LIENS

LIENS

• Encumbrance- anything that affects the title of property

• Transfer

• Lien- a form of security interest in an item of property to secure the payment of a debt or performance of some other obligation.– Can be possessory, but usually non-possessory

– Attaches to both real and personal property

– Voluntary and involuntary

– Priority…who eats first!

– State and federal law and regulation

LIENS

• Credit- an advancement of money, goods, services, etc., with the obligation of payment– Historical and usury

– Risk, risk management, and risk shifting

– Live below your means (no free lunch)

– Cost of credit• Credit card

• Unsecured obligation

• Secured by personal property

• Secured by real estate

– Regulation, e.g. Community Reinvestment Act (CRA)

LIENS

• Unsecured

• Secured– After acquired property clause

– Cognovits clause (confession of judgment)

– Recordation for real estate

– Perfection for personal property

– Default and issue of a deficiency

• Bankruptcy

LIENS

• Stakeholders– Construction lender

– General contractor

– Fixture lender

– Subcontractor

– Professionals

– Buyer

– Buyer’s lender

• Stakeholders (cont.)– Title insurance company

– Property and casualty insurance companies

– Landlord/tenant

– Government

– Other

LIENS

• Parties– Lienor- attaches a lien

– Lienee- property is subject to the lien

• Types of liens– Contractual

– Judicial

– Statutory• Tax

• Artisan’s

• Mechanics

LIENS

• Mechanics liens– Real property and exemptions

– General contractors

– Subcontractors

– Supplied labor

– Supplied materials

– “Hidden Lien” and potential unfairness (someone losses)

– Procedure and state laws

– Termination

– Constitutionality

LIENS

• Security interests– Real property- mortgage (later)

– Personal property• UCC Article 9

• Creation of the security interest

• Perfection

• Financing statement

• Recordation

• Issue of fixtures

• Record with land records???

• Termination filing

• Purchase money security interest (PMSI)

LIENS

• Priorities under UCC Article 9– Secured over unsecured– Perfected secured over subsequent real estate interests– Perfected secured creditor over unperfected secured creditor– Prior recorded real estate interest over a subsequently filed

security interest– Between perfected secured creditors first in time is first in

right– PMSI has priority if financing statement filed within 20 days

of fixture becoming attached – Some exceptions