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Irwin Law
Irwin Law, Lawyer
Category: Real Estate Law
Satisfied Customers: 7234
Experience:  Lawyer- Broker 30+years - foreclosure, short sale, liens, title attorney.
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Sale of Real Estate with lien not yet perfected? with lien

Customer Question

Sale of Real Estate with lien not yet perfected?
with lien disputed/in litigation?
Can lien holder block sale or must lien holder (without perfected lien) accept escrow or other option such as Court Registry deposit of funds?
DC, Virginia, MD jurisdictions
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Andrea, Esq. replied 1 year ago.

Thank you for your question. I will be glad to Answer your questions and the only thing I ask is that you leave a Positive rating so that JustAnswer will give me credit for assisting you. A positive rating will not cost you anything additional, but that is the only way that JustAnswer will give me credit for assisting you, Fair enough ?

ANSWER -

The lien holder cannot block the sale because he has not perfected his lien by recording it. Therefore, he must accept any substitute you offer, including placing funds in escrow.

PLEASE BE KIND ENOUGH TO LEAVE A POSITIVE RATING. IT WILL NOT COST YOU ANYTHING, BUT IT IS NECESSARY FOR JUSTANSWER TO GIVE ME CREDIT FOR ASSISTING YOU. POSITIVE FEEDBACK AND BONUS ARE VERY MUCH APPRECIATED,

Kindest Regards,

ANDREA

Customer: replied 1 year ago.

the disputed lien was recorded, but litigation was in progress over the debt represented by the lien......

the lien was recorded but not perfected....

as I understand it, anyone and everybody can record a lien for some excuse, but what is right of property owner when they are challenging the lien and its transfer to the jurisdiction....

in this case, the lien was based on a judgment in a foreign jurisdiction, which ultimately was denied......but not before the lien holder forced a payment for the lien......so I am looking at the legal ramifications of this.......

it was a forced payment, but the lien holder later claimed it was a "settlement"........it was an agreement to pay to sell the property because the lien holder refused the escrow offered and insisted on payment.......I'm looking for the law here......any code in DC that would permit sale of property with set aside of escrow for payment to lienholders ......is the lien holder obligated to take an escrow and allow sale of property on which he has not yet "won" the right to his lien....recorded, but I think NOT perfected......but maybe that is not the legal terminlology.......I thought a lien in dispute could not be perfected legally until the dispute was resolved....in this case, the lien holder forced a payment, refused the escrow option and then claimed settlement........

Expert:  Andrea, Esq. replied 1 year ago.

A lien is "perfected" when it is recorded, so in your situation, if the lien was recorded, it means that it was "perfected" in the legal sense. If the lien was not valid, you would have to litigate this issue and have a Court Order the alleged lienholder to remove the lien. If the lienholder recorded the lien based on a foreign judgment and the foreign judgment was ultimately declared invalid, but the lienholder refuses to remove the lien from the public records, then you would file an action against the lienholder and allege that the judgment on which the lienholder was relying when he recorded his lien was declared invalid and you would ask the Court to enter an Order, Ordering the lienholder to remove the lien of record. Thereafter, if the lienholder fails or refuses to comply with the Court Order to remove the lien, he will be in Contempt of Court can Order his incarceration for up to 6 months for his Contempt of the Court Order,

Please let me know if you need clarification on anything and I will be glad to explain further,

Please be kind enough to leave a Positive rating. It will not cost you anything additional, but it is the only way that JustAnswer will give me credit for assisting you. Positive Feedback and Bonus are very much appreciated.​

Kindest Regards,

ANDREA

Customer: replied 1 year ago.

unfortunately, before we could get the ruling, the lien holder insisted on being paid from the proceeds of the property sale and refused an escrow set aside on his behalf.......yes, I think it is contempt......but am trying to get to the obligations (laws, regs, business practices, DC code, etc.) that support that forcing payment prior to the resolution of the litigation was indeed contempt......he then represented that we had "settled" the matter......but the Judge ultimately ruled in my favor, but has not returned the proceeds taken from the sale.....so that is precisely what I am researching......the impropriety of refusing an escrow.....and forcing payment prior to resolution of dispute over lien........which was a foreign judgment.......

I am looking for regulations, laws, etc governing this......it seems rare outside of bankruptcy for this type of thing to evolve......

Does a lien holder have the right to dictate that a property be sold or not sold when the lien is in dispute......it is this sort of concept.....obviously the property owner incurs cost maintaining property and litigation can take years......so dictating pay or don't sell is costly to the property owner if the property is vacant, which was the case.....it was not being used and was incurring cost........

any thoughts and analysis would be appreciated......you don't have all the facts, but might have some ideas about approach......or DC code governing escrow agreements, patterns and practices in the use of escrow agreements ......also, the use of "court registry" in lieu of escrow.....does DC have that option????

