A Guide To Placing A Lien On A Property

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A property lien can occur when someone owes you money and doesn't pay. Liens can take time, and different states have different laws regarding liens, and you should seek legal advice if you need to get one, but they can be effective tools if someone hasn't completed a payment they owe you. Members of our Legal Protection Plans - both for Individuals & Families and for Small Businesses - can get legal advice any time from experienced, dedicated attorneys in our network of member law firms.

A lien is a claim against an asset used as collateral against a debt. Placing a lien against the property for debts owed is one tool commonly used to collect money that hasn't been paid. You will need a court judgment to secure a lien against the property, and some states let creditors get a lien once that judgment is entered, and other states require the creditor to record the judgment with the county before a lien is granted. Each state also sets its own price to create a lien.

A lien creates pressure on a debtor to pay the creditor, as a creditor may be able to take possession of the asset if the debt is not satisfied. There are two types of liens: judgment liens and mechanic's liens.

A Mechanic's lien is the most common type of lien, and it is used in the construction industry by contractors and subcontractors when they don't receive payments owed. A mechanic's lien is filed in the county where the work took place and it includes a bill for the work done. The lien must then be responded to, and then a court date will be set. A lien will be confirmed if the court sides with the contractor. If the debt isn't satisfied within a certain time frame, the contractor would then be able to possess the property.

Judgment Liens work similarly in that a claimant would be able to possess the property, but it is filed for reasons other than failing to pay for work that was performed.

The general process for filing a lien begins by giving the debtor notice - called Preliminary Notice - that you intend to place a lien on their property. The process of preliminary notice varies from state to state, so you may need a form from your county. Your attorney through our Legal Protection Plans will be able to give you advice for your specific situation. Depending on your state, you may have a deadline to file a lien; some states limit this to 60 days, while others give you up to a year.

You will need to complete a title search to ensure that the debtor is the owner of the property in question and to ascertain if there are other liens on the property; if there are other liens, you will essentially "get in line" behind other creditors in order to collect.

The forms for liens are typically short but include details regarding who is owed money, who owes the money, the property in question, and the work done. Some state require affidavits - also known as sworn statements - and your attorney will be able to give you details as to the laws in your state regarding these details.

The next step is notifying all parties of the lien, including any other lien holders, if there are any. Once all the parties are notified, a court date is set, and, if the court finds in your favor, you can enforce the lien. If the debt isn't paid within the time frame set by the court, the court can force the property to be sold to satisfy debts.

If you need help getting paid for work you've done or for other reasons and need lien, your provider attorney through our Legal Protection Plans for Individuals & Families and for Small Businesses will be able give you advice and assistance for one low, monthly subscription. Learn more about all the benefits of membership to our Legal Protection Plans for Individuals & Families, Legal Protection Plans for Small Businesses, or sign up your family or small business today!