Home>Levelset Community>Legal Help>What happens if the lien is quit claimed to a differant person. Do i still get paid?

What happens if the lien is quit claimed to a differant person. Do i still get paid?

Lien number[2214198] Property is in a chapter 7. was forced transferred to a different person other than the owner who is stated on the lien. There was no money exchanged. Claims must be submitted prior to December 09 2019. 1. Should i do an additional lien with new owner? 2. How would i stop the sale of the property by the Chapter 7 trustee? Lets start there. thanks

1 reply

Oct 1, 2019

When a property is transferred to another owner, a mechanics lien that's been filed on the property will generally go along with the property. This is because mechanics liens tie directly to the property, itself - not against any particular individual. Filing a new lien Filing an additional or updated mechanics lien, after the property is transferred, is generally not necessary. If a mechanics lien is accurate at the time it's filed, there's typically no need to go back and amend or replace that lien filing if the property changes hands afterwards - lien claims run with the property. What's more, filing a new lien and releasing a prior one might actually have an adverse effect on the ability to recover. This is because (1) the deadline to file may be in jeopardy, if not already passed; and (2) filing a new mechanics lien after bankruptcy has been filed and releasing the prior claim is probably riskier than riding out a lien claim, as-is (due to bankruptcy's automatic stay and the prior transfer of the property). Stopping the sale of the property Mechanics liens are powerful because they create a secured interest in the project property. Typically, they lead to payment without the "secured" nature of the claim coming into play - most mechanics lien disputes are resolved without any legal action. But, in a situation where the property owner has gone bankrupt, recovery via a lien claim may have to come through the sale or even foreclosure of the property. When a liened property is sold by the bankruptcy trustee, the lien won't just disappear. Rather, it will generally either be paid from the proceeds of that sale (since it's a secured debt), or it will run with the property (which can slow or even prevent the sale of the property since buyers don't like liens). So, it might not make all that much sense to try and block the sale of property - the sale will typically either result in the lien claimant receiving some division of the proceeds (which may only be partial payment, depending on priority) or an enforceable lien against a new owner. Bottom line Admittedly, I'm not an expert on the ins and outs of property transfer during bankruptcy. In a situation where a mechanics lien has already been filed, and where the claimant must navigate a bankruptcy, it would be wise to consult a local attorney who's versed in bankruptcy proceedings. They will be able to review the details of your situation and the bankruptcy proceedings and advise on how best to move forward and maximize the claim for payment.

0 people found this helpful

Helpful