Expert:  Andrea, Esq. replied 1 year ago.

A Judge can hold a person in contempt of Court if the Judge Orders the party to act, or to refrain from acting a certain way. However, if the lien held by the lienholder was not yet declared invalid by the Court, then the lienholder cannot be held in Contempt because when the lienholder insisted on payment, his lien was valid because the Court had not yet invalidated his lien. The holder of a lien which has not yet been declared invalid by the Court, may demand payment and he cannot be forced to agree to place his payment in an escrow account. I am sorry you experienced this, however, until the Court declared his lien invalid, the lienolder could demand payment of his lien. and his demand would not fall within the category of Contempt. He was a lienholder and he was demanding payment of his lien, otherwise he could exercise his right to foreclose on the lien and take the property on which the lien was based. If you wanted to prevent any action being taken by the lienholder, your Attorney should have filed a Petition with the Court, asking for a Temporary Stay or a Temporary Injunction to stop the lienholder from exercising the rights given by law to a lienholder, or your Attorney could have asked the Court to force the lienholder to put up a bond, but that was not done. Therefore, the lienholder was exercising the rights given to him by law which were valid unless and until the Court invalidated these rights, or forced him to put up a bond. If an individual holds a lien which has not yet been declared invalid by the Court, he cannot be held in Contempt simply because he was exercising the rights of a lienholder given to him by law.

If the lienholder's rights to certain proceeds was questionable, then the proceeds should have been immediately placed in escrow and not given to the lienholder at all. I am sorry that the outcome was not favorable to you, but from the facts you presented, it appears that the lien would remain valid unless and until the Court found otherwise. There is nothing illegal about the actions of the lienholder.

As I stated above, if the issue was still being litigated, then your Attorney should have made a request to the Court to Order the lienholder to hold the lien in abeyance and not act upon it until final resolution of all issues involved, but since nobody made this request of the Court, the lienholder was under no legal obligation to refrain from collecting anything which the lien secured. I am sincerely ***** ***** I could not give you the Answer you were hoping for and that would have been more favorable to you, but I have an ethical obligation to you to give you only correct Answers and ones on which you can rely as being correct, so I am respectfully ***** ***** you not hold this against me,

Please be kind enough to leave a Positive rating so that JustAnswer will give me credit for assisting you. You have already placed a deposit with JustAnswer and leaving a positive rating will not cost you anything additional, but it is the only way that JustAnswer will give me credit for assisting you. Positive Feedback and Bonus are greatly appreciated,

Kindest Regards,

ANDREA

Customer: replied 1 year ago.

Actually, there was a court order prohibiting the attorney from any enforcement action.......that was put into place by the Judge during the litigation......as a result of the opposition to the foreign judgment.......supposedly, no enforcement was to occur prior to the resolution of the litigation.....we did ensure that this was in place.......perhaps I omitted this fact which could change your answer.......the case is complicated and the court was very slow and overburdened at the time, so it was difficult to get a hearing and get the matter expeditiously resolved, but we did have the order in place.

Customer: replied 1 year ago.

As soon as you reply to this last message, let's pull this exchange....and make it confidential......I think that can be done......please give me the details on this procedure for this......I have forgotten what I did in the past to take any discussions out of the public domain, but we should do that shortly....as soon as you reply......to the last basic issue I presented to you.......

Expert:  Andrea, Esq. replied 1 year ago.

You stated that "...there was a court order prohibiting the attorney from any enforcement action...that was put into place by the Judge during the litigation... "

If the Judge's Order was directed to the Attorney, this Order was useless because the Attorney was not the holder of the lien, nor did he represent the individual who held the lien. If a Judge wants to enter an Order directing an individual to act in a certain way or to refrain from acting, the Judge's Order must be directed to the party who is involved in the litigation and who has something at stake. The Judge cannot Order the Attorney for a party to act in a certain way relating to the subject matter of the litigation. Such Order must be directed to the real party in interest, not to the party's legal representative. The Attorney is not a party to the litigation and the Judge, therefore., cannot Order the Attorney to do, or refrain from doing anything regarding the subject matter being litigated. The fact that the Judge entered an Order wshich prohibited the Attorney from any enforcement action is meaningless because the Attorney was not a party to the action and a Judge cannot tell an Attorney what to do or what to refrain from doing while he is acting as the Attorney for an individual. The Attorney Code of Ethics dictate that the Attorney must do whatever he believes is in the best interests of his or her client, otherwise the Attorney could be brought to Answser charges brought by the Attorney Disciplinary Board and no Judge has the authority to override the dictates of the Attorney Disciplinary Board.

