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.

While the Obama administration battles to keep people from losing their homes, many homeowners may have to fight foreclosure actions in order to buy themselves time to take advantage of recent legislation like the Helping Families Save Their Homes Act. Stalling or even stopping foreclosures is possible in some instances because loan servicers are bringing most of the foreclosure actions in the country, and they often don’t own the mortgages and have no standing to enforce them.

If you have resolved to fight your foreclosure and to try to save your home, you need to file a timely answer or responsive motion to the foreclosure petition. It is best to hire a lawyer to defend the foreclosure action. However, whether you have a lawyer or not, and regardless of whether you are a victim of a mortgage fraud, or misrepresentations by mortgage brokers, you have the right and the obligation to question the validity and accuracy of your mortgage foreclosure.

In nearly all cases of foreclosure, when the bank files its initial lawsuit, the homeowners have a chance to respond to the complaint and file their own answer. The problem is that, while mortgage companies hire local lawyers, the owners of the house may have little idea of how to go about filing an answer. Also, you may not have the time or money to hire a lawyer before you are in default in your foreclosure case. While only you or your attorney can mount a defense in court, and we can’t provide near enough information in a blog article to adequately assist you, attached to this article is a generic answer to a foreclosure petition to aid you in your defense. This form answer is not intended to be legal advice or a substitute for an attorney. It is merely a tool to help protect your rights by requiring the mortgage company to prove every element of its case: answer to petition for foreclosure

Finally, there may be a Mortgage Foreclosure Assistance Hotline in your state, or HUD-Approved Housing Counselors in your area that help homeowners who are behind on their mortgages.  Check with your state agency or HUD (www.hud.gov) to see if there is a Housing Counselor near you.

Myth No. 1:  You must be behind on your payments to qualify for a loan modification.

This belief is patently false. However, the reason why this belief exists is because it was once true. Before the U.S. government got involved, most banks could not be convinced that you were suffering a financial hardship (and thus warranting their attention as a default risk) unless you were one, two or three payments behind. This is no longer true. On March 3, 2009, the U.S. government passed the Making Home Affordable plan to help fill some of the gaps in the process. One of those gaps was to assist homeowners who were experiencing financial hardship but were hanging onto their credit with everything they had, while keeping their payments current. Maintaining your credit or minimizing the damage is paramount. There is no guarantee that your lender is going to offer you a loan modification.

Myth No. 2:  If you qualify under the government criteria, then your lender must modify your loan.

The U.S. Making Home Affordable plan is just that — a plan. The plan is not a law that obliges lenders to modify all qualifying persons’ loans. The government plan provides the lender with a financial incentive to offer loan modifications to persons who qualify under the plan’s criteria. If you are current on your payments, occupy the property as your primary residence, obtained your loan before January 1, 2009 and meet some other basic criteria, then you are a candidate for the program. If the lender approves your loan modification, then the lender receives a cash-back of close to $2,250 (depending on circumstances) for having approved your loan. It is neither obligated to do so, nor is it obligated to take the government assistance money.

Myth No. 3: My loan must be a FannieMae or Freddiemac loan to qualify for a loan modification.

In the early days of the government plan, both lenders and homeowners alike strove to digest its terms, causing much confusion. One of the most common misconceptions was that your loan must have originally been processed or backed by one of the above-mentioned loan giants in order to qualify under the loan modification plan. This is not true. The government’s plan has two programs; one offering assistance with loan modifications, and the other with refinances. Your loan need not be a FannieMae- or FreddieMac-backed loan in order to qualify for a loan modification. However, if you plan to apply for a refinance under the government plan, then the above requirement applies.

The government plan for refinances was designed to assist those homeowners who were close to qualifying for a refinance but fell short by about 25 percent. If you owe more on your house than it is worth (i.e. the property is “upside down” or “underwater”), then no one will refinance your loan because your home does not offer sufficient collateral to cover the refinanced amount. However, in this case, you may qualify under the government’s refinance plan. Its plan does require that the loan you are attempting to refinance have originally been a FannieMae- or Freddiemac-backed loan. How do you find out if your loan was a FannieMae or Freddiemac loan? For an immediate answer, visit their websites (fanniemae.com and freddiemac.com), and simply enter your street address.

Myth No. 4:  A loan modification will reduce the principal owed on the loan.

