Question

19–2. Liens. Nabil is the owner of a relatively old home valued at $105,000. The home’s electrical system is failing, and the wiring needs to be replaced. Nabil contracts with Kandhari Electrical to replace the electrical system. Kandhari performs the repairs, and on June 1 submits a bill of $10,000 to Nabil. Because of financial difficulties, Nabil does not pay the bill. Nabil’s only asset is his home, but his state’s homestead exemption is $60,000. Discuss fully Kandhari’s remedies in this situation.

Answer 1

The purpose of a mechanic’s lien is to provide security or protection to persons who improve the property of others by providing supplies, labor and services in the erection of buildings and other structures.

The lien is placed against the property that was improved, which prevents the debtor from mortgaging or selling the property. If the debtor does not pay, the lienholder may sue to have the property sold to pay for the debt. If foreclosure is approved, the debtor must be informed of the foreclosure in advance.

If a property owner has not actually approved an improvement, the owner’s authority will be inferred if s/he knew about the improvement and did not act to avoid liability for it.

In the case between person N and business KE, person N is no longer able to pay the debt he owes to business KE. Business KE can place an artisan’s lien on person N’s property. Person N’s property is worth $45,000 after the homestead exemption is applied.

Business KE must first file a written notice of lien within state statutory limit from the final date of provided labor or material.

Business KE may force a foreclosure sale in order to receive due compensation. The debtor/property owner will receive the remainder of what the foreclosure sale brought less the lien and legal proceedings costs, if any