) consensual waiver of the mover’s right to a lien in the written contract, obligating the moving company to deliver the goods with reasonable dispatch regardless of disputes over payment, and failure to do so would constitute conversion or trespass to chattels.

Common-law liens are divided into special liens and general liens. A special lien, the more common kind, requires a close connection between the property and the service rendered. A special lien can only be exercised in respect of fees relating to the instant transaction; the lienor cannot use the property held as security for past debts as well. A general lien affects all of the property of the lienee in the possession of the lienor, and stands as security for all of the debts of the lienee to the lienor. A special lien can be extended to a general lien by contract, and this is commonly done in the case of carriers. A common-law lien only gives a passive right to retain; there is no power of sale which arises at common law, although some statutes have also conferred an additional power of sale, and it is possible to confer a separate power of sale by contract. A common-law lien is a very limited type of security interest. Apart from the fact that it only amounts to a passive right to retain, a lien cannot be transferred; it cannot be asserted by a third party to whom possession of the goods is given to perform the same services that the original party should have performed; and if the chattel is surrendered to the lienor, the lien entitlement is lost forever (except for where the parties agree that the lien shall survive a temporary re-possession by the lienor). A lienee who sells the chattel unlawfully may be liable in conversion as well as surrendering the lien. In common-law countries, equitable liens give rise to unique and difficult issues. An equitable lien is a no possessory security right conferred by operation of law, which is similar in effect to an equitable charge. It differs from a charge in that it is non-consensual. It is conferred only in very limited circumstances, the most common (and least ambiguous) of which is in relation to the sale of land; an unpaid vendor has an equitable lien over the land for the purchase price, notwithstanding that the purchaser has gone into occupation of the property. It is seen as a counterweight to the equitable rule which confers a beneficial interest in the land on the purchaser once contracts are exchanged for purchase. The maritime lien has been described as one of the most striking peculiarities of Admiralty law.

A maritime lien constitutes a security interest upon ships of a nature otherwise unknown to the common law or equity. It arises purely by operation of law and exists as a claim upon the property concerned, both secret and invisible, often given priority by statute over other forms of registered security interest. Although characteristics vary under the laws of different countries, it can be described as: a privileged claim, upon maritime property, for service to it or damage done by it, accruing from the moment that the claim attaches, Travelling with the property unconditionally, Enforced by an action in rem. manufacturer’s lien a statutory lien that secures payment for labour or materials expended in producing goods for another. Mechanic’s lien (also sometimes referred to as an artisan’s lien, chattel lien, construction lien, labourer’s lien, in various jurisdictions). Municipal lien (United States) a lien by a municipal corporation against a property owner for the owner’s proportional share of a public improvement that specifically and individually benefits the owner. Notice of Lien means any “notice of lien” or similar document intended to be filed or recorded with any court, registry, recorder’s office, central filing office or other Governmental Authority for the purpose of evidencing, creating, perfecting or preserving the priority of a Lien securing obligations owing to a Governmental Authority. Notice of Lien means a record filed in the office of the secretary of state pursuant to this article that identifies one or more claimants with respect to a designated statutory lien; identifies, to the extent required by the applicable substantive statute, the property asserted to be subject to the lien; identifies the owner or owners of the property; and otherwise complies with the requirements of this article.

Notice of Lien means a notice that: a political subdivision records in the office of the recorder of the county in which a property. A lien is a notice attached to your property telling the world that a creditor claims you owe it some money. A lien is typically a public record. It is generally filed with a county records office (for real property) or with a state agency, such as the secretary of state (for cars, boats, office equipment, and the like). Liens on real estate are a common way for creditors to collect what they are owed. Liens on personal property, such as motor vehicles, are less frequently used but can be an effective way for someone to collect. To sell or refinance property, you must have clear title. A lien on your house, mobile home, car, or other property makes your title unclear. To clear up the title, you must pay off the lien. Thus, creditors know that putting a lien on property is a cheap and almost guaranteed way of collecting what they are owed sooner or later. Generally, creditors have the right to have real property sold to pay off the lien, usually by way of a foreclosure sale. But except for mortgage liens and tax liens, they rarely do so. This is because in most cases your mortgage was placed on the property before the liens and so must be paid off before any liens are paid. If the creditor forecloses on the lien, it has to keep up the payments on the mortgage or lose the property.

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When you have a notice of interest or are a lien holder in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.