A guide to lien on in times of trouble
Vail, CO, Colorado
Some pronounce the word “lean” and some say “LEE-an.” Any way you say it though, a lien can spell trouble. But not necessarily. A lien can also be a sort of place marker ” although with substantially more heft ” securing such things as a mortgage.
In a, ahem, lean definition of a lien, a lien is a charge, security or encumbrance upon property.
A lien is a qualified right of property a creditor has for a specific property as security for the debt or charge or for the performance of some act. It is a right to enforce a charge upon the property of another to satisfy a debt or claim or a right to retain property for payment of a debt or demand.
How does this work?
Say you loan me money for the purchase of a popsicle. In these inflated days, a popsicle goes for a buck. You being the industrious sort, we agree that your largesse will come with strings attached. You want to turn a little profit here. The loan will be extended to me at five percent per diem, simple interest. In other words, if I pay back the loan within a day, I will owe you $1.05. Let’s say, though, I enjoy my popsicle but decide you’ve taken advantage of me In a huff, I decide not to repay you.
Where does that leave you, other than out your buck and the interest on it you were expecting? In a sense, nowhere. The popsicle is gone. You can’t demand the popsicle in satisfaction of the debt. Your recourse, then, would be to go to court and state your case. For a buck, though, you probably will just pound sand. And not loan me money in the future.
Say the stakes are a little higher. Rather than a popsicle, what I want is to remodel my house. The remodel work will cost $100,000. We agree on the price and you order material, line up your troops and get to work. Then, when you put in three quarters of the work, I get cold feet. The stock market’s in a nose dive, I’ve lost my shirt and I decide the house was just fine the way it was. I tell you to stop and you tell me to pay. I tell you I’ve lost my shirt in the stock market plunge and, basically, pound sand.
Although the stakes are higher, you are better off this time. You know about mechanic’s liens and the laws that support them. Unlike the popsicle, my home has not melted into nothingness and, by statute, not only are you entitled to be paid, but you can force my payment.
Under the mechanic’s lien law, you can stake a claim against my property as security for payment under our agreement. Provided you follow the rules, you can lien my property. And once the property is liened, if I continue to thumb my nose at you, you can begin foreclosure of the lien. In other words, you can commence legal proceedings whereby the home will be sold and the proceeds of the sale will be applied in satisfaction of my debt with you.
For me, as the debtor, this is a different kettle of fish. Rather that walking smugly away from you and ignoring my obligation to you, you have real leverage to ensure that you are paid. You see, your lien right ties my property – the specific property you benefited with your work ” to satisfaction of the debt.
There are, as you might guess, a whole slew of liens, a smattering of which include architect’s liens, artisan’s liens, attorney liens, equitable liens, execution liens, judgment liens, tax liens and vendor’s liens.
What is a lien? Well, the word’s entomology is helpful. The word derives from the Latin “ligare” which means to bind. Simply, the debt is bound to the property securing payment of the debt. It is a happy semantic coincidence perhaps that a lien allows you to lean on the debtor for payment of the debt and does so by binding something real and tangible (that is, the property) to what might otherwise be ethereal and, certainly, more challenging to enforce.
Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley. He is a member of the Colorado State Bar Association Legal Ethics Committee and is a former adjunct professor of law. He may be heard on Wednesday nights at 7 p.m. on KZYR radio (97.7 FM) as host of “Community Focus.” Robbins may be reached at 970-926-4461 or at his e-mail address: email@example.com.