Mechanic’s Lien, debt collector liens, mortgage and property liens, federal and state tax liens and judgment liens.

Lien: A legal right or interest that a creditor or other person(s) have in another’s property and lasting until the debt that the lien secures, is paid.

Mechanic’s Lien: The right of a craftsman, laborer, supplier, architect or other person who has worked upon improvements or delivered materials to a particular parcel of real estate (either as an employee of the owner or as a sub-contractor to a general contractor) to place a lien on that real property for the value of the services and/or materials if not paid. Numerous other technical laws surround mechanic’s liens, including requirements of prompt written notice to the owner of the property (even before the general contractor has been tardy in making payment), limits on the amount collectable in some states, and various time limitations to enforce the lien.

Ultimate, last-resort enforcement of the mechanic’s lien is accomplished by filing a lawsuit to foreclose the lien and have the property sold in order to be paid. Property owners should make sure that their general contractors pay their employees or subcontractors to avoid a mechanic’s lien, since the owner could be forced to pay the debts of a general contractor even though the owner has already paid the contractor. If the worker or supplier does not sue to enforce the mechanic’s lien, he/she may still sue for the debt.

The term mechanic’s lien is also referred to as “materialman’s lien” and “construction lien” and used when improvements, repairs or maintenance is performed on real property.

Creditors, debt collectors and ordinary citizens can petition courts to grant a judgment and and then place a lien on a debtor’s “Real Property” . Called a “Judgment Lien”, the lien places an encumbrance on the property so that, if the property is sold and funds are left over after the primary lienholder (mortgage or loan company) is paid in full, any excess funds are used to pay down or pay off the lien.

Note: The term “Real Property” is legally distinguished from “Personal Property”. Land is called real property. Personal property is also called chattels (defined as any property – consumable or nonconsumable, tangible or intangible) and is property other than the land itself.

If you receive a “notice of a lien”, ALWAYS respond! If the lien surprises you, immediately check with the court that issued the lien and see if a mistake was made. Request copies of all court documents and look for any discrepancies and, if any exist, consider filing a petition to rehear the case. You might just get the case overturned. Remember: DO NOT fail to respond!

Liens on a house, real property liens, judgment liens and state or federal tax liens all mean the same basic thing as described above. However, it’s important to note that tax liens take priority over all other liens placed on a property. So, if your property already has a lien from a credit card company and then a tax lien is placed against the property, the tax lien gets paid first after any mortgages are satisfied.