In a loan modification situation, this scenario is so rare that expecting it would simply be foolish. Please do not expect the first mortgage holder on your home to forgive the principal on your loan. If someone is promising you that it can be done, be careful. Is it unheard of? No. Is it extremely unlikely? YES.  Lenders are far more inclined to forgive principal on your second mortgage, and then only in a short sale situation (where you are selling your home, not simply attempting to modify your loan).

Lenders can and will do many adjustments to the principal to reduce your monthly payment. One of the most common things that lenders do to the principal in a loan modification is to defer payment of a large portion of the principal to the maturity date of the loan (i.e a balloon payment) with no interest accruing on that principal (you could call this free money). Another principal modification that many lenders offer is to extend the term of the loan (e.g. convert a 30-year loan into a 40-year loan starting today) to keep the monthly payment amount within a tolerable range.

Myth No. 5:  Under a loan modification, the lender will only consider the income of the debtor.

In reviewing your application for a loan modification, the bank will consider the total income of the household. If your spouse works, then their income is considered. It doesn’t matter if you are the only one on the loan and the only one on title to the property. The bank will ask for the total income of all adults contributing to the household’s income. If there are adult children who work and contribute, their income will be considered too. Understand that your lender will review your tax returns and determine the total income of the household by your (most likely) jointly filed tax return.

Myth No. 6:  Foreclosure can be averted at the last minute by applying for a loan modification or a bankruptcy.

The common advice of “Never leave anything to the last minute” could not be truer than in a foreclosure situation. Many states’ laws require that a lender give you several months’ notice before a foreclosure goes forward. Use this time wisely. Consult with an attorney. Find out what your options are. A lender will typically cancel, pause or postpone an upcoming foreclosure sale if you have applied for some form of assistance (loan modification, short sale, deed in lieu of foreclosure, forbearance agreement). However, your application will take several days to be inputted into the system and assigned to a negotiator. Most banks will not promise to stall a sale until your file is assigned to a negotiator. Don’t put yourself in the uncomfortable situation of waiting for good or bad news on the foreclosure sale. Send in your paperwork at least two weeks (if not more) before a scheduled foreclosure date.

Myth No. 7:  The banks are obligated to help you.

No lender is obligated to modify your loan. No lender is going to cut you slack simply because you asked for it. Did the U.S. taxpayer just foot the bill to save our banking system from collapse? Yes. Was this collapse caused primarily by banks offering bad home loans? Yes. Does the plan obligate the banks to cut homeowners some slack? No.

When a lender decides to modify your loan, they do so because they feel it is in their best interest to do so. Keeping this truth in mind is key when preparing an application for a loan modification. The bank does not want to go through the expense of foreclosing (a typical foreclosure may cost your bank six months of time and over $10,000 in hard expenses). The bank does not want to become the new owner of yet one more foreclosed property. Having said that, the bank cannot stand aside and watch a bad loan get worse if there is any chance of saving it. If a borrower has some income, at least enough to keep the bank from losing money, then it will be interested in negotiation. By the same vein, banks want assurance that the new monthly payment is an amount that is not going to overburden the borrower (and hence cause them to be back at “square one” with a delinquent borrower in a few months’ time). This delicate balance is what will make the difference between your loan modification being approved or denied. Keep in mind that for all of the above reasons, you simply will not qualify if you have no income. But if you can show that you can afford some amount, then you should at least try to apply.

Put your best foot forward financially. This is not the time to exaggerate your financial hardship. Be honest and offer what you can. If you simply have nothing to offer, then your next best option is to sell the property short or simply give it back to the bank. Both options have advantages that a loan modification cannot offer (such as forgiveness of principal).

Be vigilant, seek assistance from reputable professionals and explain your financial situation sincerely and frankly.

Several factors go into the decision to buy a home, e.g., price, location [location, location ], condition and financing. One decision is often over-looked, and that is how to take and hold legal title to the home. However, this decision will affect who can sign documents regarding the property, whether creditors can get to it, and how the property will be transferred on your death. Here are the typical ways to hold title to your home or other real estate.

Sole Ownership

This is how an individual holds title to property. The deed may say: “John Doe, a single person” or similar language. It means one person owns the property alone. This ownership form does not apply to property bought by married couples. However, if a married couple wants to put title in the name of one spouse, the deed could say “John Doe, a married person, as his sole and separate property.” When a married person takes title as sole owner, the spouse usually must consent to this and give up all rights in the property by a quitclaim deed or other disclaimer of interest in the property. A sole owner is free to transfer the property as he or she desires, and when the sole owner dies, the property passes by the person’s will unless a Transfer On Death Deed has been recorded.

