What is a Lien in the District of Columbia?
A lien in the District of Columbia is a notice attached to a property that informs the public that the property has been used as security for a debt. A lien establishes a property as collateral for debts and renders the property's title unclear. Liens are legal mechanisms for creditors to collect all or part of what they are owed. They are a form of security interest granted over a property to secure the payment of a debt or performance of an obligation. Different types of liens can be instituted by separate entities, including small business owners, financial institutions, and government agencies. However, lien agreements are generated and enforced by judicial orders issued by District of Columbia courts.
A lien can either be general or specific. Specific liens are attached to the debtor's specified properties or assets, while general liens are connected to all of the debtor's assets. With a specific lien, the creditor and the debtor agree to secure a particular property as security for a loan or debt. If the debtor cannot make payments, the creditor may only receive the specified property or its value. In contrast, general liens attach to all of the debtor's assets. This implies that if a debtor fails to make payments, the creditor can seize any property to obtain payment.
Types of Lien in District of Columbia
In Washington D.C., a lien may be consensual, with the agreement of the property owner. The most common example of a consensual lien is a residential mortgage. In this instance, the homeowner goes to a bank to take a security interest in the home. Washington banks often record a deed of trust as evidence of the security interest.
Some liens also arise by Washington statutes, and these are called statutory liens. A good example is a landlord's lien, created under RCW 60.72.010, which allows a landlord to hold on to a tenant's personal property if there is a default in rent. Condominium associations in Washington D.C. also have statutory liens over defaulting members. How this works is that the maintenance of condos in a specific area results from various owners chipping in together through a condominium.
A condominium represents cooperative ownership; while every member owns a separate unit, they collectively own other portions of the property as tenants in common. Suppose a unit owner does not, or refuses to chip in, for maintaining the shared areas, the association will need to recover the money somehow. In that case, the law allows for an assessment lien to be placed on the unit owner's property.
What is a Property Lien in the District of Columbia?
A property lien is a security interest on real or personal property. The lien allows the creditor to obtain the property or its value if the owner cannot repay the loan or debt. The property owner voluntarily gives up their rights to the property if they fail to meet debt obligations. The lien can be issued for real property such as houses, condominiums, land, etc., or personal property such as cars and electronics. The lien will contain the terms of the action being taken against the debtor to claim the asset. The Recorder of Deeds approves and records any property liens taken out in the District of Columbia.
How Do You Know if a Property Has a Lien in Washington D.C.?
Usually, the property owner will know of any existing liens on the property. The reason is that most liens result from the owner's action, like a mortgage lien or lien arising out of debt. It is then the owner's responsibility to inform third parties of the situation before attempting a sale.
However, in some circumstances, like a statutory lien, the property owner may be unaware until it is time to foreclose. That is why it is crucial to find out ahead of time and prepare for such a situation. The safest bet for an interested party is to conduct a title search or visit the appropriate government agency in charge of recording liens.
How Do I Check for Liens in Washington D.C.?
Different government agencies manage and record different liens. So, before checking for liens in Washington D.C., it is essential to identify the type of lien and where it is filed. The Washington D.C. Recorder of Deeds is the centralized office in charge of indexing, recording, and storing public records in the state. These public records include liens such as a judgment lien on a person's property, as provided in § 15–102 of the Washington D.C. Code.
Thus, a property owner or an interested person may visit the department at 1101 4th Street, SW, 5th Floor, Washington, D.C. 20024 to access property records or conduct lien and title searches. However, due to Coronavirus concerns, the building is now closed to the public till further notice. Alternatively, the department provided an online public records site to make the search process easier.
On the other hand, Tax liens are filed in superior courts. So, to confirm that a tax lien exists or to review the legal documents, interested persons may contact the superior court where the lien was filed. Location information for all courts in Washington D.C. is listed on the Washington Courts court directory page.
For motor vehicle liens, the Washington State Department of Licensing is the right place to visit. Even if the seller provides title documents, verify that the title is valid and clear of lien holders by visiting the department.
