I often have clients who have entered some sort of business arrangement with someone but never got the details in writing. If you do this, you are courting disaster, whether the other person is a family member, a friend, or a stranger (sometimes, the closer the person is to you, the worse the problem can be).
Too often, each person who enters this type of arrangement walks away with a completely different understanding of the agreement. the best protection for everyone is to have a well-written contract that sets out the details. Otherwise, you have nothing to show to a court if you wind up having to enforce the agreement later. I sometimes joke that a verbal contract is "worth the paper it's written on" for this reason.
The cost of having a competent attorney put your agreement in writing is a whole lot less than the cost of losing what you thought you had, so before you shake hands on the deal, see a lawyer.
Do you have a horror story to add or a question? Please feel free to post.
Friday, March 6, 2009
Monday, March 2, 2009
I Want to Lien Somebody
Question: Somebody owes me money and I want to put a lien on their property. How do I do that?
Answer: A lien is a document that gets put on record saying that someone has claimed rights in someone else's property pending the payment of a debt. There are several ways that liens can be placed on real estate in NC, but simply going out and filing a paper that says somebody owes you money is not one of them.
If a person owes you money and you can prove it in a court of law, then the judgment you win in court becomes a lien on any property that person owns, subject to some exceptions. Exceptions include any statuory or constitutional rights that may protect some of their assets from seizure, and the fact that your judgment has to be against both the husband and wife for you to go after certain property they may own together (known in NC as a tenancy by the entirety property).
Another type of lien is a Deed of Trust, or mortgage, that puts property up as collateral for a loan. This type of lien was covered in Post One. The property owner has to agree to let this type of lien be placed on the property.
Governmental liens might come up because taxes or assessments have gone unpaid. The governmental body that wants the lien has to follow certain steps before the lien can be effective.
Certain people who provide material or labor for the improvement of real estate can place what's called, in NC, a mechanic's lien, against the property if they are not paid. There are very strict rules about how this can be done, but it provides some protection for people in the building industry. I believe much confusion about liens may come from misunderstandings about this process, which leads people to believe they can simply file a paper against anyone who owes them money.
No matter how or why the lien was filed, it doesn't do much until you enforce it. You acutally have to take the steps to have the person's property legally seized and sold to produce the cash that is owed to you. However, if the person sells the property in the meantime, your lien is public notice to anyone who buys it that the property is subject to such seizure. Often, this means that you will be paid out of sale proceeds so that your lien can be cancelled.
Once the debt that caused the lien to be filed has been paid, you are obliged to cancel the lien from the public record.
As always, if you still would like more information or want to comment, please feel free to post.
Answer: A lien is a document that gets put on record saying that someone has claimed rights in someone else's property pending the payment of a debt. There are several ways that liens can be placed on real estate in NC, but simply going out and filing a paper that says somebody owes you money is not one of them.
If a person owes you money and you can prove it in a court of law, then the judgment you win in court becomes a lien on any property that person owns, subject to some exceptions. Exceptions include any statuory or constitutional rights that may protect some of their assets from seizure, and the fact that your judgment has to be against both the husband and wife for you to go after certain property they may own together (known in NC as a tenancy by the entirety property).
Another type of lien is a Deed of Trust, or mortgage, that puts property up as collateral for a loan. This type of lien was covered in Post One. The property owner has to agree to let this type of lien be placed on the property.
Governmental liens might come up because taxes or assessments have gone unpaid. The governmental body that wants the lien has to follow certain steps before the lien can be effective.
Certain people who provide material or labor for the improvement of real estate can place what's called, in NC, a mechanic's lien, against the property if they are not paid. There are very strict rules about how this can be done, but it provides some protection for people in the building industry. I believe much confusion about liens may come from misunderstandings about this process, which leads people to believe they can simply file a paper against anyone who owes them money.
No matter how or why the lien was filed, it doesn't do much until you enforce it. You acutally have to take the steps to have the person's property legally seized and sold to produce the cash that is owed to you. However, if the person sells the property in the meantime, your lien is public notice to anyone who buys it that the property is subject to such seizure. Often, this means that you will be paid out of sale proceeds so that your lien can be cancelled.
