Chapter 31Chapter 31Other Creditors’ Other Creditors’ Remedies and Remedies and

SuretyshipSuretyship

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Lien (Definition):Lien (Definition):Claim to property (or Claim to property (or

proceeds of sale of property)proceeds of sale of property)

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Types of LiensTypes of Liens Consensual Lien: Secured interest in property Consensual Lien: Secured interest in property

created by agreement of partiescreated by agreement of parties

Statutory Lien: Claim to property created Statutory Lien: Claim to property created through statutethrough statute

Mechanic’s Lien: Claim on real propertyMechanic’s Lien: Claim on real property

Artisan’s Lien: Claim on personal propertyArtisan’s Lien: Claim on personal property

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Types of Liens (Continued)Types of Liens (Continued) Judicial Lien: Legal action whereby creditor seize debtor’s Judicial Lien: Legal action whereby creditor seize debtor’s

property to satisfy debtproperty to satisfy debt

Attachment: Court-ordered judgment permitting local Attachment: Court-ordered judgment permitting local court officer to seize debtor’s propertycourt officer to seize debtor’s property

Writ of Execution: Document authorizing law officer to Writ of Execution: Document authorizing law officer to seize debtor’s non-exempt propertyseize debtor’s non-exempt property

Garnishment: Order that satisfies debt by seizing Garnishment: Order that satisfies debt by seizing debtor’s property that is being held by third party (such debtor’s property that is being held by third party (such as bank or employer)as bank or employer)

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Exhibit 31-2: Other Types of LiensExhibit 31-2: Other Types of Liens Attorney’s Lien: Right of attorney to keep client’s Attorney’s Lien: Right of attorney to keep client’s

money/possessions until client pays debtmoney/possessions until client pays debt

Broker’s Lien: Claim to property by real estate broker for Broker’s Lien: Claim to property by real estate broker for commissioncommission

Common Law Lien: Claim to property by implication of law Common Law Lien: Claim to property by implication of law (rather than statute)(rather than statute)

Consummate Lien: Lien of judgment that arises when motion for Consummate Lien: Lien of judgment that arises when motion for new trial deniednew trial denied

Equitable Lien: Claim on property either created by sales Equitable Lien: Claim on property either created by sales contract, or imposed by court to ensure fairnesscontract, or imposed by court to ensure fairness

Innkeeper’s Lien: Claim on baggage of guests who stay at inn Innkeeper’s Lien: Claim on baggage of guests who stay at inn and are unable to pay billand are unable to pay bill

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Exhibit 31-2: Other Types of Liens Exhibit 31-2: Other Types of Liens (Continued)(Continued)

Landlord’s Lien: Claim on furniture and property in apartment by Landlord’s Lien: Claim on furniture and property in apartment by landlordlandlord

Maritime Lien: Claim on vessel for service made to vesselMaritime Lien: Claim on vessel for service made to vessel

Medicare Lien: Hospital’s claim to medical benefits paid under Medicare Lien: Hospital’s claim to medical benefits paid under Medicare ActMedicare Act

Possessory Lien: Claim to property representing lienholder’s right Possessory Lien: Claim to property representing lienholder’s right to be in possession of property until debt paidto be in possession of property until debt paid

Tax Lien: Claim against taxpayer’s property for unpaid taxesTax Lien: Claim against taxpayer’s property for unpaid taxes

Vendor’s Lien: Vendor’s claim to land for unpaid purchase price Vendor’s Lien: Vendor’s claim to land for unpaid purchase price of landof land

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Mortgage Foreclosure Mortgage Foreclosure (Definition):(Definition):

Foreclosure and sale of Foreclosure and sale of mortgaged property to pay debtmortgaged property to pay debt

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Assignment for Benefit of Assignment for Benefit of Creditors (Definition):Creditors (Definition):Transfer of title of property to trustee, Transfer of title of property to trustee, who sells property to pay creditors on who sells property to pay creditors on pro-rata basis with proceeds of salepro-rata basis with proceeds of sale

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Suretyship and Guaranty Suretyship and Guaranty ContractsContracts

Suretyship: Contract between creditor Suretyship: Contract between creditor and third party who agrees to pay another and third party who agrees to pay another person’s debt, and is primarily liable for person’s debt, and is primarily liable for debtdebt

Guaranty: Third party (usually called Guaranty: Third party (usually called “guarantor”) who must pay debt only after “guarantor”) who must pay debt only after debtor has defaulted, and is secondarily debtor has defaulted, and is secondarily liable for debtliable for debt

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Defenses of Surety and GuarantorDefenses of Surety and Guarantor

Statute of FraudsStatute of Frauds

Discharge from debtDischarge from debt

BankruptcyBankruptcy

Debtor’s fraudDebtor’s fraud

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Rights of Surety and GuarantorRights of Surety and Guarantor

Right to Subrogation: Surety/guarantor entitled Right to Subrogation: Surety/guarantor entitled to all rights creditor had against debtorto all rights creditor had against debtor

Right to Reimbursement: Surety/guarantor can Right to Reimbursement: Surety/guarantor can recover actual amount of debt paid to creditor, recover actual amount of debt paid to creditor, plus legal expenses against debtorplus legal expenses against debtor

Right of contribution: Other sureties/guarantors Right of contribution: Other sureties/guarantors must pay their equal sharesmust pay their equal shares

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