Did you recently find out that a lien has been placed on your property but you’re unsure what that means? In Missouri, there are several types of liens that an individual or business can place on someone who owes a debt. The more you understand what a lien is, and the type that has been placed against you, the better you can begin to eliminate it. Groce & DeArmon, P.C. explains.
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What Is a Lien?
A lien is when a creditor files a legal right to a security interest in your property.
When a person or business files a lien against you in Missouri, the lien holder (the creditor who has filed a lien against you), attempts to prevent you from selling the property until the debt has been paid in full to the lien holder.
Are there good liens and bad liens?
Yes, there are three main types of liens in the United States.
Statutory Liens. This is a lien against you that will adversely affect your credit for up to seven years. If you have defaulted on a loan or not paid for services rendered, then the creditor or provider can file a lien against you in court.
Consensual Liens. This is considered a good lien and happens when you purchase a vehicle, home or business assets. It is an agreement between you and the creditor that they will provide you a service or product and you, in turn, will pay the amount on the agreed terms. These types of Missouri liens do not affect your credit.
Judgment Liens. These are the most severe liens. Like a statutory lien, these will remain on your credit for seven years. These liens happen when a court grants a financial interest in your assets to the creditor. Judgment liens are signed off on by a judge.
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What are the different types of liens?
There are many liens in the State of Missouri, ranging from medical to mortgages. If a lien has been placed on you recently, or you need to file a lien on someone else, we offer a brief summary of the different liens available.
Mechanic’s. Missouri law requests that any original contractor who provides labor, material or machinery for the improvement of property shall provide a notice to the owner of the property being improved. Missouri law requires this notice to be provided prior to receiving payment of any kind. If you had a mechanic work on your car or any motorized vehicle and you failed to pay for those repairs, that mechanic can place a lien on your property until he has been paid.
Construction. If you hired a contractor to build a residential or commercial structure and did not pay for services rendered, they can place a construction lien against you. Adversely, if you as a contractor completed a building and now cannot get paid, you can file a lien against the owner. If this becomes a judgment lien, the judge will identify the borrower’s assets such as cars, real estate and equipment. The contractor (or lender) will notify the county clerk, the DMV and any banking institutions, preventing the business from selling the property without paying the lien first. This can be true for mechanic’s liens as well.
Property & Real Estate. If you took a loan from a bank and used your property for collateral, and now you are defaulting on the bank loan, the mortgage company can place a lien on your home. If you were to sell the property, whatever you owed to the bank will be taken from the price of the sale for the price of the lien. Your lien will be removed. However, you will have less money in hand after the sale and it may affect your credit.
Tax Lien. This happens when the government places a lien when income, estate or property taxes are owed but not paid. If you own taxes in the State of Missouri and have not paid them, there may be a lien against you. This Missouri lien is filed in court.
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How do I remove a lien from my record in Missouri?
Groce & DeArmon, P.C., offers several steps you can take to remove a Missouri lien from your record.
- Pay it off directly. Work with the lienholder for a payment plan or pay in full as quickly as possible.
- Make a payment plan with the Missouri Department of Revenue or IRS.
- Fill out a Release-of-Lien form and have the lien holder sign it.
- Run out the lien under the statute of limitations. Missouri has a 10-year statute of limitations to collect debt, including liens.
Questions About Missouri Liens? Ask Groce & DeArmon, P.C.
If you have recently been notified that a lien has been placed against you, or if you need to place a lien on another party, contact us today. We can discuss your options and help you determine the best course of action for your individual situation. Our first consultation is always free. Contact Groce & DeArmon, P.C. or call toll-free 1-800-640-3706 in Missouri or (417) 862-3706.