What is a Lien in Nebraska?
A lien in Nebraska is a claim to a property or asset. The primary purpose of this legal claim is to bind and encumber a property to secure payment of a debt or ensure an obligation's performance. The lien is a powerful legal remedy that confers a creditor with a security interest on a property. The property or asset becomes collateral that the creditor can claim or repossess in the event of a contract breach or underperformance on the debtor's part. This claim is not necessarily granted through extensive legal actions or court intervention. However, it is typically established by the creditor or via legal judgment. Claimants in Nebraska can file a petition at the county Register of Deeds' office and local district court. Nebraska courts are also tasked with issuing the judicial orders required to enforce liens within state limits.
Types of Liens in Nebraska
There are several types of liens in Nebraska, including tax liens, construction liens, judgment liens, and Homeowners Association (HOA) liens, to name a few.
However, all liens fall under two broad classifications: consensual and non-consensual liens. When an individual uses their property as collateral to guarantee payment to a creditor, the lien established from that action is a consensual or voluntary lien. An example of this lien classification is a mortgage lien.
Meanwhile, non-consensual or statutory liens are placed on a property against the owner's will. One example is a tax lien issued by a tax authority when a resident defaults on the payment of taxes. Another is the mechanics or construction lien, which contractors, subcontractors, or suppliers use to secure payment for materials supplied or services rendered to improve a property.
Liens are also categorized by their scope: general or specific. A general lien allows the lienholder to seize and sell any property to pay off a debt. In contrast, a specific lien authorizes the lienholder to foreclose or sell only a particular asset. An example of a specific lien is a statutory lien on agricultural products, equipment, or production inputs.
What is a Property Lien in Nebraska?
Property liens in Nebraska are placed on real or personal property. Therefore, when an entity finances a home or car with borrowed money, they agree to have a lien on the property. This lien protects the lender from losing money if the borrower defaults and cannot repay debts. As such, the lienholder can rightfully seize, sell, foreclose, or repossess the property.
Property liens can arise out of any legal transaction in Nebraska. It is typically a standard for acquiring assets such as vehicles and property. In such situations, they are placed with the property owner's consent, along with written agreements that the incurred debt will be settled within a specific timeframe.
In some cases, liens could extend to legal issues such as child support default payments.
To secure an outstanding support payment, a lien may be placed on a child support defaulter's property. Similarly, a government entity can place a property lien, specifically the state taxation authority. Such claims are placed on a defaulting taxpayer's assets and are called tax liens. Other examples of property liens are mechanics' liens attached to a piece of real estate and judgment liens which a court imposes on the judgment creditor's behalf.
A property lien affects the value and sale of real property in Nebraska because most buyers are wary of acquiring property with liens attached to them. The fastest way to get rid of such a claim is to pay the debt, negotiate with the lienholder, or prove that the lien is unauthorized by law. An unauthorized lien is invalid or wrongful. If the lien is wrong, the property owner can hire an experienced attorney for legal assistance to contest the claim.
How Do You Know if a Property Has a Lien in Nebraska?
Usually, a property owner receives a notice when a lien is filed against their property. Based on the Nebraska Revised Statutes, Chapter 52, the owner must receive a copy of the lien stamped by the Register of Deeds within ten days of the lien's filing.
However, there are instances where an owner would not receive this notice because the individual changed mailing addresses. A property owner may also not find out about the lien until they try to sell or refinance the property.
Fortunately, Nebraska considers perfected liens as public records. As a result, any lienee (the debtor) or third party with a property's address can quickly look up liens in the state. Usually, the party can conduct a title deed search at the Register of Deeds office in the county where the property exists. The title search provides details on the property's ownership and liens.
Though the title search is usually free, a requester may be asked to pay a token for a copy of the report. To perform a thorough investigation, an individual may need to engage the service of a real estate attorney or title company.
What is a Tax Lien in Nebraska?
Nebraska tax liens are the state government's legal claims to a defaulting taxpayer's property or business assets. This claim puts the defaulting taxpayer's assets at risk, and in most cases, can only be removed after an outstanding payment is made. A tax levy follows when a tax lien is not removed in due time. The levy results in the actual seizure of the debtor's property, assets, and bank accounts. It could even lead to the Nebraska Department of Revenue garnishing the debtor's wages to pay owed taxes.
According to state laws, homeowners who fail to pay delinquent taxes can lose all or part of their properties in a tax sale. However, although the buyer gets the "certificate of purchase," they are not immediately granted property ownership. The certificate is simply evidence of the purchaser's interest in the property during the redemption period. The Nebraska law institutes a 3-year redemption period during which debtors are given a chance to pay off owed taxes and reclaim their properties legally.
Tax lien sales occur on the first Monday in March every year. Before this event, the county treasurer must publish a Notice of the Tax Sale once a week for three weeks, starting from the first week of February. The treasurer must also post a copy of the notice in a visible place at the county office. Statutes governing these tax sales are contained in Chapter 77 of the Nebraska Revised Statutes.
Debtors who cannot make payment may offer to pay the tax in installments, file an appeal for the tax review, or declare bankruptcy. However, debtors are advised to make these decisions with an attorney's help.
What is a Mortgage Lien in Nebraska?
