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47 Cards in this Set
- Front
- Back
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When is a person entitled to a Personal Property lien? Why?
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When that person provides storage or repair services; to secure payment.
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What happens if lienholder does not possess the personal property?
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Liens are possessory in nature; if the lienholder voluntarily relinquishes the property, the LIEN IS LOST
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Personal property lien vs. pre-existing perfected Article 9 security interest
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Personal property lien wins; a mechanic can get priority over the bank that financed the purchase of the car
EXCEPTIONS - Landlord liens and innkeeper liens are still subordinate to a prior Art.9 SI |
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Elements of a General Service and Storage Lien (GSSL)
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1. The work must be performed pursuant to contract with the owner or legal possessor
2. In ordinary course of lienor's business 3. Lien must be asserted for the reasonable value of its services EVEN IF the actual K price was higher |
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Who may claim a GSSL? Who may claim a MVL?
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Anyone who tows, alters, repairs, stores, services, treats, or improves personal property that is NOT a motor vehicle
Anyone who tows, repairs, services, or stores motor vehicles (*not guys who just do a little car work on the side) |
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Why are GSSLs of little value unless true owner brought the goods in?
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1. Thieves cannot subject goods to a GSSL.
2. Someone with lawful possession can be subjected to a GSSL lien, but max amount of the lien is $100 |
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Elements of a Motor Vehicles Lien
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1. The work must be performed pursuant to contract with the owner or legal possessor
2. In ordinary course of lienor's business 3. Lien must be asserted for the reasonable value of its services EVEN IF the actual K price was higher |
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What's a "motor vehicle" for the purpose of MVLs? What doesn't count as doing work in the ordinary course of business? What's the big difference between an MVL and GSSL?
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One that is "commonly used on highway" therefore a motor boat not a motor vehicle under this MVL statute
Doing a little work on the side does NOT count as doing business in the ordinary course MVLs are not limited to $100 when applied to mere lawful possessors rather than true owners |
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Rights of Lienholder? Rights of Debtor?
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LH can conduct a public or private sale if no payment received within 30 days UNLESS its towing or storage charge on a motor vehicle. Then LH can sell in 10 days.
D will receive notice of lien and has the right to demand a judicial hearing to determine the lien's validity. But D must request a hearing within 10 days of receiving notice. Notice includes time, place, mature, and goes to the true owner, anyone the LH dealt with and any other person claiming interest in the property. Private sales need to be commercially reasonable. Public sales require notice in the paper and courthouse. |
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What are the rights of purchasers at public sales? Private sales?
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At both public and private sales, protected purchasers receive title to property FREE of any conflicting interest. PPs are purchasers for value at:
1. Properly conducted sales OR 2. Defective sales (other than the lienor) who had no notice of the defect |
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Who can claim a real property lien? Who cannot?
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Anyone who furnishes labor, materials, rental equipment, or consultation services to improve real property
A carpet installer IF the carpet is removable; a real estate appraiser who prepares the appraisal that enables owner to get an attractive mortgage |
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How is RPL it perfected?
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To be enforceable, RPL must be perfected
If notice to a lien agent is NOT required, a RPL lien may be perfected by: 1. Serving a copy of the COL on the record owner of the property (personal delivery or mail) 2. Filing a COL with the COC within 120 days after the last bona fide furnishing of goods/services AND 3. An action to enforce must commence within 180 days of completion If notice to a lien agent IS required, then a RPL lien may be perfected by: 1. Serving a copy of the COL on the record owner of the property (personal delivery or mail) 2. Filing COL with the COC (under the rules outlined above) prior to recordation of a conveyance of the property to a BFP for value 3. Providing the LA with notice within 15 days of the FIRST furnishing of labor/materials 4. Providing LA with notice before BFP for value records |
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How does a contractor find out who lien agent is?
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1. Owner: posts name/contact info on property and must respond to a written demand with info within 7 days
2. Contractor: must notify lower tier sub within 3 days of contracting or will face liability for actual damages |
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Who can subject a property to a lien?
