A statutory lien is enforceable only to items which the lien is legally attached. Statutes may allow the lienholder to foreclose the lien judicially and sell the property if the owner fails to pay the debt. However, the lienholder must give proper notice to the owner prior to foreclosure and sale. Proceeds from the judicial sale are used to pay foreclosure and sale costs as well as to satisfy the remaining debt. Any additional proceeds are paid to the former owner. Keep in mind the statutory Lien remedy is generally exclusive to satisfying the lien debt.
A judicial lien is acquired by judgement, seizure (levy), or another judicial process. A court, after a civil proceeding, may issue a monetary judgement for one of the parties. The party who is owed a money judgment is a judgement creditor. If the debtor fails to pay, the judgment creditor may petition the court to issue a writ of execution. This order authorizes the sheriff to seize and sell specific nonexempt property of the judgement debtor to satisfy the judgement. Attachment, a prejudgement remedy, is the seizure of a defendant’s nonexempt property prior to the court’s final judgement. The court allows seizure of property and placement of it in the custody of the court so that the judgement creditor cannot sell the property during the pendency of the litigation. Attachment is intended to secure satisfaction of a pending judgment. Replevin is a prejudgement remedy intended to secure property already subject to a lien or a right of repossession. Garnishment is a prejedgement or postjudegement collection remedy. It is directed against a third party (the garnishee) who holds property, or is a debtor, of the defendant. For example, wages or bank accounts of the defendant may be garnished. However, please note that filing a bankruptcy petition stays the garnishment.
Termination of Liens
A lien is discharged by payment or tender of payment. Tender is an offer to pay combined with a present ability to pay. It also discharges liability for further interest or damages. It does not discharge the debt. A debtor may owe separate debts to one creditor. If the debtor makes a partial payment, the creditor may apply the payment to whichever debts he chooses, but the debtor may instruct otherwise. A lien is effective as long as the property exists. A lien also depend on possession terminates if the lienholder voluntarily and unconditionally surrenders possession or control of the property. If the surrender is subject to an agreement that the property will be returned, the lien does not terminate. However, if a third party obtains rights to the property before it is returned, the lien terminates. A lien may be terminated by waiver, for example, voluntary surrender of a right.
Foreclosure on a Real Estate Mortgage by Judicial Sale
- The right to foreclose results from the debtor’s default. Foreclosure is an action by the mortgagee-lender (or assignee) to take the property from the mortgagor-debtor and sell it to pay the debt and end the mortgagor’s rights in the property
- To foreclose, the mortgagee must initial a judicial proceeding to secure an order of sale. The sheriff or other officer of the court then conducts a sale by auction as specified by state statue
- The sale is confirmed by court order following a hearing. The debt then is satisfied with proceeds of the sale
- The mortgagee may buy the property at the sale
- The mortgagor has an equitable right of redemption. Prior to foreclosure, the mortgage may regain the rights by paying the mortgage debt plus interest and costs
- The mortgagor may also have a statutory rights of redemption. The mortgagor may repurchase the property by paying the auction sale price after the foreclosure sale during the statutorily specified period, not exceeding one (1) year
- The purchaser at the judicial sale takes the property free of any claim
Originally posted 2018-07-23 23:19:28.