Question

What is this an example of?

Contractor begins construction of a home on March 1, 2012 and ended on September 15, 2012. The Contractor filed a lien claim within 120 days from last furnishing labor & materials to the
lot, i.e., prior to January 14, 2013, the lien claim relates back to first day of construction, March 1, 2012. Thus, if a Buyer purchases property and closes on December 10, 2012 they take ownership subject to a possible later filed mechanics lien (not revealed in a
title search). Mortgage lien inferior?

Answer 1

This is an example of a mechanics lien claim. The mechanics lien takes priority over a mortgage lien in terms of payment. The buyer takes ownership subject to the possibility of a later filed mechanics lien.

Step-by-step explanation:

This is an example of a mechanics lien claim. A mechanics lien is a legal claim that can be filed by contractors, suppliers, or other parties who have provided labor or materials for a construction project. In this case, the contractor filed a lien claim within 120 days of the last day of construction to protect their right to payment.

The lien claim relates back to the first day of construction, meaning that the contractor's claim takes priority over subsequent rights or interests, such as a mortgage. If a buyer purchases the property and closes before the lien claim is filed, they take ownership subject to the possibility of a later filed lien.

In terms of the mortgage lien, it is considered inferior to the mechanics lien. This means that if the property were to be foreclosed upon, the proceeds from the sale would first be used to satisfy the mechanics lien before the mortgage lien is paid off.