A publication for Credit and Finance Professionals
Legal Tools for Creditors
Provided by Rosenfeld & Stein, Attorneys at Law, Miami FL
The first remedy we will examine is a lien. There are two broad categories of liens: liens acquired by contract or those that arise by operation of law. Simply stated, a lien is a preference given to a creditor. Below is a very brief overview of the various types of liens.
A Construction Lien is one that is given by operation of law (statute) to a person or persons who contribute to a construction job and is therefore to have priority over the general creditors of the owner. For example, a plumber who supplies fixtures and labor to a job site would be preferred to a general creditor that the owner owes monies to. To benefit from such a lien, it must be exercised within a certain period of time as defined by statute. There are other conditions for granting such a lien. Examples are notification to the owner that work is being performed on the property. Generally, a construction lien must be recorded within 90 days of the substantial completion of the work. Additionally, the lien must be foreclosed within 1 year of the docketing of this lien. Construction liens are complex and a creditor wishing to make use of any of these statutory provisions must strictly comply with the requirements of the statute to have a valid and enforceable lien.
A Judgment Lien is also an example of a lien created by operation of the law. A judgment lien is obtained after a creditor has sued its debtor and reduced the claim to a money judgment. Generally speaking, to perfect a judgment lien as to real property, a creditor must record a certified copy of its judgment in the county in which the debtor owns real property. A judgment lien in every state is good for certain durations of time as defined by statute. A judgment lien can be effective against personal property if it is docketed and recorded in accordance with statutory requirements.
Possessory Liens are liens derived from having possession of personal property that is with the lienor. A classic example would be of a car staying with the dealership until the repair bill is paid. Another example would be a jeweler that performs repairs on a watch. If possession is given up than the lien is lost. In order for the owner to regain possession he/she must either pay the bill or post the monies with the clerk of the court and obtain a court order to obtain release of order.
A Levy is a post judgment remedy available to a creditor to enforce its judgment. Instructions are given by a creditor to the county sheriff to seize property belonging to the debtor, advertise it for a sale, and conduct the sale. Title is given to the successful bidder at the sale. All classes of property are subject to a sheriff’s levy and sale.
An Attachment is a statutory remedy given to a creditor before judgment is procured for the purpose of insuring that there will be a recovery once a judgment is entered. To avail itself of this remedy a creditor must follow the statutory requirements. A bond must be posted along with a myriad of other requirements in order to obtain such relief. Classic cases where this is done is when a debtor is fraudulently disposing of property in a “going out of business sale” or otherwise fraudulently parting with property before a judgment can be obtained.
Please note that the above information is meant to serve as a general overview of what constitutes a lien, levy, and an attachment. Each of these remedies must be evaluated in the context of particular situations. Of course, not all of these remedies are available to all classes of creditors (for example – a construction lien is not available to a creditor who is not providing an improvement to real property).