Once the debt that caused the lien to be filed has been paid, you are obliged to cancel the lien from the public record.
As always, if you still would like more information or want to comment, please feel free to post.
Saturday, February 28, 2009
Post One
Hello and welcome to Your Law, a place for non-lawyers to get down-to-earth answers about the law and how it works. I'll start with a few of the questions I frequently hear in my law practice, and we'll go from there.
Keep in mind that the answers are geared toward North Carolina law, and may have some variations from state to state. Also, none of the answers will be direct legal advice to the person asking the question or anyone else. If you have a personal legal question, I encourage you to talk to a lawyer near you.
Okay, let's go.
A question I've heard recently is, "I paid off my mortgage, but I didn't get my deed back. Why not?"
The fact that a mortgage document is often called a 'Deed of Trust' causes a lot of confusion. The real proof that you own your real estate is the Deed you got when you bought the property. That Deed should have been recorded at your local register of deeds, or similar governmental recording place (that I'll call the Registry) so that there is a public record of your ownership. After it was recorded, the original Deed should have been returned to you for safekeeping, but a copy remains on public record.
A Deed of Trust, on the other hand, is a mortgage document that puts your real estate up as collateral for a loan. It may have even been the loan you took out to buy the property. It gives you no ownership rights in the property--your original Deed already did that. It does give some rights to the bank or person who loaned you the money, especially the right to have the property sold if you don't pay. (One of the best short descriptions I've heard from a client is, "If you pay you stay: If you don't, you won't.") The mortgage is one form of lien that can be placed on your property. We'll talk more about liens in a later post.
Once you pay off your mortgage, the bank is obliged to cancel the Deed of Trust, which means they have to send some kind of notice to the Registry to tell the public that you've paid your mortgage off and they no longer have an interest in the property. This is called cancelling the lien or cancelling the mortgage.
Traditionally, the bank sent the cancelled note (your written promise to pay them) and the Deed of Trust back to the borrower, but that may or may not happen any more. You've probably read about the problem some big banks and mortgage brokers are having trying to find original documents. The important thing for you is that they record the cancellation at the Registry. You still should insist on getting your original papers back, though, to be on the safe side.
If this answer still doesn't help, or if it raises more questions, let me know. I'll be happy to answer any other general questions you may have about the inner workings of the law.
Keep in mind that the answers are geared toward North Carolina law, and may have some variations from state to state. Also, none of the answers will be direct legal advice to the person asking the question or anyone else. If you have a personal legal question, I encourage you to talk to a lawyer near you.
Okay, let's go.
A question I've heard recently is, "I paid off my mortgage, but I didn't get my deed back. Why not?"
The fact that a mortgage document is often called a 'Deed of Trust' causes a lot of confusion. The real proof that you own your real estate is the Deed you got when you bought the property. That Deed should have been recorded at your local register of deeds, or similar governmental recording place (that I'll call the Registry) so that there is a public record of your ownership. After it was recorded, the original Deed should have been returned to you for safekeeping, but a copy remains on public record.
A Deed of Trust, on the other hand, is a mortgage document that puts your real estate up as collateral for a loan. It may have even been the loan you took out to buy the property. It gives you no ownership rights in the property--your original Deed already did that. It does give some rights to the bank or person who loaned you the money, especially the right to have the property sold if you don't pay. (One of the best short descriptions I've heard from a client is, "If you pay you stay: If you don't, you won't.") The mortgage is one form of lien that can be placed on your property. We'll talk more about liens in a later post.
Once you pay off your mortgage, the bank is obliged to cancel the Deed of Trust, which means they have to send some kind of notice to the Registry to tell the public that you've paid your mortgage off and they no longer have an interest in the property. This is called cancelling the lien or cancelling the mortgage.
Traditionally, the bank sent the cancelled note (your written promise to pay them) and the Deed of Trust back to the borrower, but that may or may not happen any more. You've probably read about the problem some big banks and mortgage brokers are having trying to find original documents. The important thing for you is that they record the cancellation at the Registry. You still should insist on getting your original papers back, though, to be on the safe side.
If this answer still doesn't help, or if it raises more questions, let me know. I'll be happy to answer any other general questions you may have about the inner workings of the law.
Subscribe to:
Posts (Atom)