Common Law Liens
A lien is a legal device designed to ensure that an obligation is met. A lien represents a claim against property. Once attached, a lien freezes title in the name of the current owner of the liened property. There are two basic types of liens. A commercial lien is placed on property over which someone other than the lienor has lawful possession. A common law lien is placed on property over which the lienor has lawful possession.
A common law lien secures the lienor’s interest in his own property. Have you ever wondered at the injustice of the current system of mortgages? If for any reason you are unable to make your monthly payments, foreclosure of your property can be initiated, and you can lose all of your equity! Is that just? Is that right? Is that lawful?
The common law lien provides a lawful method of ensuring that your equity is protected. You can lien your own property, establishing a claim against your interest in the property. There are three elements that determine the amount of your common law lien: equity, improvements and life experience. Equity means the actual amount of principal (not interest) you have paid for the property. Improvements are the actual amount of principal (not interest) you have paid for improvements to the property. Improvements are those expenses that increase the value of the land or property. Repairs or general maintenance are not considered improvements.
Under common law, life experience has value. The
idea is that you have lived, worked, played,
laughed, cried, in other words, you have put
yourself into the property, and the property
owes you as a result. We know of no formula for
life experience; We use Three Thousand (3,000)
dollars a year (or 250 dollars a month), which
we believe to be a very low figure and therefore
uncontestable. The amount of your common law lien
is the total of your equity, improvements and
life experience. However, under no circumstances
should the total amount of your lien exceed the
general market value of the liened property,
because that would call undue attention to the
property, possibly infringe on your privacy, and
might result in a legal challenge to your
lien. Did you know that liens are not paid in
chronological order but rather in the order of
their character? For example, a mechanic’s lien
is always the first lien to be paid (the person
who built your house gets paid before you
receive full title to the property). Common law
liens are the second lien paid. This means that
if you do not have a mechanic’s lien on your
property, then your common law lien will be the
first lien paid, should the property be sold,
transferred, or otherwise liquidated.
Now let’s take a simple example. You own a house
purchased for 100,000 dollars. You have 20,000
dollars in equity and an 80,000-dollar mortgage.
You have paid for 10,000 dollars in
improvements. You have lived there for five
years. Your common law lien is for 45,000
dollars (20,000 + 10,000 + 15,000).
There is a terrible drought and the crops don’t
come in for over three months. You cannot pay
the mortgage during this time and the bank now
wants to foreclose.
The bank finds a common law lien in the amount
of 45,000 dollars, which they know will be paid
before the bank gets its money! The
bank is currently owed 80,000 dollars on the
house. This means that the bank is going to have
to sell this 100,000-dollar property for 125,000
dollars, just to get their money! What will the
bank do? They will probably work with the
customer. They will put on a kinder, gentler
Let us offer a warning here. Do not attempt to
use the common law liens to commit fraud. An act
of fraud vitiates any agreement, contract or
circumstance. Do not make up figures for your
lien. Do not take out a mortgage in Bad Faith,
without intending to pay it back.
The common law lien is a tool to ensure justice. It is designed to secure your interest in your own property. Use it accordingly.
If you need a Common Law Lien Prepared please contact our Commercial Lien Division at email@example.com