Creditors Rights and Remedies Flashcards
Lien
A lien is an encumbrance on claim against property to satisfy a debt or protect a claim for the payment of a debt
Lien Mechanic, Artisan, Judgement Garnishment :Are statutory liens in which the real estate itself becomes security. for the debt. This type of lien provides a remedy for the contractors when a person who has contracted for labor, services, or material to be furnished for making the improvements on real property does not immediately pay for the improvements
Mechanic
In PA, a mechanics lien must be filed within ___ from the last of labor , services, materials were provided by the services
180 days
If property owner fails to satisfy the lien, a foreclosure action must be filed by contractor within ___
2 years of the filing lien
Lien Mechanic, Artisan, Judgemen, Garnishmentt: Are recognized at common law when a debtor fails to pay for the labor or materials furnished for the repair or improvements of personal property, a creditor can recover payment
Artisan Lien
In PA, a artisans lien must be filed within ___ from the last of labor , services, materials were provided by the services
artisans lien is possessory. The lien remains in existence as long as the shareholder retains possession
Lien Mechanic, Artisan, Judgement: What legal process allows a creditor to claim a debtor’s property before and after a court ruling?
Before a court judgment: Writ of attachment
After a court judgment: Lien obtained by a creditor to secure payment.
Example of a Lien mechanic, artisan, judgement, Garnishment: In the case of Clean Vehicle Solutions America, LLC v. Carrollton Exempted Village School
District Board of Education, 2015 WL 5459852 (S.D.N.Y. 2015), Carrollton Exempted Village School
District (in Ohio) hired Clean Vehicle Solutions America, LLC (CVSA, based in New York) to
convert ten school buses from diesel to compressed natural gas. The contract price was $660,000. The
district paid a $400,000 deposit and agreed to pay installments of $26,000 to CVSA after the delivery
of each converted bus. After the first two buses were delivered, the district refused to continue the
contract, claiming that the conversion made the two buses unsafe to drive.
Both parties filed breach of contract lawsuits. CVSA also asserted a ____ lien over two other
buses that it still had in its possession because it had started converting them to natural gas and spent
$65,000 doing so. Regardless of the outcome in the parties’ lawsuit, CVSA has a ____ lien that
gives it a priority claim to those two buses so long as they remain in its possession. The buses will act
as security for the district’s payment of at least the amount CVSA has spent converting them to natural
gas
In the case of Clean Vehicle Solutions America, LLC v. Carrollton Exempted Village School
District Board of Education, 2015 WL 5459852 (S.D.N.Y. 2015), Carrollton Exempted Village School
District (in Ohio) hired Clean Vehicle Solutions America, LLC (CVSA, based in New York) to
convert ten school buses from diesel to compressed natural gas. The contract price was $660,000. The
district paid a $400,000 deposit and agreed to pay installments of $26,000 to CVSA after the delivery
of each converted bus. After the first two buses were delivered, the district refused to continue the
contract, claiming that the conversion made the two buses unsafe to drive.
Both parties filed breach of contract lawsuits. CVSA also asserted an artisan’s lien over two other
buses that it still had in its possession because it had started converting them to natural gas and spent
$65,000 doing so. Regardless of the outcome in the parties’ lawsuit, CVSA has an artisan’s lien that
gives it a priority claim to those two buses so long as they remain in its possession. The buses will act
as security for the district’s payment of at least the amount CVSA has spent converting them to natural
gas
In PA Judgement Liens are typically valid up to __
5 years
Steps for judgement Lien
Typically the first step of the judgment creditor is to file the Judgment Lien Certificate with the state
Secretary of State. Then, nonexempt property must be identified by the judgment creditor.
The next step once nonexempt property is identified is the creditor can request a writ of execution
from the court. A writ of execution is an order that directs the sheriff to seize (levy) and sell any of the
debtor’s nonexempt real and personal property. The writ applies only to property that is within the
court’s geographic jurisdiction (usually the county in which the courthouse is located).
Once the property is levied, the property is sold by the sheriff at a public auction.
Example: Vince Beere owes Chris Veltman $40,000. The debt is the subject of a lawsuit, and the court
awards Veltman a judgment of $40,000 against Beere. Beere’s homestead is valued at $50,000, and the
homestead exemption in the state is $25,000. There are no outstanding mortgages or other liens on his
homestead. To satisfy the judgment debt, Beere’s family home is sold at public auction for $45,000.
The proceeds of the sale are distributed as follows
- Beere is given $25,000 as his homestead exemption.
- Veltman is paid $20,000 toward the judgment debt, leaving a $20,000 deficiency judgment (that
is, “leftover debt”). The deficiency judgment can be satisfied from any other nonexempt property
(personal or real) that Beere may own, if permitted by state law
Lien Mechianic, Artisan, Judgement, Garnishment : Permits a creditor to collect debt by seizing a property of debtor (such as wages and funds in banks) that are held by third party
Garnishment
Wage Garnishment Limitations:
Under federal law, garnishment cannot exceed more than ___ percent of an individual’s net wages or
the amount earned per workweek that is more than 30 times the federal minimum wage, whichever is
less. Social Security benefits, worker’s compensation benefits, unemployment benefits, disability benefits,
and veteran’s benefits are typically exempt.
25%
Case in Point – Tinsley v. Sun Trust Bank, 2016 WL 687545 (Md. App. 2016)
When Edward G. Tinsley divorced Michelle Townsend, they entered into a marital settlement contract.
They agreed to sell the marital home and split the proceeds evenly. But Tinsley refused to cooperate
with the sale. A court therefore appointed a trustee to sell the house for them and ordered the sheriff to
evict Tinsley. Tinsley then conveyed the house to a trust established in his name. Even after the sheriff
evicted Tinsley from the house and changed the locks, Tinsley managed to move back in and change
the locks again.
Tinsley was arrested for trespassing and charged with contempt of court (for disobeying court orders).
In the meantime, Tinsley secretly sold the home for $150,000 and deposited the proceeds into a bank
account held in the name of Edward G. Tinsley Living Trust at Sun Trust Bank.
Case in Point – Tinsley v. Sun Trust Bank, 2016 WL 687545 (Md. App. 2016)
When Edward G. Tinsley divorced Michelle Townsend, they entered into a marital settlement contract.
They agreed to sell the marital home and split the proceeds evenly. But Tinsley refused to cooperate
with the sale. A court therefore appointed a trustee to sell the house for them and ordered the sheriff to
evict Tinsley. Tinsley then conveyed the house to a trust established in his name. Even after the sheriff
evicted Tinsley from the house and changed the locks, Tinsley managed to move back in and change
the locks again.
Tinsley was arrested for trespassing and charged with contempt of court (for disobeying court orders).
In the meantime, Tinsley secretly sold the home for $150,000 and deposited the proceeds into a bank
account held in the name of Edward G. Tinsley Living Trust at Sun Trust Bank. After learning of the
sale, the court-appointed trustee obtained a writ of garnishment on all of Tinsley’s and his trust’s bank
accounts at Sun Trust Bank. Despite numerous objections from Tinsley (and a trial and appeal), Sun
Trust eventually complied with the garnishment order and sent all the funds to the trustee.
suretysyship or guaranty arrangement: A promise made by third person to be responsible for debtor’s obligations. A creditor can demand payment from the moment the debt is due and the creditor does not need to exhaust all legal remedies
suretsyship
