WHEN TO FILE SUIT TO FORECLOSE YOUR MECHANIC’S AND MATERIALMAN’S LIEN

A Mechanic’s and Materialman’s lien, once filed with the county clerk, is valid for only one (1) year.  This is because it directly affects the owner’s title, andpublic policy dictates that the lien be enforced within a short period of time.  Enforcement of a lien is done by filing a lawsuit to foreclose. The courts strictly construe the time limit, i.e., the statute of limitation.  If you are one day late, the lien may be cancelled by the owner filing an affidavit. Bottom line, do not wait to file suit until the end of the year from the date the mechanic’s lien was filed.

WHERE TO FILE SUIT

Suit must be filed in the district court of the county in which the property is located. Further, it is common for the owner’s construction contract to provide that all disputes will be decided by binding arbitration, as opposed to a court proceeding by judge or jury. In fact, it has long been a tradition to do so in the construction industry. Arbitration is usually quicker and less costly. The decision is final and binding, with almost no right to appeal. There is no right to a jury trial, but that is usually more of a concern to property owners. The Arbitrator is usually an experienced construction attorney or a retired judge. Arbitrations are like a court proceeding with the same general rules of evidence, but much more informal. Since you can only foreclose your lien through a court proceeding, not arbitration, you bring a lawsuit to protect the lien, and then immediately request the court to stay the court proceedings. When the arbitration is done, if you are successful, you go back to court and turn the arbitration award into a judgment.

DO YOU NEED A LAWYER?

Every individual has the right to represent themselves. This means they can prepare all necessary papers, appear at all hearings, and actually try the whole case alone. In so doing, the court considers you to be acting pro se. Before making this decision, consider the following factors:

1. You are a professional and know the ins and outs of not only the construction industry but of the project itself. Your lawyer may not know the facts as well as you.

2. How is your public speaking ability? If you are uncomfortable speaking to a group, you will be even more uncomfortable in court or arbitration. You may not be able to present your arguments. Appearing uncomfortable is often perceived as having deficiencies in your case. People usually think that if you are not comfortable about your own facts, then they must not be that strong.

3. If the other side has a lawyer, you might want to think twice about representing yourself. You will certainly know the facts quite well, but you may be blindsided by legal technicalities.

4. You may also want to think twice if this is a really nasty and emotional case. In other words, if the other side is going for “blood”. Having a lawyer can shelter you from this emotional trauma. No matter how strong you are, unless you are a lawyer, lawsuits are taxing not only on your time, but on your physical and emotional energies.

5. If you have a good case in which you have complied with all the technicalities and performed good work, you are essentially engaging in a collection action. These actions are typically uncomplicated because there are few defenses or defects alleged by the property owner. This makes it easier for you to represent yourself.  On the other hand, you will have only yourself to blame if you are unprepared and lose a case that you clearly should have won.

6. If you have a binding arbitration provision, you may consider representing yourself because the arbitrator tends to give you more leeway. There are also fewer rules and not they are usually not quite as strict.

7. You could consider representing yourself but get advice along the way from a lawyer. It is much cheaper that way. On the other hand, the lawyer cannot watch over every move and you might slip up. Many times lawyers can also help you with preparing the forms, simply putting your name on the pleading. You can also bring in your lawyer at the end to actually try the case.

8. Judges and courts do not give legal advice and they cannot make up for you not having a lawyer.  Judges usually treat you the same as an attorney which means they expect compliance with the rules. Although some judges give you more slack, don’t count on it.

The ongoing economic downturn and the crash in the real estate market have put millions of American homeowners in tough positions. Recent news reports say more than 13% of American mortgages are overdue or in foreclosure, an effect likely to be buoyed by high unemployment and the aftereffects of the exotic and subprime loans made during the housing boom. Unfortunately, large numbers of scammers disguising themselves as “foreclosure rescue” companies and loan modification “consultants” have sprung up to take advantage of those homeowners. As state and federal lawsuits show, far too many of them are successful at taking homeowners’ desperately needed money, sending them even deeper into financial trouble for no gain.