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1) Owners
2) Tenants 3) Prospective buyers with property under K |
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Can owner avoid liens by having a tenant agreement that bans them from getting repairs/improvements without approval?
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No; a ban from repair would only be enforceable if the contractor KNEW about the tenant agreement
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RPL vs. Mortgages and Other Real Property Interests
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Once a lien commences, as long as it is perfected within the 120 day statutory period, it will have priority over SUBSEQUENTLY COMMENCED liens and SUBSEQUENTLY RECORDED mortgages/deeds of trust
MEE of a later perfected mortgage interest DO NOT need to know when the LH's work commenced in order for the LH to have priority. |
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When is a lien agent NOT required?
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When the improvements cost less than $30K OR the improvements are on an existing single-family dwelling used as LO's residence
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Lien arising from Sub's being subrogated to GC
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1st tier subs are subrogated to GC the lien that a GC could bring against LO, so 1st can can assert a lien EVEN IF LO properly retains fund following notice from 1st.
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SoL for RP liens
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VERY SHORT window for action
To be enforceable, a lien must be perfected by filing a COL with the COC within 120 days of the last bonafide furnishing of good/services The action to enforce must commence within 180 days of the completion of work **A claimant cannot save himself from an expired SOL by performing superfluous work (touching-up paint doesn't extend time) |
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When does RP lien begin?
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The first day the contractor's work visibly commences on site
EXCEPTION: There's no visible commencement required for engineers & architects. The lien begins from the moment they start working on the project |
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Liens resulting from LO's improper payment upon notice
How are they perfected? |
Allows 1st and 2nd subs to get a lien own LO's property even though they haven't dealt with him
1st: if LO pays GC after proper notification, without insuring 1st was paid, 1st is given lien on property improved by sub's work 2nd is subrogated to the the rights of the 1st, however in order for 2nd to get a lien on LO's prop, it must be shown that BOTH the 1st and the GC have not been paid These liens are perfected by serving the LO AND the GC and following filing requisite filing rules. |
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1st, 2nd & 3rd tier subK'er Lien upon funds
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1st tier subs can get liens upon the funds owed to the GC by the LO
2nd tier subs gets a lien upon funds owed to 1st by GC. Additionally, 2nd tier subs are subrogated to the rights of 1st tier subs against the GC. Meaning, if the GC has not paid the 1st, the 2nd can claim a lien on the money landowner owes the GC. 3rd tier subs have liens on the funds owed to 2nd. 3rd tier subs are subrogated to the rights of the 2nd against the 1st |
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How does a sub perfect a lien upon funds?
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To perfect his lien on the funds owed the sub must:
1. Give notice to the person who is the obligor to the debt being attached 2. Must identify parties, describe property, the work done, and the amount of lien **BUT a sub’s claim of a lien will be defeated IF the obligor has ALREADY PAID his immediate obligee |
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Does a subK'er asserting lien against funds need to give notice to lien agent?
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NO
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What happens if party who owes ignores the notice?
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OWNERS:
• Becomes personally liable for the amounts owed to the sub AND • Sub can get a lien on the owner’s land OTHER PARTIES • Become personally liable for amounts owed |
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Most likely way to defeat sub's claim of a lien upon funds?
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Tell sub that the obligor of the funds the sub wants a lien on has already paid ALL money owed to party above the sub
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What happens if general contractor waives its right to lien on RP?
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1st has no greater rights than GC, so 1st tier sub that was subrogated to general K'er loses right to enforce GC's lien on the property.
**BUT the power of the GC to prejudice 1st subs terminates once the sub has taken action to file ***GC's waiver of RPL doesn't affect 1st right to get a lien upon funds |
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What defenses can a LO assert in a suit by a sub?
Can contractors encumber property held as TBE? |
Any defenses the GC would have had
Not if the contractor only dealt with one spouse who doesn't purport to be acting as the agent of the other spouse. The fact that the nonparty spouse was aware of the work being done doesn't alter the rule. |
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State Tax Lien vs. Preexisting Interest
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The government ALWAYS wins
**Even against recorded preexisting interest ***Even against the BFP of the property ****Even against other state claims |
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City tax liens vs. State tax liens
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City & state will share pro-rata (in proportion to amount owed to each)
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When must taxing authorities perfect a tax lien? How would a potential interest holder find out about a property's tax lien?
