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What to Include in a Lien on a House?

What to Include in a Lien on a House
Perhaps you are having troubles in collecting payment from a debtor and are thinking of putting a lien on a house. But the question that you probably have in mind is what to include in a lien on a house.

Most of the time, a lien against a house is actually a good thing. The lien is basically a claim to a home property and the main purpose is to satisfy a debt. The debt includes home equity loans and mortgages, both of which will give the lender a lien into a property in case the debtor will be on default. Other types of lien will require that the debtor will settle the debt but without any benefit on the part of the creditor.

The lien can be applied in various ways. Aside from using it as a means to collect payment from someone who is indebted to you, you can also use the lien as a way of claiming payment of a service rendered.

Even after using the services of a debt collection agency or an attorney, you will be able to place a lien on the real estate property of your debtor. Of course, getting a lien is a time consuming process and the law when it comes to this will vary from one state to another. However, a lien is a great means of collateral and is an effective way to motivate your debtor to pay everything he or she has owed you.  So here’s what to include in a lien on a house.

Mechanic’s Lien

One of the most common types of lien is called the Mechanic’s Lien. It is also being referred to as the laborer’s liens, construction liens or artisan’s line. Subcontractors, contractors and construction firms are filing this type of lien. Anyone who works for the purpose of improving a home can also file this type of lien. In some cases, the plumbers, carpenters and roofers will also make use of this type of lien.

On this type of lien, the contractor will take a job in order to improve or build a home property and will create a contract signed by the property owner. The contractor will then render the work. However, the owner of the property ended up paying the contractor with only a fraction of the agreed price as stated on the contract or that they will not make any payment at all. In this case, the contractor can then file for a Mechanic’s Lien.

The contractor must file the lien on the place or the state where the work has taken place. In this case, include in the lien the bill that will serve as a proof of the work completion.

After this, the lien will have to be answered and then a court date will be scheduled. If the court will affirm the lien, the contractor will now have a lien on the property that will immediately give the contractor the right to take ownership of the property in the event that the debt has not been paid at a certain period of time set.

Judgment Lien

Just like with the mechanics lien, a judgment lien will give a creditor the right to acquire the property of the debtor in the event of unpaid debt. However, unlike the mechanic’s lien, the judgment lien is not filed for a certain work that has been done. Instead, this lien is filed if a creditor has not paid other circumstances that have not been covered under the conditions of the mechanics lien.

For instance, a man will enter into a contract for some brochures to be printed by a printing press. The printing company has provided all the brochures but the man was unable to pay. In this case, the printing company can file for a lien of the cost of the debt on the state or country where it happened.

And just like the mechanics lien, it is the court that will rule on the legitimacy. If in case the lien will be granted, this will give the creditor or the printing company the right to take ownership of the property that will be valued at the total amount of the lien.

You have to remember that the laws, rules and procedures that govern around the Judgment and Mechanic’s liens will vary from one state to another and from one locality to another. Consider checking with an attorney to get a better understanding of a mechanic’s lien.

It is also a good idea to try collecting the debt on your own or by means of a debt collector. However, if worse comes to worst, then filing for the judgment lien might work best.

Property Tax Liens

Usually, the property tax liens will take priority on all the other mortgages or liens of a certain property even if the lien has been placed for the property at a later time. If you are not paying your taxes in order to protect the mortgage of your property, then the lender will end up paying the taxes and what they paid for will be added on your mortgage debt.

If these will remain unpaid, the government will require that your property will be sold in order to pay for these taxes. It is important that the government will follow on whatever the procedures are and what to include in the lien in the event of property tax liens. The property owner will always have the chance to pay the taxes and then get the property back even after it has been sold.

IRS Liens

If you ended up not being able to pay the taxes right after you receive notices from IRS, then the IRS could place a lien on all of your properties especially if you are self-employed, unemployed or sporadically employed and that the IRS often have problems in attaching your salary. A lot of creditors that have property liens will choose to wait until such time that the house has been sold and refinanced in order to get paid. However, the IRS will not have to wait and will force the sale if the amount that you have owed them is substantial. Just like with the other types of liens, for the IRS lien, what you need to mention in the lien will vary from state to state.

Child Support Liens

If for instance you have owed a lot of money on child support or alimony, then the recipient will also have an option to put a lien on your home property. The lien must stay until such time that you will be able to pay the support that you have owed or until such time that you will be able to sell or refinance your real estate property, or perhaps until the recipient will force a lien on sale, whatever will happen first.

Depending on the type of lien that you plan to file, it is important to understand what should go into it. If you miss out any of the requirements, then you may not be able to acquire the property that has been put on lien if the debtor will not be able to pay you.