Please be kind enough to leave a Positive rating so that JustAnswer will give me credit for assisting you. You have already placed a deposit with JustAnswer and leaving a positive rating will not cost you anything additional, but it is the only way that JustAnswer will give me credit for assisting you.

Positive Feedback and Bonus are greatly appreciated,

Kindest Regards,

ANDREA

Customer: replied 1 year ago.

Honestly, I do not know what you are talking about here.....the Order was issued to the lienholder, who was an attorney......I don't really understand how this got confused.......the Judge obviously knew to whom the order should be directed - the party holding the lien - who happened to be an attorney........I am sorry this somehow got confused......

Expert:  Andrea, Esq. replied 1 year ago.

I apologize for the confusion. The way you had the sentence phrased, it was not clear that the lienholder was an Attorney. That is why I said that a Judge will direct his Orders to the real parties in interest, not to their Attorneys. It was not clear that the lienholder also happened to be an Attorney,

Kindly leave a positive rating so that JustAnswer will give me credit or assisting you, even if the Answer I gave you was not he Answer you were hoping for. At least, you can be sure that my Answers are correct for the facts stated and they are Answers on which you can rely, :)

Kindest Regards,

ANDREA

Customer: replied 1 year ago.

Would you please revisit the Court Order commentary with the understanding that it was indeed issued to the lien holder......(who happened to be an attorney).......ie, with Court Order stating that the lien holder is not to take any enforcement action......what happens when the alleged debtor/defendant wants or must sell property and the lien holder refuses to lift the lien for the sale in exchange for proceeds put in an escrow and insists on payment from the sale, as if the disputed lien had already been validated or whatever a favorable ruing would be.....but was not......at that point........this is the essence of what I am probing......what right does a party with a lien on property have to sell a property, put the proceeds in escrow pending resolution of the dispute in litigation versus the party holding the property......can a lien holder block the sale of a property while litigation is on-going and a Court Order is in place (as described above) by refusing to allow the escrowing of proceeds? What rules, regs, etc., would apply? What underscores or outlines basic business practice for this type of situation.......are there guidelines in the real estate business to use....in addition to the law, what would be available to establish a reasonable norm? I am not finding cases in DC where this has occurred.....but will use search engines for that......if any (legal) case comes to mind or surfaces quickly on your end that involves this issue, that would be helpful.....as a real estate attorney you might know of a case or of standards in the industry that can be used to determine reasonableness......as in Title companies typically look to XYZ or brokers underwriting transactions use XXX guidelines.....in determining sale of property with liens.....you seem to have the right background to come up standards and guidelines or some DC code that might be applicable......

thanks.....I appreciate your diligence in trying to answer......of course, I will be happy to rate you in a positive way......I see that you appear to have the right background to come up with ideas on this situation......I did not get into more specific details up front because it is pointless if the person (expert) does not have the right background or demonstrate the ability to think/probe in a meaningful way.....the Answer mechanism allows fresh perspectives from a "cold reader" which can be quite helpful......I am not relying on this for legal advice......I am looking for that fresh perspective from someone with the right background/expertise......of course, you did not have enough details previously.......to do that.....so given the additional details and my quest for laws, regs, reasonableness, basic business practice or the "norm" for the real estate industry......any suggestions? (I realize that ideally one might go back to the court, but getting into court can be tough, especially on short notice......if a buyer is ready to buy and the seller really needs to sell.....(think some duress here).and did not anticipate the resistance to the escrow.....or some reasonable solution......because of the Court Order in place.....ie, what is the expectation, the norm, the reasonable solution....also, in terms of "court registry".....is that used in DC? it seems to be an option in addition to escrow, but I don't see it used in DC.....of course, I don't do a lot of real estate sales in DC.....but in researching.....the "court registry" option does not surface......in the DC jurisdiction.....as in other jurisdictions......

Thanks a lot for sticking with me on this. Yes, I think that your answers are correct for the facts as stated....and that you are reliable....which is why your input at this stage could be particularly invaluable.....some attorney experts are not so focused or reliable.....while some come up with some amazing info......that is why I use this mechanism......but it is challenging to give enough info for the right feedback, without getting into too much detail......

Customer: replied 1 year ago.

Please see below.....

Given the fact there was a Court Order in place, would you please revise your response to consider the information below

Thank you.

Expert:  Andrea, Esq. replied 1 year ago.

