My son-in-law has borrowed about $75,000 for his business and signed a contract to pay me back $1,000 monthly. The loan is to him personally and with the business. He is behind in his payments due to a seasonal up/downs since he is in the heating and cooling business. In the contract I stated if he declared bankruptcy he still owed me the money. Also I stated I would have security interest or mortgage in any of the three properties he owns (two business buildings, one home). The contract was notarized as well. Can I file a lien against his properties just in case he doesn't pay?Laurie
Country relating to Question: United States
State (if USA): Iowa
Just asking my son-in-law to try to pay the back payments.
Hello JACUSTOMER,Before you could file a lien against his property, you would have to get a judgment against him in civil court. You have to file a lawsuit against him for failing to pay back the Loan as per the terms of the loan agreement. And if the court awards you a judgment, you could use the judgment to place a lien on his property.The provision in your contract which states that he would still owe you if he declared bankruptcy would not be enforced by a bankruptcy court. Bankruptcy courts have the specific power to override a creditor's contracts.Thomas
In the contract it's stated "Security: To protect Lenders, Borrowers gives what is known as security interest or mortgage in any property owned by 'company name' or 'individual name' as follows:" and I listed the three properties. Can I ask him to put my name on the properties for security or anything else besides a lien?
You can not ask him to put your name on the deed to the properties. But you may be able to file or record the contract as a mortgage on the properties. I would check with a real estate attorney in Iowa about filing the contract as a mortgage. Usually a mortgage requires a separate notarized instrument or document in addition to a loan document which your contract would be. And there may be problems in fact that the contract lists three separate properties rather than one. A mortgage document usually only lists one property per mortgage. In any case, even if you could file the contract as a mortgage, you would still have to commence a lawsuit to "foreclose" the mortgage by proving that he did not pay the loan according to the terms of the contract.Thomas
Twenty one years experience as a lawyer in New York and New Jersey. Former Appellate Law Clerk.
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