Mechanics Lien and Forclosure
If a property is forclosed upon by the mortgage company, does the mechanics lien still get paid during that process or is it wiped out?
Re: Mechanics Lien and Forclosure
The priority of a mechanic's lien dates from the day that work started on the project. There must be some physical sign that work has begun! The priority of the mortgage company lien dates from the day that the trust deed is recorded. Thus, if the work started after the Trust Deed was recorded, the Mortgage company lien is superior to the Mechanic's Lien; if work started before the Trust Deed recorded, the Mechanic's Lien is superior. However, please take note of the following:
1. You must file suit to perfect your lien. Even if the lien is superior, the lien does not get paid through the process - it must be pursued on its own merits.
2. Even if the mechanic's lien is junior to the Trust Deed, it still may be enforceable if the property sells at foreclosure for more than the balance due the mortgage company; the excess belongs to the junior liens and/or the property owner.
This is a very technical area of the law and you should consult with a knowledgeable construction lawyer.
Best of luck
E. Leonard Fruchter
