Where can a homeowner apply for a mortgage if a mechanic's lien has been filed?

Answer 1

Once a mechanic's lien has been filed against a property, it is almost impossible to get a new mortgage. Existing lenders will frequently stop making progress payments, really putting the owner in a bind. The laws relating to mechanic's liens vary widely among the states. In Ohio, homeowners have a paid-in-full defense against liens filed after the payment have been made. The concept of "payment-in-full" may include payment of less than the full contract price if the contractor has abandonded or been properly terminated from the project (termination is a very difficult and uncertain prospect, not for the faint of heart), and it will cost more than the remaining balance due to hire a replacement contractor. In Ohio, this ONLY WORKS ON HOME IMPROVEMENT OR HOME CONSTRUCTION CONTRACTS. Ohio Revised Code 1311.011 provides that if a homeowner has made payment, lien claimants have no lien rights. It goes on to provide that if the homeowner gives notice of payment in full to the lien claimant and the lien claimant does not release the lien within 30 days of the date that the notice was received, the lien claimant will be liable to the homeowner for all of its damages for the failure to release the lien, including attorneys fees. Even with the strictness of this law, it is a bitter pill for unpaid subcontractors and suppliers to swallow. It takes a very forceful negotiator to get most lien claimants, even if they are represented by attorneys to properly and timely release their liens. In Ohio you have another alternative which it to bond off the lien. This involves a lawsuit and, for a homeowner, usually cash deposits with the court in an amount equal to 200% of each lien that is less than $5,000 and 150% of each lien that is $5,000 or more. This bonding process is done by way of a lawsuit. I would recommend hiring a lawyer to do it. I am a past Chair of the American Subcontractors Association Attorneys Council which has given me great contacts across the country. If you would like to find an attorney that can help you do this in your state, please feel free to contact me via email (in my profile). I will be happy to locate an attorney in your state to help you (of course I do NOT charge for that) I have also written some articles for the Builders Exchange Magazine you may find helpful. You may find them at http:/ohiolienlaw.com/bx/resources.php . You may also find it useful to review your state's statutes. Here is a link to Ohio's Mechanic's Lien Statute. http://codes.ohio.gov/orc/1311 . I hope that this helps.

Answer 2

All potential mortgagees will check the same land recordsto determine the status of the title to the property. Any potential mortgagee will find that mechanic's lien. You need to disclose it. If you are approved for a mortgage the lender will require the lien be paid off from part of the proceeds.