Free Lien Search in Washington D.C.
Government agencies that maintain public records provide free lien searches to the public. Through this, individuals may find information like the lienee or lienholder's name and address, the type, and status of the lien, etc. interested persons may visit the physical offices of the particular government agency or check if the agency has an online search tool.
What is a Tax Lien in the District of Columbia?
A tax lien is an enforcement action applied against tax defaulters. It is an involuntary lien that can be attached to the property or assets of a delinquent taxpayer. A tax lien may be recorded with the D.C. Recorder of Deeds against taxpayers who fail to pay their taxes. Tax defaulters have 10 days after receiving a due tax notice from the District to pay their taxes. A tax lien announces to the public that the District has a preferred claim over other creditors. The lien on the property will be in the amount of taxes owed by the taxpayer.
What is a Mortgage Lien in the District of Columbia?
A District of Columbia mortgage lien is a consensual lien on a piece of real property held by a creditor as security for a debt or loan. The lien is given to the creditor by the property owner, and the creditor must file it with the D.C. Recorder of Deeds to ensure it is put on the public record. If the loan is repaid, the creditor files a Satisfaction of Mortgage notice to remove the lien from the property.
What is a Mechanics Lien in the District of Columbia?
A mechanics' lien in the District of Columbia is a security interest provided to persons who supplied labor or materials to improve a property. It is a legal tool that ensures persons and firms that built or repaired a structure are compensated. Mechanics' liens can only be filed by contractors, suppliers, and sub-contractors on a property improvement project.
It is not mandatory to file a preliminary notice in D.C., though it is still a good idea to do so. A preliminary notice is a document sent to the general contractor or owner of the property at the start of the project. It informs of the work being done by the writer of the notice.
To file a mechanics' Lien in D.C., the claimant must complete and submit a Notice of Mechanics' Lien form. The information provided by the claimant will include:
- Claimant's details
- Property owner's details
- General contractor's details
- Amount claimed
- Description of labor or materials
- Description of property
- Copy of contractor's license and certificate of good standing
- Copy of home improvement contract
- A signed and notarized statement verifying the accuracy of the information provided.
Mechanics' liens must be filed within 90 days, after the completion or cessation of the project, whichever happens, earlier. A mechanics' lien can be filed in person at the Office of the Recorder of Deeds or by mail. It can also be filed electronically using any approved third-party electronic filing service. A copy of the lien must be sent to the property owner within five business days of filing. Mechanics' liens in D.C. are valid for 180 days after the claim has been recorded, after which they can no longer be enforced.
To enforce a lien, an Action to Enforce must be filed within 180 days. This is a full lawsuit against the property owner to foreclose the property and should not be entered lightly. The claimant will also have to file a Notice of Pendency Action (lis pendens) with the recorder's office within 10 days of recording the action. The purpose of this is to put other purchasers and lenders on notice regarding the foreclosure of the property. The lienholder is required to release the claim on the property after the owner has settled the debts. Failure to repay debts results in a $50 penalty plus any damage suffered by the property owner.
What is a UCC Lien?
A UCC Lien protects sellers of goods and materials from bad debt by providing a security interest in the borrower's assets. The seller (or creditor) can repossess the debtor's personal property, listed as collateral, upon a failure to meet financial obligations.
The Uniform Commercial Code (UCC) facilitate interstate commercial transactions. While states are primarily in charge of devising laws, but the laws must adhere to the standards set by the UCC to enable interstate commerce. UCC laws cover the sales of goods, securities, and negotiable instruments but do not cover employee, service, or real estate contracts. UCC liens can be attached to the debtor's property — usually the goods or materials but not always — under Article 9 of the UCC by creditors. Material suppliers for construction projects commonly use UCC filings or liens to guarantee repayments for credit facilities extended to customers. UCC protections apply to goods and materials purchased but may also apply to services rendered if it is only a small amount or for incidental labor.
