I paid a contractor to dig a pond. He didn't complete the job and he didn't pay a equipment rental company . The rental company filed a lien on my property. Contractor filed ch 7 bankruptcy and has no assets . His debt is cancelled. Will the lien on my property be removed.
Generally, the answer to that question is No.
Why? Let's walk through this. Initially, the debtor is the contractor and the creditor is the equiment rental company. The only secured interest is in the equipment being rented; it belongs to the equipment rental company.
When the equipment rental company files a lien on your property, they are securing their interest in being paid. If properly perfected, it means the debtor is potentially the Property Owner and the creditor is still the equipment rental company.
When the contractor declared bankruptcy, it would have discharged his obligation to pay the equipment rental company if the equipment rental company did not step in to maintain their interest in the bankruptcy court. Effectively, the contractor's debt has been discharged according to the ruling of the bankruptcy court. What is not extinguished is the equipment rental company's interest in getting paid through action against your property. The Property Owner and the equipment rental company are separate from the contractor so the lien would not have been addressed. Also, lien law is State and bankruptcy is Federal. The bankruptcy court would not have had much jurisdiction to deal with the lien if it was properly perfected and no one brought it to them as part of the proceedings.
With that being said, you do have some options.
1) Call the equipment rental company and ask them if you can provide an amount (that you're comfortable with) to make the issue go away.
2) Wait. In one year the right to execute on the lien goes away then, because the equipment rental company is not in privity of contract with you, it's going to make it that much harder for them to sue you.
3) Sue them. If you have paid the GC on a line item for equipment rental, or have paid the GC in full, you can show the court where you have paid and get the lien released. Then they are SOL because they did not pursue their claim in the bankruptcy court against the contractor.
E. Aaron Cartwright III
In addition to my #3 option above, you may challenge the validity or enforceability of the lien as Mr. Erikson described under Texas Property Code 53.254.
You may be in luck. Based on your situation and THIS ARTICLE ON LEVELSET you may be in a good position. You will still need to ask this question in the Oklahoma section or contact an Oklahoma attorney.