JimL ) said...
There may be exceptions to what I said in each of the many
jurisdictions, but that doesn't change the general rule which is true
in most jurisdictions in this country.
"MECHANICS LIEN - A claim against real estate made by a contractor,
subcontractor, or supplier of building materials who contributed to
improvements built on the real estate. A mechanics lien, if enforced,
permits the party who filed the claim to force a sale of the real
estate to pay the claim. "
Only if there is no other title on the property. If you hold a first
mortgage, the lender of that COMES FIRST and they are the only one who
can force the sale of the property. A mechanic's lien waits in line, so
if the mortgage lender is happy with the situation and is not interested
in foreclosing, the contractor can wait until the cows come home.
If you ever pay off the mortgage before selling the property, the
mortgage is discharged and any other interests move up the queue,
possibly putting the the contractor in first position, who could then
force a forclosure if you are not paying them.
Should you sell the property, all interests must be discharged before
the deed can be transferred, so the contractor would have to be paid
or somehow made happy enough to discharge the lien before the sale
could be completed. If you refuse to do what is necessary to discharge
the lien, then the purchaser of the property will have grounds to start
an action against you.
OBdisclaimer
I am not a lawyer, but I sometimes play one on a local talk radio show! ;-)
/OBdisclaimer
After building my own home, I have had some personal experience in this
area. The company I contracted with to install our HVAC automatically
filed a lien on the property the day after I signed with them. The contract
stipulated that NOTHING was payable until 3 months after completion, when
it could be paid in full without interest, or billed through our natural
gas bill over 12 years at almost that rate of interest (I wanted to use
the first option!).
I only found out about this when our construction mortgage was being
processed. The initial draw was to pay off and discharge the vendor take
back morgtage on the lot. Since the lien was there, the lien would move
into first position. I was able to successfully argue with the contractor
that they had no right to register the lien until the money became due.
To get through the first draw on the construction mortgage, a postponement
had to be issued on the lien (I was still arguing about whether the lien
should even be there) so that the new lender could move into first
position of interest on the property when the original mortgage on the
lot was discharged. In the end, as I said, the lien was discharged at the
contractor's expense AND they reimbursed me for my lawyer's fees for
handling the postponement.
--
Calvin Henry-Cotnam
"I really think Canada should get over to Iraq as quickly as possible"
- Paul Martin - April 30, 2003
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