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Posted by JimL on July 8, 2006, 1:47 am
On 08 Jul 2006 01:05:31 GMT, calvin@remove.daxack.ca.invalid (Calvin
Henry-Cotnam) wrote:
>JimL (me@privacy.net) said...
>>
>> There may be exceptions to what I said in each of the many
>>jurisdictions, but that doesn't change the general rule which is true
>>in most jurisdictions in this country.
>>
>>"MECHANICS LIEN - A claim against real estate made by a contractor,
>>subcontractor, or supplier of building materials who contributed to
>>improvements built on the real estate. A mechanics lien, if enforced,
>>permits the party who filed the claim to force a sale of the real
>>estate to pay the claim. "
>
>Only if there is no other title on the property. If you hold a first
>mortgage, the lender of that COMES FIRST and they are the only one who
>can force the sale of the property. A mechanic's lien waits in line, so
>if the mortgage lender is happy with the situation and is not interested
>in foreclosing, the contractor can wait until the cows come home.
>
>If you ever pay off the mortgage before selling the property, the
>mortgage is discharged and any other interests move up the queue,
>possibly putting the the contractor in first position, who could then
>force a forclosure if you are not paying them.
>
>Should you sell the property, all interests must be discharged before
>the deed can be transferred, so the contractor would have to be paid
>or somehow made happy enough to discharge the lien before the sale
>could be completed. If you refuse to do what is necessary to discharge
>the lien, then the purchaser of the property will have grounds to start
>an action against you.
>
><OBdisclaimer>
>I am not a lawyer, but I sometimes play one on a local talk radio show! ;-)
></OBdisclaimer>
>
>After building my own home, I have had some personal experience in this
>area. The company I contracted with to install our HVAC automatically
>filed a lien on the property the day after I signed with them. The contract
>stipulated that NOTHING was payable until 3 months after completion, when
>it could be paid in full without interest, or billed through our natural
>gas bill over 12 years at almost that rate of interest (I wanted to use
>the first option!).
>
>I only found out about this when our construction mortgage was being
>processed. The initial draw was to pay off and discharge the vendor take
>back morgtage on the lot. Since the lien was there, the lien would move
>into first position. I was able to successfully argue with the contractor
>that they had no right to register the lien until the money became due.
>
>To get through the first draw on the construction mortgage, a postponement
>had to be issued on the lien (I was still arguing about whether the lien
>should even be there) so that the new lender could move into first
>position of interest on the property when the original mortgage on the
>lot was discharged. In the end, as I said, the lien was discharged at the
>contractor's expense AND they reimbursed me for my lawyer's fees for
>handling the postponement.
>
>--
>Calvin Henry-Cotnam
>"I really think Canada should get over to Iraq as quickly as possible"
> - Paul Martin - April 30, 2003
>-------------------------------------------------------------------------
>NOTE: if replying by email, remove "remove." and ".invalid"
Not so in most states.
For instance, In Texas, a Mechanics Lien for labor and materials can
easily be taken to court and the property foreclosed, even though
there is a valid prior recorded lien.
You foreclose on the property by going to court with your M&M lien
and the property is ordered sold by the court. The prior lien is not
affected by the sale. That means that the buyer at the M&M
foreclosure sale takes the property encumbered by the prior lien. In
actuality, the prior lien holder becomes involved early on because
they want to protect their rights.
In Texas, the prior lien is a Deed of Trust lien which means that the
holder of the note can foreclose without court intervention by selling
the property between the hours of 10am and 4 pm on the courthouse
steps. The M&M proceeding are almost always a triggering mechanism so
the original lender can foreclose.
My point is that the M&M lien is VERY serious business and if you are
not careful, you can lose your home to a foreclosure sale.
Here is some actual Texas code:
----
" § 53.123. PRIORITY OF MECHANIC'S LIEN OVER OTHER
LIENS. (a) Except as provided by this section, a mechanic's lien
attaches to the house, building, improvements, or railroad property
in preference to any prior lien, encumbrance, or mortgage on the
land on which it is located, and the person enforcing the lien may
have the house, building, improvement, or any piece of the railroad
property sold separately.
(b) The mechanic's lien does not affect any lien,
encumbrance, or mortgage on the land or improvement at the time of
the inception of the mechanic's lien, and the holder of the lien,
encumbrance, or mortgage need not be made a party to a suit to
foreclose the mechanic's lien."
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