Mechanic's Lien: The right of a craftsman,
laborer, supplier, architect or other person who has worked upon improvements
or delivered materials to a particular parcel of real estate (either as an
employee of the owner or as a sub-contractor to a general contractor) to place
a lien on that real property for the value of the services and/or materials if
not paid. Numerous other technical laws surround mechanic's liens, including
requirements of prompt written notice to the owner of the property (even before
the general contractor has been tardy in making payment), limits on the amount
collectable in some states, and various time limitations to enforce the lien.
Ultimate, last-resort enforcement of the mechanic's lien is
accomplished by filing a lawsuit to foreclose the lien and have the property
sold in order to be paid. Property owners should make sure that their
general contractors pay their employees or subcontractors to avoid a mechanic's
lien, since the owner could be forced to pay the debts of a general contractor
even though the owner has already paid the contractor. If the worker
or supplier does not sue to enforce the mechanic's lien, he/she may still sue
for the debt.
The term mechanic's lien is also referred to as
"materialman's lien" and "construction lien" and used when improvements,
repairs or maintenance is performed on real property.
Creditors, debt collectors and ordinary citizens can
petition courts to grant a judgment and and then place a lien on a debtor's
"Real Property" . Called a "Judgment Lien", the lien places an encumbrance on
the property so that, if the property is sold and funds are left over after the
primary lienholder (mortgage or loan company) is paid in full, any excess funds
are used to pay down or pay off the lien.
Note: The term "Real Property" is legally
distinguished from "Personal Property". Land is called real property. Personal
property is also called chattels (defined as any property - consumable or
nonconsumable, tangible or intangible) and is property other than the land
itself.
If you receive a "notice of a lien", ALWAYS
respond! If the lien surprises you, immediately check with the court
that issued the lien and see if a mistake was made. Request copies of all court
documents and look for any discrepancies and, if any exist, consider filing a
petition to rehear the case. You might just get the case overturned.
Remember: DO NOT fail to respond!
Liens on a house, real property liens, judgment liens
and state or federal tax liens all mean the same basic thing as described
above. However, it's important to note that tax liens take priority
over all other liens placed on a property. So, if your property already has a
lien from a credit card company and then a tax lien is placed against the
property, the tax lien gets paid first after any mortgages are satisfied.