Co-Ownership

There are several ways co-owners may take and hold title, including:

• Community property. For married couples in “community property” states, this is one of the main ways the couple can hold property. Oklahoma is not a community property state even though an Oklahoma statute exists stating that a husband and wife may hold property as community property. 43 O.S. 207. No two community property states’ laws are alike. In fact, laws in one state may be completely opposite to those of another state on a particular issue. The right of a creditor to reach community property in satisfaction of a debt or other obligation incurred by one or both of the spouses varies from state to state.

• Joint tenancy. Available in almost every state, this ownership form is an option when all of the co-owners will each have an equal ownership interest in the property. In Oklahoma, the four unities of time, title, interest, and possession must be present to create a joint tenancy. The deed must say title is taken as “joint tenants,” or as “joint tenants with right of survivorship,” and the owners must all take title at the same time. 60 O.S. 1991 § 74 Each joint tenant has an equal right of possession, meaning none can exclude the others or claim a certain portion belongs to him or her. A joint tenant can usually sell his or her interest in the property without the consent of the other owners. If there are only two joint tenants and one sells his or her interest, a tenancy in common is created. If there are three or more owners, the joint tenancy interest ends for the interest sold, but stays in effect for the remaining interests. A lien on a debtor’s joint tenancy interest is extinguished if the joint tenant dies before execution on the lien. However, a levy or execution before the joint tenant dies destroys the joint tenancy and allows the creditor to reach the interest of the debtor. The most important characteristic of joint tenancy is that when a co-owner dies, his or her ownership interest goes to the other co-owners by operation of law, and not by a will. As a result of this feature, called “right of survivorship,” the last joint tenant will own the entire property. If two people own property and they want a comparatively easy way for the other person to receive their interest upon death, joint tenancy is an ownership form to consider. The surviving joint tenant only has to file with government entities a few documents to establish full ownership. 58 O.S. 912 If a co-owner of property wants to be able to give away his or her interest by a will, joint tenancy would not be a good way to hold title. Note, it is not a good idea to add your child as a joint tenant on the deed to your home if the primary reason is to simplify the transfer of the property upon your death (i.e., to avoid probate). Never, ever create a joint tenancy with a minor child!

• Tenants in common. Tenants in common are also co-owners of property. Unlike joint tenants, tenants in common do not have to have equal ownership interest in the property. Each co-tenant has an equal right of possession, and each can convey his or her interest without the consent of the other owners. Any tenant in common is free to sell his or her interest. If one co-tenant wants to sell the entire property and the others don’t, a sale can be had by filing a “partition action.” The most important characteristic of a tenancy in common is that when a tenant in common dies, the owner passes his interest to his heirs or his estate and not to the other co-owners.

• Tenants by the entireties. Many non-community property states, including Oklahoma, let married couples hold title as “tenants by the entireties”. 60 O.S. 1991 § 74 Basically, one can think of a tenancy by the entirety as ownership by married joint tenants. That is to say, when a spouse dies the surviving spouse becomes sole owner of the property. Tenancies by the entirety are founded on the somewhat antiquated legal fiction that the husband and wife are considered one person, and consequently, the husband and wife can not truly own the real estate concurrently because they only possess a single interest. Tenants by the entireties are a useful form of ownership because, at common law, creditors usually cannot seize that half of the property owned by the debtor’s spouse. In Oklahoma, however, the legislature qualified the common law tenancy by the entirety by the above statute which states that “[n]othing herein contained shall prevent execution, levy and sale of the interest of the judgment debtor in such estates and such sale shall constitute a severance.” Because this qualification only applies in situations involving judgment debtors, and thus involuntary conveyances only, Oklahoma still applies the common law tenancy by the entirety in matters not involving judgment debtors. That is to say, a spouse may not sell or convey his tenancy by the entirety interest in the property without the consent of the other spouse. Thus, by disallowing individual voluntary conveyances but allowing individual involuntary conveyances, Oklahoma has a unique form of tenancy by the entirety, which in this writer’s opinion, should be used more often by couples living in Oklahoma.