A "mechanic's lien" is a claim against a piece of real property (such as a car or house) for unpaid work or improvements to that property. A lien is filed against the property by the mechanic or contractor who did the work that was not paid. Once a lien has been filed on the property it cannot be legally sold or transferred without the lien being taken care of first/simultaneously. Furthermore, it should be noted that, legally speaking, any financial or legal data that is public record can potentially be included on a credit report.
Mechanic's Liens Can Appear on Credit Reports
The collection agency Experian explicitly mentions "Mechanic's Liens" as potentially included on page five of its Collection Report, and several other sources mention mechanic's liens in credit reports.
Different State Laws on Mechanic's Liens
Different states have different legal requirements and statuses for mechanic's liens, and in some states mechanic's liens are not noted as "judgments" and are only noted in the public record in relation to the property and not the property owner, and thus do not automatically appear on the property owner's credit record.
Preventing a Mechanic's Lien
Keeping good records and having everything down in writing is the best way to protect yourself in any kind of a major repair situation. If it is a big project, make sure to receive interim lien waivers each and every time you make a payment to contractors. Also make sure to get a final affidavit of payment from your contractor when the job is done. This document guarantees that all materials and labor for this job were paid in full by the contractor and thus no other liens can be placed on your property.
Filing a Mechanic's Lien
Remember that only the mechanic or the contractor who did the work can file a mechanic's lien. They cannot be filed by third parties or used to collect other forms of debt.
Taking Care of a Mechanic's Lien
There are several ways to deal with a mechanic's lien. One of the most common methods is to demand cancellation based on defects in the lien, that is, the lien was incorrectly dated or misspelled the owners name or address, or not filed on time. Another typical defense against a lien is just waiting until it expires to sell the property. Most liens are only good for 12 months and then the party must go to court to get a legal judgment. As this process requires more expensive filing fees and overhead, many lien claimants just let them expire.
0 comments:
Post a Comment