Lesson 14: Involuntary Liens

Question 1

mechanic’s lien

Answer 1

The first type of involuntary lien we’re going to discuss is the mechanic’s lien.

A mechanic’s lien (also known as a construction lien) is an involuntary, specific lien that can encumber property that has been improved by labor, professional services, or materials provided by construction workers, contractors, or suppliers.

(Remember, a specific lien attaches only to a particular piece of property. A general lien attaches to all of the debtor’s real property.)

Question 2

unjust enrichment

Answer 2

Mechanic’s liens prevent a property owner from benefiting from work done on his property that has not been paid for. This is sometimes referred to as unjust enrichment.

If a contractor or other construction worker isn’t paid for the work she’s done, then she has a right to place a lien against the improved property for the reasonable value of that work.

Question 3

preliminary notice

Answer 3

Note that direct contractors (contractors who work directly for the property owner) aren’t required to provide the owner with any sort of formal notice of their status as a potential lien claimant.

But subcontractors and materials suppliers are required to provide the property owner with a preliminary notice of the right to claim a lien.

Question 4

attachment lien

Answer 4

An attachment lien is a lien against the real and personal property of the defendant.

The lien is used to keep the defendant from selling or giving away his property before it can be used to satisfy the claim the lawsuit is based on.

The lien may attach to the defendant’s property as soon as the lawsuit is filed.

Question 5

writ of attachment

Answer 5

An attachment lien is created by means of a writ of attachment issued by the court. Before issuing the writ, the court will hold a formal hearing to make sure that:
the claim is one for which an attachment lien may be used,
the property to be attached is not exempt from attachment, and
the plaintiff’s underlying claim against the defendant is probably valid.

Question 6

judgment lien

Answer 6

A judgment lien is an involuntary, general lien that is placed against property to secure payment of a money judgment awarded by a court.

While an attachment lien is used to secure property before a trial, a judgment lien is used to secure property after a trial.

Question 7

abstract of judgment

Answer 7

A judgment lien is created when a judgment creditor (the winning plaintiff) records a document called an abstract of judgment in a county where the judgment debtor (the defendant) owns property.

Question 8

certificate of satisfaction

Answer 8

The judgment debtor can get the property released from the lien by paying the amount owed and then obtaining a certificate of satisfaction from the judgment creditor.

Question 9

change in ownership statement

Answer 9

Anyone who acquires an interest in real property must file a change in ownership statement with the county recorder or assessor at the time the transfer is recorded, or within 45 days of the change in ownership if the transfer is not recorded.

This is to make sure that the county records remain updated for property tax assessment purposes.

Failure to file a change in ownership statement may result in fines.

Question 10

homestead law

Answer 10

Specifically, the homestead law gives homeowners limited protection against foreclosure by judgment creditors.

The homestead law protects the equity in a debtor’s principal residence, or homestead, up to a specified dollar amount.

(Remember, equity is the fair market value less the amount of all debts against the property).