Small Business

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Intellectual Property

 July 27, 2022

How to Place a Lien on a Property

A white picket fence along a piece of real estate property.

So you want to know how to place a lien on a property? Liens come about because someone owes you money and refuses to pay or only partially pays.

Make no mistake, they take time—they don’t happen overnight, and different jurisdictions have different laws governing liens. This is why getting professional legal advice is recommended.

With that in mind, LegalShield members can receive legal advice on an unlimited number of personal legal matters for a monthly subscription fee. With a dedicated law firm on hand to offer legal guidance when it’s most needed, our members can make informed decisions quickly and easily without the hassle of appointments or high hourly legal rates.

But first…what’s a lien?

What is a lien?

A lien is a claim/legal right against assets that are typically used as collateral to satisfy a debt. If the person owing you money owns real property, you can take action by placing a lien against that property. Some states allow liens once a judgment is secured while others force the judgment creditor to record the judgment with the county before creating the lien.

The cost to file a lien varies from state to state, from $5 to $345. If you hire a lawyer privately, the process can run into the thousands, which is why a LegalShield membership makes so much more sense.

What is the purpose of a lien?

Essentially, the purpose of a lien is to pressure the person who owes you money to pay you. Because if they don’t satisfy their debt, the person holding the lien might be able to take possession of their property.

Types of liens

Mechanic’s lien – The most common lien, a mechanic’s lien, is also known as a construction lien and is usually filed by contractors or subcontractors (roofers, carpenters, etc.) who didn’t get paid. Typically a mechanic’s lien is used when someone is hired to work on a property, does the work, and they aren’t paid in full.

They file for a mechanic’s lien in the county of the property and include their bill for the work they did. The lien is then responded to, and a date to go to court is set. If the court agrees with the contractor, the lien is confirmed, and they would have the right to possess the property if the debt isn’t paid by a certain date.

Judgment lien – This type of lien works in the same way as a mechanic’s lien in that it also entitles a creditor to possess someone else’s property. The difference is, this type of lien is filed when someone hasn’t been paid for reasons other than work performed.

How to place a lien on a property

If the creditor refuses to pay you after several requests, you should start the lien process. As mentioned above, the procedure varies from state to state, but the general steps are:

Preliminary notice – You may be required to give the debtor notice that you’ll place a lien on their property. It may be a form and there may be time restraints – it varies depending on where you live. Make sure you’re up to date on your state’s requirements by consulting with a LegalShield provider law firm.

Review deadlines – Make sure you comply with the time deadlines for placing liens. Some states only give you 60 days to file after the work was completed, while others give you up to a year.

Research the property – Do a title search to make sure that your debtor is the owner of the property. If there are other liens already on the property, you’ll be in line behind them to collect.

Draft and file the lien – Liens are usually short and include details about the creditor, debtor, and property. Some states require you to file affidavits (sworn statements) too, so be sure to consult with a LegalShield provider law firm. Most states have filing fees of between $25 and $50.

Notify parties – Let all the parties know once you’ve filed the lien. This includes other lien holders.

Enforce – If the debt isn’t paid, you can enforce the lien by suing the property owner in court and forcing the property to be sold to collect the outstanding debt. Check with a LegalShield provider law firm to see what the statute of limitations are in your state.

LegalShield can help

Figuring out how to place a lien on someone’s property isn’t something non-lawyers know how to do, so hiring a real estate lawyer is recommended. Become a LegalShield member and call your LegalShield provider law firm for consultation and legal advice on personal legal matters, including pre-existing legal matters. A lawyer will return your call within four business hours. We’d love to hear from you!

Pre-Paid Legal Services, Inc. (“PPLSI”) provides access to legal services offered by a network of provider law firms to PPLSI members through membership-based participation. Neither PPLSI nor its officers, employees or sales associates directly or indirectly provide legal services, representation, or advice. The information available in this blog is meant to provide general information and is not intended to provide legal advice, render an opinion, or provide any specific recommendations. The blog post is not a substitute for competent legal counsel from a licensed professional lawyer in the state or province where your legal issues exist, and the reader is strongly encouraged to seek legal counsel for your specific legal matter. Information contained in the blog may be provided by authors who could be a third-party paid contributor. All information by authors is accepted in good faith, however, PPLSI makes no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of such information.

 

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