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NEVER; the taxing authority isn’t required to perfect a tax lien because the taxes due become a lien on the property AS SOON AS it is listed (NC = January)
Tax liens are in the chain of title for property |
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What type of judgment gives rise to a judgment lien?
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Only money judgments, NOT specific performance judgments OR declaratory judgments
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What does judgment lien attach to? How long do they last?
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Only REAL property, NOT bank accounts, personal property, cars, etc.
**AUTO attach to after acquired real property JLs lasts for 10 years, but can be renewed for successive 10 year periods with no limits; SOL runs from the day judgment is rendered NOT when lien is docketed **They’re known as the Patient Creditor’s Lien; Cs usually don’t collect immediately because D has no money; instead they wait for D to acquire value |
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What does the doctrine of instantaneous seisin do?
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Subordinates prior liens to a purchase money mortgage interest held by a seller or other financier of the property
Rationale – It is unfair to allow liens that follow the buyer to defeat the interest of someone who finances the sale of the property. It is only because of the credit extended that the property was available to be subjected to the other lien. **BUT a creditor can impliedly or expressly consent to a lien |
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What must be done to give rise to a judgment lien?
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The judgment must be docketed; obtaining an order DOES NOT give rise to the lien, entry on the docket does and entry on the docket comes after sheriff has levied on the property
JL only arises w/respect to the real property of D that's located in the county where the judgment is docketed. P can docket her judgment in any county in the state by filing a transcript with COC of the desired county. |
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How do you prioritize multiple judgment liens in after-acquired property?
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Multiple JLs would share the AAP pro rata rather then using the default of first in time
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Is an enacted reversion "after acquired property"?
What is lis pendens? |
No. Reversion always existed.
Lis pendens is the litigation pending docket; P can docket the order on lis pendens immediately after securing the order and the lien will relate back to the date of the lis pendens entry rather than the judgment docket entry **Lis pendens docketing is OPTIONAL and also available for attachment liens |
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What is attachment lien?
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Pre-judgment lien before P has established claim's validity (courts are very hesitant to grant ALs because of this)
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What must P show before an attachment lien will be granted?
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1. There's a risk D will be unavailable at time of judgment OR
2. D's assets will be unavailable because they will be fraudulently disposed of |
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What are factors in favor of ordering an attachment because D will be unavailable?
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Defendant is:
1. A nonresident 2. A foreign corporation 3. A domestic corporation with no offices in the state 4. A resident who has left the state indefinitely |
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What must P show to prove that D's assets are being fraudulently disposed of?
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P must show:
1. D has disposed of assets or is about to dispose of them AND 2. This was done w/the intent to defraud creditors As long as D’s transactions are in the ordinary course of business and not purely personal and unrelated to an important event (eg, wedding), it doesn’t count as fraudulent disposition |
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When does a COL have priority over a mortgage or DOT?
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ONLY when:
1. COL is filed before the M/DOT is recorded 2. LA receives notice within 15 days of the FIRST furnishing of labor/materials OR 3. LA receives notice before the M/DOT is recorded |
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How does a lien holder get maximum protection?
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By giving notice to LA within 15 days of the FIRST furnishing of labor/materials
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How is a RPL enforced after perfection?
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Property must be sold at a public sale in the same manner undertaken to execute a judgment
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How is a RPL discharged?
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By the COC after LO presents an instrument from the LH indicating the lien has been satisfied
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Contents of Claim of Lien
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- Name/addy of recorded LO
- Description of prop - General description of labor performed/material furnished - Dates work commenced and ended - Signature of claimant |
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Acceptable Methods of Notice of Lien Agent
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- Certified mail, RRR
- Signature confirmation of USPS - Physical delivery with delivery receipt - Fax with confirmation - Deposit with designated delivery service - Email with delivery receipt |
