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Can a mechanics lien be recorded after 6 month of work completion and then enforced when owner files for Bankruptcy Chapter 7

FloridaMechanics Lien

We financed a water purification system in 05/16/2016. The work was completed on that same day. We had some financial issues and had to file for a Chapter 7. We obtained counsel in 12/2016 and this company that financed our water purification system was included in the filing. Our discharge was 10/04/2019. We placed our home for sale and closing was going to be later today, 04/29/2019. The title company notified us on Friday 04/26/2019, of a 2nd mortgage listed on the title settlement statement from a 3rd party biller. We were shocked and had no idea about any such 2nd mortgage. We found out yesterday, 04/28/2019, through a Osceola Co. Florida e record search, the company that had financed the water purification system filed a mechanics lien/UCC Financing Statement with Osceola Co. Florida on 01/05/2017. This was 6 months after the completion of the system install and just after we obtained counsel for our bankruptcy. They were included in our filing and discharge. We have and had not received any notice of this UCC action from Aqua Finance or their 3rd party biller Quantum 3 Group, LLC. Can they legally do this and are we obligated to pay this to close on our home sale?

1 reply

Apr 30, 2019

That's an interesting situation, and I'm sorry to hear about the financial trouble. First, it would be important to distinguish whether the filed lien was a mechanics lien filing made under the Florida code, or whether the lien was a UCC filing. While it may seem they should be similar, understanding which type of lien has been filed on the property can really affect how the lien can be fought an removed. Further, it will also affect the rules and restrictions relating to the lien filing. If the lien was filed as a mechanics lien under the Florida Code, then the deadline to file the lien would have been 90 days from the last date when labor or materials were furnished to the property. So, filing a Florida mechanics lien several (3+) months after work was performed would likely result in an untimely and unenforceable lien. While mechanics liens work notoriously well in the face of bankruptcy, if a lien deadline was missed, a lien claim would likely be doomed from the start. And, if a mechanics lien was improperly filed for one reason or another, the lien claim can likely be removed via legal action or by potentially bonding off the lien. Regarding UCC liens, if the debt was included in the bankruptcy and discharged, there's a strong chance that the debt is no longer recoverable after the fact. Though, there is precedent of UCC liens being reinstated and renewed following a bankruptcy. Admittedly, I'm not as familiar with UCC liens - when talking liens, we typically discuss mechanics liens as they relate to construction. So, for more insight, it'd likely be wise to consult a local bankruptcy attorney familiar with UCC filings and real estate laws. They'll be able to further evaluate the circumstances and relevant documentation and advise on how best to proceed. Further, services like Avvo and JustAnswer make it easy to ask questions on a variety of legal topics and receive answers from lawyers specializing in both bankruptcy and UCC matters, as well as a wide variety of other specialties.

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