People commonly inquire about how a mechanics lien actually works. They have heard about mechanics lien claims and know a little bit of information about it, but they wonder just how it technically performs. How, for instance, does it actually stop a property from being sold?
This article from AGBeat is pretty interesting because it discusses a lien from the perspective of title companies. The article refers to these liens as “non-instituational liens” (i.e. liens that are not mortgages). The article refers to a number of liens, such as HOA or tax liens, but these are the same category as mechanics lien claims.
As you can see, when a property is ordinarily sold, the proceeds from the sale are reduced by lien amounts. Things can be a little more complicated with short sales and other types of sales, but the concept is the same. The mechanics lien must be addressed before the property is sold. Period. And that’s one way that a mechanics lien works to get your company paid.
Title reports and short sales — when liens aren’t mortgages (via AGBeat)
Non-Institutional Liens One of the issues that often comes up in the short sale is the issue of non-institutional liens (i.e., liens that are not mortgages). These are liens filed against the property or against the borrower, and they can get in the way of the short sale closing (or any real estate…