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LawGirl
LawGirl, Lawyer
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Mechanics Lien on home. If a homeowner has necessary improvements

Resolved Question:

Mechanics Lien on home.

If a homeowner has necessary improvements made, such as replacement/repair of HVAC, and finances the transaction with the service provider creating a mechanics lien, where does the mechanics lien fall in line? Is it subordinate to first/second mortgages, or is similar to an automotive lien taking a first position in front of purchase liens?
Submitted: 3 years ago.
Category: Real Estate Law
Expert:  LawGirl replied 3 years ago.

LawGirl :

Thank you for your question. Although I am an attorney, I cannot represent you. However, I will give you the most thorough information I am able.

LawGirl :

The mechanics lien falls after the existing liens and encumbrances on the property. For example, if the property has a first and second line prior to the mechanics lien being file, the mechanics lien would take after the first and second mortgage lenders are satisfied (in the event of foreclosure or a property sale.)

Customer:

I was attempting to interpret the following, which seems to say otherwise:

A properly perfected mechanic's lien attaches to the covered property in preference to other prior liens, encumbrances, or mortgages, although it does not affect any lien, encumbrance, or mortgage which was on the land at the time of the inception of the mechanic's lien, except as to "removables." Texas Property Code §53.123. All properly perfected mechanic's liens are on equal footing with one another without reference to the date each respective lien affidavit was filed. Texas Property Code §53.122. An exception to this rule is the lien of an architect, engineer, or surveyor, which is determined by the date of recording. Texas Property Code §§53.122(a) and 53.124(e).

Customer:

Here is a direct quote from Texas Property Code: (http://www.statutes.legis.state.tx.us/Docs/PR/htm/PR.53.htm#53.123)

Sec. 53.123. PRIORITY OF MECHANIC'S LIEN OVER OTHER LIENS. (a) Except as provided by this section, a mechanic's lien attaches to the house, building, improvements, or railroad property in preference to any prior lien, encumbrance, or mortgage on the land on which it is located, and the person enforcing the lien may have the house, building, improvement, or any piece of the railroad property sold separately.

Customer:

(b) The mechanic's lien does not affect any lien, encumbrance, or mortgage on the land or improvement at the time of the inception of the mechanic's lien, and the holder of the lien, encumbrance, or mortgage need not be made a party to a suit to foreclose the mechanic's lien.


 

Customer:

it appears to me a properly perfected mechanics lien has preference over prior mortgage liens, but does not affect those liens. "Not affect" seems to indicate the prior liens continue unaffected, but become effectively subordinate?

LawGirl :

There is a distinction in the verbiage. What is happening to the property, is it being sold or going into foreclosure?

Customer:

in the case that a service provider installs, repairs, etc. HVAC equipment that is unpaid. At the point the provider has perfected the lien and then enforces it, if unpaid after all statutory notices and time to cure, it appears to me the mechanics lien can foreclose in preferance to the mortgage(s) and if the homeowner does not cure, the mortgage interests may be affected if the sale does not produce a sale adequate to First pay the mechanic, and second pay the mortgage(s)

Customer:

then a deficiency on mortgages would exist, and the home title conveyed?

LawGirl :

That is correct. (Assuming in this hypothetical that the IRS is not a lien-holder.)

Customer:

yes, I understand tax liens take priority in all cases.

Customer:

okay, thank you for helping me to read this statute/situation better.

LawGirl, Lawyer
Category: Real Estate Law
Satisfied Customers: 4606
Experience: I am familiar with this area of law.
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