What Is a Subordinate Lien
A subordinate lien is any secondary lien that is placed on a person's property. This can include mortgaged property like a home or a fully owned property, like a vehicle. In basic terms, a subordinate lien is any lien that has less of a payment priority than liens that have already been placed. It would be like having a first and second mortgage. Mechanics, contractors, and other professionals are able to place subordinate liens when they can prove services were rendered without payment.
Almost All Liens Are a Subordinate Lien
Except for most tax liens and the first mortgage, every lien that is placed on a home or other property are considered to be a subordinate lien. This means that they will be paid only when the primary liens in front of them are paid first. Let's say there's a $125,000 primary first mortgage, a $1,200 tax lien, and a $45,000 second mortgage on a property. The owner sells the property for $137,000. This means the tax lien, which has senior status in most jurisdictions, will be paid first. Then the primary first mortgage would be paid, totaling $126,200 in payments. This would leave $10,800 to be paid to the second mortgage, leaving the remainder of the lien outstanding.
Liens Don't Always Go With the Debt Originator
Liens must be disclosed during the purchasing process, but the liens don't necessarily have to be resolved by the original debtor. It is possible to sell a home with a tax lien, for example, and the new property owner would then assume responsibility for the tax that is due. Most transactions require that all liens be cleared before closing, but that isn't a legal requirement. Other debts can also create a subordinate lien. Home improvements that remain unpaid, a mechanic's bill for repairs that is not paid, or even materials for the home that are provided can all be a subordinate lien. A contractor does not have to provide labor for services to be rendered. Anyone who holds a property lien has the ability to foreclose upon that property. This includes subordinate liens. This is why taking care of them as soon as possible is a best practice. Losing a home because of a $1,000 contractor subordinate lien could be financially devastating. That's why knowing what is allowed and what is not allowed is so important.
Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More
Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More
Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More
Becoming a landlord is a major deal and no one can simply get up and think, “well, yes I think I should be a landlord and rent out my flat.” If you are thinking that you would like to be a landlord,... More
If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More
Landlords and aspiring landlords, do not become as such, without guidance and advice. There is a lot that goes into being a landlord nowadays; in fact, there is so much to learn that it often confuses... More
Renting out an apartment or a house can become a constant revenue source for landlords, but at the same time, it gives rise to several problems. It is a fact that high standards, a strict lease... More
If you are currently thinking of becoming a landlord only because it helps you have a constant stream of income, you should think twice. It’s not that you should not consider offering your property... More
When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More