what if a lien is filed
UPDATED: Oct 2, 2022
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what if a lien is filed
I am doing a home flip in Indianapolis, Indiana. The contractor has been paid
more than his contract stated but wants more money now even though he didn’t do
additional work. He says if I don’t pay him he will file a lien against the
property and I will have to pay to sell the house.
Asked on August 8, 2019 under Real Estate Law, Indiana
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 3 years ago | Contributor
Ignoring for the moment that you can seek to have an invalid or unjustified lien dismissed (we will discuss that below), if the lien is filed, there was will be a notice filed with the county which will come up whenever anyone searches or looks at title to your home, which will show that there is a claim against the property for a certain amount of money. Any possible buyer will know that the lien must be paid off before they can take title, and if you sell the house, to be able to transfer the buyer clean title, you will have to pay the lien off. So it can obstruct selling the house and can result in some of the proceeds of the home sale going to the lien holder, not you.
However, a lien can be dismissed by the courts if you bring a legal action or challenge to it and prove that it is not justified--for example, that you paid all the money owed the contractor. If he files a lien knowing or with reasonable grounds to know that it is unjustified, you could countersue him for "abuse of process" or "malicious use of process" (deliberately misuing the legal process for an improper, not legally justified reason) and/or seek sanctions under the court rules for "frivolous" (or baseless/unjustified) litigation. So you could tell the contractor that if he does this, you will countersue and seek sanctions for frivolous litigation and also file a complaint with the state agency or board which licenses contractors.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.