Regarding my background, besides over 20- some odd years experience in real estate transactions, before deciding to open my own private practice, I was Assistant General Counsel, Underwriting and Claims for a major title insurance company. In Answer to your questions, I have taken into consideration all the facts and additional facts you have offered, but they do not change my Answer - where a Court has not yet invalidated a lien, or has not yet set aside the judgment on which the lien is based, nor are any of these issues presently before the Court, then the lien remains valid, regardless of how strong the arguments are for setting aside the judgment or invalidating the lien, the lienholder cannot be forced to hold his lien in abeyance, or forced to accept placing sale proceeds into an escrow account. What the party should have done in the first instance is to attack the judgment on which the lien is predicated and asked the Court to enter an Order, ordering the lienholder to accept the placement of sale proceeds into an escrow account, until the validity or the judgment was adjudicated. However, without placing the issue of the validity of the foreign judgment or the lien before the Court, a Judge would have no legal basis for preventing the lienholder from enforcing his lien, or placing the proceeds of any sale into an escrow account. I wish that I could give you the Answer you were hoping for, but that would not be a correct Answer. Unless the issue of the validity of the lien or the judgment is before the Court, no matter how flawed the judgment or the lien is, then the Court would have no valid legal basis to force the lienholder to forego any rights given to lienholders by law.

Please be kind enough to leave a Positive rating so that JustAnswer will give me credit for assisting you. You have already placed a deposit with JustAnswer and leaving a positive rating will not cost you anything additional, but it is the only way that JustAnswer will give me credit for assisting you. Positive Feedback and Bonus are greatly appreciated,

Kindest Regards,

ANDREA

Customer: replied 1 year ago.

the matter WAS in litigation, the lien WAS disputed and the Court DID issue an Order prohibiting enforcement of the lien until the matter was resolved......it is unclear what more should have been done......litigation takes time........the lien was eventually invalidated, but the property needed to be sold for a variety of reasons......

I asked about the escrow process, how it is regulated and used.......and how a litigant with a lien in dispute and Court Order in place against enforcement could legitimately and reasonably refuse an escrow of funds......it would seem the lien holder was not yet entitled to anything because the lien was in litigation......otherwise, what is the point of litigation and Court Orders against enforcement?

I would like to know more about the escrow process, how it is regulated, industry standards......also what is the primary legal basis for the escrow process/governming the process and what is difference between putting funds in escrow and "court registry"......does DC have the "court registry" mechanism????

Thanks.

Customer: replied 1 year ago.

Again, the Issue of the validity of the lien AND judgment WERE before the Court and the Court issued an Order stating that no enforcement should occur prior to resolution of the matter......(essentially....not the exact words).......it was in that context that I asked about the escrow solution for sale of property......or court registry or any other solution that might typically be appropriate for sale of property with lien in dispute......with Court Order outstanding against any enforcement.......

I also asked for the general laws, regs governing the escrow arrangement.....sort of the "nutshell" version......industry practices, primary laws, regs used to govern escrow.......

I now have two replies.......going forward......

Thanks for your input, but the last sentence of your reply just does not equate to the facts I thought I gave you......"Unless......"

As I have said, the lien and judgment were very much before the court and contested and there was a Court Order outstanding against enforcement.....in that context, how would property be typically sold/transferred, etc........it would seem an escrow is the most common mechanism, but there is also the "court registry" which I don't really understand, but if it is used in DC please tell me where I can get more info on it........as well as resources, etc., for use of escrow in DC and surrounding area........

Thanks.

Expert:  Andrea, Esq. replied 1 year ago.

I sincerely ***** ***** I am going to have to opt out of your question. I cannot justify the amount of time and the number of questions I am Answering for the value of 12 dollars which JustAnswer has placed on your question, and for which I will receive no credit at all, nor any payment. I do sincerely ***** ***** I will not receive any credit for any legal research I would do in order to Answer your current questions on "general laws, regs,, etc. governing escrow arrangements, industry practices, primary laws, regs, etc. used to govern escrow ...."

I wish you the best of luck,

ANDREA

Customer: replied 1 year ago.

Obviously that payment is not reasonable......the matter is far more complex than the original request indicates......can I do something from my end with customer service to increase the complexity of the question? (Of course there is the bonus mechanism at some point, but it is not fair and reasonable for you to continue a question rated simple that has been through several iterations and is now more complex/should be rated more complex.)

I also have spent time and think you finally have enough information to offer a fresh perspective or "cold reader" view that is more relevant and on point........than previous answers......(not your fault.....nature of these queries......which are necessarily based on limited facts.....however, I have gotten some amazing answers/analysis with these limited queries that provided me ideas and avenues for more research)

Please let me know.......what can be done.....or if nothing can be done and you will indeed be opting out....

thanks

Expert:  Irwin Law replied 1 year ago.

Hello. Another expert here. I'll Answer your question. It isn't that complicated. Actually it's pretty simple. I can answer it in a couple sentences, and when you read it, you'll give yourself a dope-slap that will probably render yourself unconscious. I just need to know that you will read it and keep an open mind in rating it. I have just one question of you: Was any lawyer involved on your side either in the sale or the lien litigation? BTW, I've taught seminars for lawyers on this subject.