Lien filing, perfection and foreclosure... what's the real point?
january 10, 2018
Let’s say you have jumped through all of the lien hoops: filing the lien, filing and winning the suit against the contractor to perfect lien and filing and winning the foreclosure suit on the lien so that you have a judgment against the owner and a lien on their property.
Let’s also say that you’ve obtained a fi. fa. (more on obtaining this later) otherwise known as a Writ of Fieri Facias on your judgment, which is a directive by the court to the sheriff to satisfy the judgment from the property, in this case real property. What are the chances that you are going to be able to force the sale of the real property to satisfy your lien? Probably slim.
Initially, only property in which the judgment debtor has sole unencumbered title will be subject to the sale. Real property on which there is a deed to secure debt (in favor of the lending bank) or that is owned as tenants in common, cannot be sold to satisfy a judgment on the lien.
So, what is the point of filing a lien and working through the process of perfecting and foreclosing on the lien if you can’t levy on the real property? For one, once you have a lien on the property, there is a cloud on the title of the property that will hinder its sale. If the property is sold (after your lien has been foreclosed) the lien must be satisfied from the proceeds of the sale of the property. Another benefit to perfecting the lien is that once you have a judgment against the contractor (or entity with whom you contracted to do the work) you can move to enforce that judgement against that entity directly. More will be provided on collecting against individuals and their personal property later.
Finally, you also have the perceived negative consequence of the lien to the property owner and on the contractor who may be willing to resolve the matter to avoid having a lien placed on the property. Filing, perfection and foreclosure are a multi-step process that provide many opportunities for resolution, through leverage of the lien filing process, to resolve your claims.