Copyright

Lien Enforcement & Right of Redemption

Instructor: Kyle Aken

Kyle is a journalist and marketer that has taught writing to a number of different children and adults after graduating from college with a degree in Journalism. He has a passion for not just the written word, but for finding the universal truths of the world.

The process of lien enforcement can be complicated. In this lesson, we'll outline the process of non-mortgage lien/non-deed of trust enforcement and the right of redemption relating to real property.

Liens

There are many different types of liens, from common law and statutory to agricultural to maritime. There are even contractual and equitable liens. Within these lien categories, the liens have specific names that relate to the types of creditor involved.

A lien is a security arrangement or legal right that is acquired by a creditor on real property. For example, a government agency can place a lien on someone's home if the homeowner fails to pay taxes. Usually, a lien is in effect until the obligation to the creditor is taken care of, or satisfied, in some manner. However, if the debt is not paid off, the creditor has the right to take possession of all the property involved in the original contract.

This lesson explores the process of non-mortgage liens or non-deed of trust enforcement. A non-mortgage lien is a lien that is placed on property without the property owner's consent. We'll start with the process of lien enforcement before discussing perfecting a lien, lawsuits and writs, and the right of redemption.

Lien Enforcement

There are cases where a debtor, for whatever reason, refuses or neglects to pay taxes or another type of liability. In these instances, a civil action may be filed in a court of the United States. This is done to enforce the lien with respect to the tax or liability. This means that the creditor may place a lien on property in which the person, who is delinquent, has any title, right, or interest, in order to get payment for the tax or liability. The court must notify all secured creditors and third parties involved to determine the merits of everyone's claims and determine how the lien will be enforced: from the sale of property to the distribution of proceeds. The process of lien enforcement involves perfecting a lien, lawsuit, prejudgment writ of attachment, and writ of execution.

Perfecting a Lien

Perfecting a lien determines the rights of the secured creditor as well as any third parties that might have claims on the creditor's collateral. For example, a government agency might have a lien on property, but a bank may also have a claim on that same property because the property was used as collateral for a loan.

There are many ways to perfect a lien, including:

  1. Filing. This has some exceptions, but a secured creditor can perfect a security interest of any type of collateral by filing, or having someone else file (an agent), a financing statement that satisfies the state's requirements.
  2. Possession. A secured creditor, or an agent, can perfect an attached security interest by having possession of it, from money to consumer goods, even tangible documents, just to mention some types of collateral.
  3. Delivery. Perfection can be achieved by delivering, or having an agent deliver, the collateral.
  4. Control. There are many ways that a secured creditor can take control of different security interests, from being the bank for a deposit account to having the letter-of-credit rights.
  5. Automatic perfection. This can happen in many different ways, from the purchase of a security interest to the proceeds from the collateral that are automatically perfected.
  6. Certificate of title notation. This can be done by the secured creditor by making a note of the lien on the certificate of the title in a special registry.

Lawsuits and Writs

In the United States, a lawsuit may be filed on a claim for a debt through a civil action lawsuit. This means that the creditor makes an application to a court to issue a prejudgment remedy. A prejudgment writ of attachment can be obtained for many reasons, like when a creditor believes that a debtor is about to leave the country or will destroy the property; these are just a couple of reasonable causes among many more.

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