Been defaulted on a second lien - Posted by Grace

Posted by SteveG_Pa on October 19, 2003 at 21:00:49:

From http://www.mechanicslien.com/services.html

"What does a Mechanics Lien do?

A Mechanics Lien impacts the owner (who requested the improvements) from selling the property without first addressing the lien claimant’s payment. A properly filed mechanic’s lien can ensure the lien holder is paid before a mortgage holder if the property is sold or foreclosed upon."

Been defaulted on a second lien - Posted by Grace

Posted by Grace on October 19, 2003 at 09:55:09:

I have an investor friend in Dallas who invested $15,000 for a rehab project as a second lien holder. The house in Ft Worth was fixed, fell thru contracts three times in the last three months(for some reasons) and the rehabor just walked and let the hard money lender took the house back.

What recourse my friend, the investor, has in getting his $15,000 back?

It’s in a personal note, guarenteed by the house. The note was recorded (in Austin?) as a mechenical lien on the house.

Re: Been defaulted on a second lien - Posted by SteveG_Pa

Posted by SteveG_Pa on October 19, 2003 at 20:34:55:

Im pretty sure here in PA that mechanics liens take priority over mortgages.

SteveG

Re: Been defaulted on a second lien - Posted by phil fernandez

Posted by phil fernandez on October 19, 2003 at 18:33:13:

If it was done properly and recorded, your friend would have a lien against the property. The question then becomes who is in front of him, obviously the hard money lender is. And what are the amounts owed in front of your friend and what is the property worth.

My guess is that if the owner walked there are property taxes due which start adding up and go ahead of other mortgages and other liens no matter the order of recording.

Have your friend talk to a good real estate lawyer quick.

Re: Been defaulted on a second lien - Posted by Joe Kaiser

Posted by Joe Kaiser on October 19, 2003 at 18:30:12:

Houses can’t guarantee personal notes, and a mechanic’s lien is
not the proper device to secure a personal note.

Your investor friend should have had the loan professionally
documented with or by or through an attorney or escrow
company. Situations such as these make it clear why it’s false
economy to try and save $250 on a $15k deal.

Getting it done correctly would have likely allowed your investor
friend to protect his investment. As it is now, it appears his
interest has been foreclosed off the property (if it ever attached in
the first place . . . and I doubt it did). His only recourse is against
the borrower himself.

Hope it works out.

Joe

Re: Been defaulted on a second lien - Posted by Potash

Posted by Potash on October 19, 2003 at 20:54:03:

Are you pretty sure you are in PA?