To attach a UCC lien, the creditor must file a UCC-1 financing statement. Filing a UCC-1 financing statement formalizes the creditor's claim and declares a legal right to the debtor's property. Both parties agree to the collateral, payment terms, and the supplier's security interest at the time of the purchase or order. The UCC financing statement form is completed by both parties at the time of the purchase and filed with the D.C. Recorder of Deeds. The lien remains active for five years unless it is removed. If the financing terms of the agreement are longer than five years, the lien must be renewed.
UCC Liens can be filed electronically or in person at the Recorder's Office and are public records.
What is a Judgment Lien?
Upon losing a civil case, a judgment lien can be placed on a debtor's property. In civil lawsuits, there are typically monetary payments instituted as part of the judgment. Creditors can ensure that they receive owed amounts by filing a judgment lien after the judgment is entered. This gives the creditor the right to be paid from the proceeds of the sale of the debtor's property. In the District of Columbia, judgment liens can only be attached to real property, i.e., real estate such as land, houses, and condominiums, but not personal property. A creditor files the judgment with the D.C. Recorder of Deeds to attach the judgment lien to the debtor's property. A judgment lien attached to any property in the District of Columbia remains on the property for 12 years, irrespective of if the property changes hands.
Voluntary Lien Vs. Involuntary Lien in the District of Columbia
A voluntary lien is a consensual claim to property as collateral to ensure a debt or loan repayment. With voluntary liens, the property owners consent to the creditor's legal claim to property as security for debts. The property attached to the lien can be seized and auctioned off if the debtor defaults on repayments. Voluntary liens are typically placed on properties that are financed and are usually mandatory for persons seeking financing. If the debtor cannot make repayments, the property will be repossessed by the lender, who holds the lien, to recover the money. Examples of voluntary liens are mortgages, property liens, and car loans.
An involuntary lien is a non-consensual claim to property as collateral to ensure debt is paid. Involuntary liens are liens attached to a property without the explicit consent (and even against the will) of the owner. These liens can claim the real estate, personal property, and financial assets of the debtor. If an involuntary lien is placed on a debtor's assets, the debtor has no claim to the assets until the debts are repaid. Involuntary liens are typically placed by regulatory authorities for unpaid financial obligations. They can also be placed by third parties such as home repair contractors, plaintiffs in lawsuits, credit card companies, and law enforcement. Examples of involuntary liens are tax liens, judgment liens, and mechanics' liens.
How Creditors Collect Payment Through a Lien
A creditor is someone that is owed money or other obligation. If the creditor records a lien against the debtor's assets or property, it creates a legal right over that property or asset. As such, the creditor has the right to repossess the property or force a sale. The creditor may also carry out other legal actions against the property owner to settle the debt.
How Do I Get a Lien Removed in Washington D.C.?
The process for getting a lien removed in Washington is called a lien release, provided in R.C.W. § 60.04.071. Generally, the Washington Statutes do not provide a specific form for releasing liens, but contractors may issue their lien release forms. After a debtor pays the due amount, the lien holder prepares a release document, a statement requesting the lien to be released. The lienholder may then present this document to the person making the payment.
To release motor vehicle liens, the affected person must first pay off the lien on the vehicle. The next step is to submit either of the following documents at the nearest DMV office:
- A letter of financing stating that the lien has been satisfied
- A certified loan agreement stamped "paid" and issued by the bank
- The title certificate with a lien release stamp
How Long Does a Lien Stay on Your Property in Washington D.C.?
The duration that a lien stays on a debtor's property in Washington D.C. varies with the type of lien. Under the RCW 4.56.210, judgment liens on a real or personal property last for only ten years from the entry date, unless extended for another ten years, under RCW 6.17.020. A voluntary lien, such as a mortgage or motor vehicle lien, will stick to the property until payment is made or the property foreclosed. Mechanics lien in Washington expires eight months after filing, but this expiration only means that the lien is unenforceable, not removed from the records.