Fortunately, the federal government has launched multiple programs to fight both the foreclosures and the scammers. To help homeowners navigate the complicated and sometimes confusing collection of federal resources, the Federal Reserve Board has collected links to those resources on one page. There, struggling borrowers can find resources to help them avoid foreclosure; apply for the federal Making Home Affordable refinance and loan modification programs; avoid foreclosure rescue scams; and address related issues like credit repair, taxes and loans. The Fed has also established Foreclosure Rescue Centers at each of its 12 district offices, where it connects homeowners with community and local organizations working with troubled homeowners.

The size of this foreclosure crisis, which set new records for foreclosure and bankruptcy rates, is part of the reason the federal government is actively intervening to stop foreclosures. Foreclosures ultimately threaten our nation’s economic stability by threatening the housing market. When a home is foreclosed on, the bank typically loses money. In this market, it is also likely to sell the home at a low price, depressing housing prices. Those prices can be driven down further if the home sits vacant and unmaintained for a long time, because unkempt yards and dilapidated buildings tend to lower the price of the real estate nearby, even if those homeowners are still current on their loans. And of course, the housing downturn has negative effects on real people, who lose their investments, their communities and their dreams along with their homes.

According to the president of the Mortgage Bankers Association, nearly 50% of borrowers who face foreclosure haven’t talked with their lenders, sometimes out of embarrassment and shame. (The MBA’s members have also faced negative publicity after numerous published reports that homeowners’ efforts to talk to their lenders were met with red tape, incompetence or incorrect denials. This has led to a growing number of lawsuits from consumers and their personal injury attorneys.) We do not believe anyone should lose their home just because they were too embarrassed to face discussing their financial problems. And we believe even more strongly that the foreclosure rescue scammers who prey on desperate homeowners would be out of business if all homeowners took the time to educate themselves about what to watch for. That’s why we strongly urge homeowners in financial trouble to take advantage of the resources offered by the federal government.

One of the most needed types of insurance coverage is also one of the most commonly overlooked, or even known about. It’s called Ordinance or Law Coverage.  As your property becomes older certain changes in your county’s building codes and ordinances change to reflect new standards for construction. If your older property suffers a substantial loss, fixing it may require a higher construction standard to reflect new laws, therefore simply replacing your home as it was just isn’t good enough to meet these new laws and codes.

Let’s say, for example, your home was built in 1972, and in 1993 the building ordinance was upgraded to call for portions of the same building to be built in a different way. Complying with this code could require changes in design and building materials, and could entail substantial additional costs for labor and materials.

As this occurs the cost of replacing your building could be greatly increased. If these new laws are not met during re-construction the codes inspector must stop construction until such time as these building standards are properly met. If your insurance doesn’t cover this increase in government standards then you risk being in a “catch 22″ situation where you will have to pay for these upgrades before completing the repairs and possibly resuming occupancy.

Please review your policy to find out exactly what it offers for ordinance or law coverage.

Chronicle Editorial excerpt:

As the nation’s economic crisis drags on, we’ll hear more and more about the financial and political mistakes that fueled it. But what about the legal mistakes?

Quiet as it’s kept, if homeowners had more legal advice and legal power to negotiate with lenders, the foreclosure epidemic might have turned out to be as threatening as the common cold.

More than 8 million American families are expected to lose their homes to foreclosure over the next four years. Foreclosures destabilize families and depress entire neighborhoods’ property values. Experts
believe that they will be the major reason why it’s going to take the housing market years to recover.

This is serious business. And yet the laws in most states don’t take foreclosures very seriously. In 30 states mortgage holders who allege that homeowners have fallen behind in their payments can auction off their homes without the intrusion of any judicial process. In 33 states homeowners don’t even have to be personally served with a foreclosure notice. Tenants have stronger protections.

Making matters worse is the fact that most homeowners don’t have access to lawyers, who have better success at negotiating with lenders and potentially finding workable solutions that avoid foreclosure. According to a new report from the Brennan Center for Justice, cuts to civil legal aid programs have deprived poorer homeowners of representation during one of the most critical proceedings of their lives. Many counties don’t keep this information, but they dug up information on the ones who do, and the numbers are staggering. Eighty-four percent of foreclosure defendants with subprime or nontraditional mortgages in Queens County, N.Y., went without full representation, for instance.

The “crisis” has passed.

The pain is just beginning.