Home>Levelset Community>Legal Help>How is it possible to close on property ithout funding the recorded STATEMENT OF CLAIM AND PRIVILEGE (Lien). The closing Attorney told me that this is possible. I know that it could be escrowed or paid, but how else is this possible.. Please supply the La. state statute that would allow this. Thank you.

How is it possible to close on property ithout funding the recorded STATEMENT OF CLAIM AND PRIVILEGE (Lien). The closing Attorney told me that this is possible. I know that it could be escrowed or paid, but how else is this possible.. Please supply the La. state statute that would allow this. Thank you.

Louisiana

I am a current client of Zlien, and you have filed a STATEMENT OF CLAIM AND PRIVILEGE on my behalf. It has been recorded and a certified copy delivered to the closing Attorney. I found out (on my own) that there are 3 other people that have 1/6th ownership in said property, these other three are not on the recorded copy. The closing Attorney told me that she Can close without paying me. Please tell me what Statutes would allow her to do this. Time is of the essence on this. Thanks

1 reply

Aug 13, 2018

That's a good question. A mechanics lien runs with the property, not with the individual party who has failed to make payment or some individual owner (or group of owners). Thus, the property runs with the land. This means that, even after a sale has occurred, a mechanics lien will remain attached to the property. Very typically, a purchaser or a lender will not want to purchase property where a lien is present. However, if the purchaser and/or lender is ok with it, a property can certainly be purchased while a lien is attached. Further, if the property is purchased by a third party, the claimant is not required to be paid at that time. Granted, most purchasers and lenders will require that the lien be paid before the property is transferred. However, in order to force payment through the sale of the project property, a claimant must enforce their lien. In a situation where the sale of liened property is about to take place, it might be a good idea for a claimant to attempt to notify the prospective purchasers of the presence of the lien. Further, sending a document like a Notice of Intent to Foreclose could also be very effective, especially if sent to both the current property owner and the prospective purchaser. This document states that, if the claimant isn't paid, they will foreclose their lien on the property. A threat to foreclose property that's subject to an ongoing transaction will often go a long way to make a purchaser have second thoughts about buying - or at least give them pause. Plus, when a lien is interfering with a real estate transaction, the seller may be more amenable to resolving the dispute. You can learn more about a Notice of Intent to Foreclose here: Construction Payment: What Is a Notice of Intent to Foreclose? Ultimately, though, if both the buyer and seller are comfortable selling land that is encumbered by a lien, the transaction may take place without resulting in the payment of the lien claimant. At such a point, a claimant might be wise to be sure that they understand their deadline to enforce the lien (within one year from the lien filing) and may want to hire a local attorney to advise on next steps. They will be able to look at the specific documentation and communication regarding your claim for payment and help guide you through the recovery process. Plus, once a lien has been filed (and other options, like sending a Notice of Intent to Foreclose, have been exhausted) enforcing a filed mechanics lien will require a lawsuit and likely the assistance of an attorney anyway. Finally, it's worth noting that filing a Notice of Pendency of Action may also be necessary in order to be effective against third parties, but according to § 4833 of the Revised Statutes, "The effect of filing for recordation of a statement of claim or privilege and the privilege preserved by it shall cease as to third persons unless a notice of pendency of action...is filed within one year after the date of filing the statement of claim or privilege." So, a claim of privilege (mechanics lien) will remain effective as to third parties (such as a purchaser), but unless a Notice of Pendency of Action is filed within 1 year from the lien filing, the lien will not be effective to third parties. However, since this deadline appears to run the same as the lien enforcement action's deadline, it should be easy to keep track of.

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