Home>Levelset Community>Legal Help>I have loaned money to a cmpany in New York with business interest in Florida. They are not paying back the interest or pricipal. I have a signed promissory note Can I file a lien against them?
I have loaned money to a cmpany in New York with business interest in Florida. They are not paying back the interest or pricipal. I have a signed promissory note Can I file a lien against them?
I have loaned money to a cmpany in New York with business interest in Florida. They are not paying back the interest or pricipal. I have a signed promissory note Can I file a lien against them?
1 reply
Mar 7, 2019
Mechanics lien laws are state-specific, and the rules and requirements related to the ability to file a mechanics lien are set by the state in which the project is located. Further, mechanics liens are protection given specifically to construction industry participants related to their work furnishing labor or materials for the improvement of property.
If there is no construction project giving rise to a debt, a mechanics lien is not the right option. Further, even in the event that there was a construction project for which money was loaned in either Florida or New York, mechanics liens are not able to be validly claimed by parties who did not furnish labor or materials to the project. Lending money, even if for a construction project, does not give rise to mechanics lien rights.
Since mechanics liens are involuntary encumbrances on property, the rules about who may claim a mechanics lien are strict, specific, and limited to actual construction participants.
Lenders, however, whether construction lenders, mortgage lenders, or other lenders, are generally protected by voluntary encumbrances, like UCC financing statements, mortgages, deeds of trust, or similar, that the property owner must specifically agree to (as a prerequisite for getting the cash). Many times, a promissory note will be "collateralized" which means that there is some property that can be repossessed to pay the obligation.
Accordingly, if a lending agreement allows for the filing of a UCC statement or other type of voluntary lien, or, if the promissory note itself is collateralized, there can be security available. Otherwise, if the promissory note was not a secured promissory note and was just a promise to pay, a lien or other security instrument may not be the path to recovery. This doesn't mean that getting paid is off the table, though. There are other ways to recover, including filing suit for breach of the contract, among other causes of action. And, if a judgment is awarded against the debtor and s/he still doesn't pay, a judgment lien may be able to be obtained against his/her property to satisfy the judgment.