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I am trying to find some information out for my sister. She defaulted
on an auto loan, and she was sued by the Bank. The put a lien on a
plot of land she is hoping to build a house on. She is planning on
taking out a construction loan to finance the building of the house.
What problems will she run into having the lien on the house?
thanks
Ty
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tvmaly@gmail.com writes:
I am trying to find some information out for my sister. She defaulted
on an auto loan, and she was sued by the Bank. The put a lien on a
plot of land she is hoping to build a house on. She is planning on
taking out a construction loan to finance the building of the house.
What problems will she run into having the lien on the house?
There's a good chance she'll have problems getting the loan at all,
since the construction loan would be subordinate to the lien, and
the potential lenders won't like that.
--
Rich Carreiro rlcarr@animato.arlington.ma.us
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tvmaly@gmail.com wrote:
I am trying to find some information out for my sister. She defaulted
on an auto loan, and she was sued by the Bank. The put a lien on a
plot of land she is hoping to build a house on. She is planning on
taking out a construction loan to finance the building of the house.
What problems will she run into having the lien on the house?
Assuming she does get the construction loan and she does build the
house, she won't be able to convey clean title to the land / house until
she clears the lien. Essentially that means that for normal transfers,
the property isn't saleable.
This can be very nasty business. Have her clear the lien before she
builds. It's the wise course.
-paul
ianal
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tvmaly@gmail.com wrote:
: I am trying to find some information out for my sister. She defaulted
: on an auto loan, and she was sued by the Bank. The put a lien on a
: plot of land she is hoping to build a house on. She is planning on
: taking out a construction loan to finance the building of the house.
: What problems will she run into having the lien on the house?
I am not a lawyer. See a lawyer for the "real" answer.
However, it would seem to me that the only LEGAL problem she would
have would be when she attempts to sell the land that the lein has been
placed on. The lein would need to be satisfied before the title could be
transferred in a sale.
As a practical problem, it would seem unlikely to me that she
would qualify for the construction loan with a defaulted loan on her
credit, but that would depend upon many other factors, none of them
relating to the legal ramifications of defaulting on an auto loan.
Joe
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In article <6g3941l2b1v5f7v0pegj4iktfa45t3qv3b@4ax.com>,
tvmaly@gmail.com wrote:
I am trying to find some information out for my sister. She defaulted
on an auto loan, and she was sued by the Bank. The put a lien on a
plot of land she is hoping to build a house on. She is planning on
taking out a construction loan to finance the building of the house.
What problems will she run into having the lien on the house?
This is pretty much the same as having filed bankruptcy. She
likely will not be able to get a bank loan for 5 to 8 years.
She may be able to get a brokered loan, but that will need
good credit other than this repo, a huge downpayment (like
30% down), and a huge interest rate (like 12%). She will
also likely need to satisfy the lien since the home builder
will need that lien credit for his/her own lien to protect
their work on the house. The builder will not want to be
2nd in line if your sister walks out on the project.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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She is planning on
taking out a construction loan to finance the
building of the house.
What problems will she run into having the lien on the house?
Well, for one thing, the brief history you gave us indicates that she
might have trouble paying the loan. And if she defaults on that loan,
the bank will seize the property. And her equity in the property is
reduced by the amount of the lien from the car loan settlement, which
in turns reduces the profit the bank can make from seizing and
reselling the property.
But the main reason I am replying is because I am curious to know why
the car loan wasn't settled simply by repossessing the car! How come
defaulting on a car loan resulted in a law suit and a lien against the
house? :-)
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tvmaly@gmail.com wrote:
I am trying to find some information out for my sister. She
defaulted
on an auto loan, and she was sued by the Bank. The put a lien on a
plot of land she is hoping to build a house on. She is planning on
taking out a construction loan to finance the building of the house.
What problems will she run into having the lien on the house?
thanks
Ty
The below is according to the general common law of securities and may
depend on the laws of the jurisidiction in question.
It is unlikely that the bank has a lien over your plot of land as land
is real property and General or Special possessory liens generally only
cover chattels or personal possessions.
However, if there is a lien, the character of a lien is retention of
possession of property until liability is satisfied.
You have stated that your sister owes money on an auto loan - this is
her liability.
Therefore, the lien will entitle the bank to possession including the
right to exclude entry onto property until the lien is satisfied. You
may also have difficulties in alienating or selling the property until
the lien is satisfied.
It does appear odd that a bank could have a lien unless it was ordered
by a court or an implication of a contract to which your sister signed.
It may be that the bank only has a 'Charge' which is a wholly different
form of security and does not confer a right to possession. It can
limit your ability to sell the house or land though.
Just pay the lien if that is what it is. The bank may interfere with
the construction of your house which I am sure you dont want.
ACS
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In article <gtrm41h0er43aao4l719vablv46shp20g9@4ax.com>,
Timothy <horrigan@aol.com> wrote:
But the main reason I am replying is because I am curious to know why
the car loan wasn't settled simply by repossessing the car! How come
defaulting on a car loan resulted in a law suit and a lien against the
house? :-)
Maybe the car was repossessed, and sold for less than the remaining
balance on the loan.
Seth
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But the main reason I am replying is because I am curious to know why
the car loan wasn't settled simply by repossessing the car! How come
defaulting on a car loan resulted in a law suit and a lien against the
house? :-)
Because the value of the repossessed car was less than the remaining amount
owed, and a deficiency judgment was entered after the car was sold. The
judgment represents a lien on *all* of her property, including a house.
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