CHCP CHCP Lien & Encumbrance Resolution 1 — Questions and Answers
Question 1: A mechanic's lien is filed by which party?
- The mortgage lender
- A contractor or supplier who has not been paid for labor or materials (Correct answer)
- The county recorder's office
- The homeowner's association
Correct answer: A contractor or supplier who has not been paid for labor or materials
Mechanic's liens (also called materialman's liens) are filed by contractors, subcontractors, or suppliers who furnished labor or materials to a property but were not paid.
Question 2: Which type of lien is considered a general lien because it attaches to all real and personal property owned by the debtor?
- Mortgage lien
- Mechanic's lien
- Judgment lien (Correct answer)
- Tax lien for special assessments
Correct answer: Judgment lien
A judgment lien arises from a court judgment and attaches broadly to all property the debtor owns in the jurisdiction where it is recorded.
Question 3: A property tax lien holds what priority position relative to other liens in most US states?
- It is subordinate to all mortgage liens
- It has the highest (superior) lien priority (Correct answer)
- It is equal in priority to a first mortgage
- It only has priority over mechanic's liens
Correct answer: It has the highest (superior) lien priority
Property tax liens are given super-priority status by statute, meaning they take precedence over all other liens, including first mortgages.
Question 4: The principle that the first lien recorded in the public records generally has the highest priority is known as:
- Lis pendens doctrine
- First-in-time, first-in-right rule (Correct answer)
- Subrogation principle
- Estoppel by deed
Correct answer: First-in-time, first-in-right rule
The first-in-time, first-in-right rule (also called lien priority) means liens are ranked by their recording date, with earlier recordings having superior claims.
Question 5: When a homeowner pays off their mortgage, the lender must release the lien by recording which document?
- Deed of reconveyance or satisfaction of mortgage (Correct answer)
- Quit-claim deed
- Warranty deed
- Lis pendens
Correct answer: Deed of reconveyance or satisfaction of mortgage
A satisfaction of mortgage (or deed of reconveyance in deed-of-trust states) is recorded in the public records to officially release the lender's lien on the property.
Question 6: A notice of lis pendens provides constructive notice that:
- The property taxes are delinquent
- Litigation is pending that may affect title to the property (Correct answer)
- A mechanic's lien has been filed
- The mortgage is in foreclosure
Correct answer: Litigation is pending that may affect title to the property
Lis pendens (Latin: 'suit pending') is recorded in the public records to warn buyers and lenders that a lawsuit is underway that could affect ownership of the property.
CHCP CHCP Lien & Encumbrance Resolution 1
A mechanic's lien is filed by which party?