A mortgage lien in Nebraska is a legal document that gives a creditor conditional ownership of a debtor's property. The lien is a means of ensuring that the debtor keeps up with payment obligations or risks foreclosure if the debt remains unpaid. Besides, it also prevents the sale of the real property if the mortgage is not satisfied. The lien offers the most robust protection to a creditor because the claim puts pressure on the debtor to pay the bills.
What is a Mechanics Lien in Nebraska?
A mechanic's lien in Nebraska is also called a construction lien. It is a legal tool used by construction service providers to secure payment for unpaid services. Once filed, the lien encumbers the property such that the property or project owner finds it difficult to sell or refinance the property without first removing the lien by paying the claimant or lien holder.
According to state laws, contractors, suppliers, architects, surveyors, or builders who provide materials or labor services for construction projects can file mechanics' liens in Nebraska. However, the state only allows the claim to be filed when the claimant proves an agreement exists to provide services or materials for the construction or improvement of a piece of real property. Construction services may include:
- Altering the land surface
- Demolishing, repairing, or removing a structure that is already on the land
- Landscaping services
- Surface testing
- Plan and survey preparation
Materials supplied include every tool and machinery delivered to the site and used in construction.
Claimants may file liens with the Register of Deeds of the county where the property is located. The lien statement must contain the following information:
- A legal description of the property subject to the lien
- The name of the property owner
- The name and address of the claimant filing the lien claim
- A detailed description of the services rendered or materials supplied for the project
- The amount in controversy
- The date the service was rendered or materials were furnished
For the mechanic's lien claim to be valid, the claimant must file it within 120 days from when the services were last performed. Once recorded, the claimant must send a copy of the lien claim to the owner within ten days. To enforce the lien, the claimant must initiate a civil lawsuit. This lawsuit should be filed in the county where the property is located. After filing, the lien is enforceable for two years.
What is a UCC Lien?
A Uniform Commercial Code (UCC) filing or lien is a legal document that a creditor in Nebraska files to notify the general public of an interest on a debtor's personal, real, or business property. When a debtor pledges collateral to secure a loan, the UCC filing or statement allows the creditor to lay claim to the declared property or asset formally. Therefore, the declared assets serve as collateral until the debt is discharged.
The UCC lien is designed to primarily protect a creditor's interest in the event of a debtor's default, bankruptcy, or liquidation. In such cases, the lien authorizes the lender to seize, sell or foreclose on the collateral to pay the debts off.
Businesses in Nebraska can file UCC statements in the office of the Nebraska Secretary of State. To file, the parties must provide a financing statement that contains the following:
- The debtor's name and address
- The creditor's name and address
- The collateral
UCC filings are a matter of public record and are usually published in the local newspaper to give general notice of a claim.
A UCC lien is active on a property for five years. Therefore, any lender who needs to lay claim to a debtor's property for longer than that must periodically renew the UCC statement. Creditors can place UCC filings on various properties and business assets, but they primarily file UCC liens against real property or real estate. The Secretary of State's Office charges filing fees for UCC claims. Interested entities can file the lien claims online, by mail, or in-person:
Secretary of State, UCC filing center:
P.O. Box 95104
Lincoln, NE 68509
Phone: (402) 471-4080
Fax: (402) 471-4429
What is a Judgment Lien?
A judgment lien is a statutory claim attached to a debtor's home or property in Nebraska.
It is put in place by a court ruling, and it gives a judgment creditor the right to take possession of a judgment debtor's real or personal property if the debtor defaults and cannot make payment. Although the court orders the debtor to pay the creditor, payment is not always guaranteed. The court orders the payment but plays no role in collecting the payment on the debtor's behalf. Once a judge decides on the civil case, a judgment lien is created automatically against the debtor's property, and the creditor can file it with the county district court's clerk to enforce the claim.
While many other states allow liens to be attached to different property and assets, creditors can only claim real estate in Nebraska. Therefore, a judgment lien can be attached to any real estate property in Nebraska owned by the debtor, specifically in the county where the judgment is entered. Nebraska laws on judgment liens are enclosed in Nebraska Revised Statutes, Sections 25-1303, 25-1542. According to these laws, judgment liens attached to a property in Nebraska remain in effect for five years, including when the property changes ownership. If the judgment is not executed within those five years, it becomes dormant.
The best way to remove a judgment lien is by paying the debt owed or negotiating other terms with the lienholder. The payments can be made directly to the creditor or through the county court.
Voluntary Lien Vs. Involuntary Lien in Nebraska?
In a voluntary lien, the property owner grants the creditor permission or consent to attach a claim to the property as security for repaying debts. The borrower agrees to grant the lien because the property acts as collateral that may be seized or sold off if unable to fulfill debt obligations. In Nebraska, voluntary liens are attached to properties, including:
In contrast, an involuntary lien is legally placed on a borrower's property but without their consent.
In most cases, this type of lien is placed by a regulatory authority — for example, a tax lien placed on real estate because of unpaid taxes.
How Do I Check for Liens in Nebraska?
As previously noted, liens are public records in Nebraska. This regulation makes it easy for all persons to access the files on demand.
In every county, the Register of Deeds keeps the records of real estate-related liens. Individuals interested in looking up the records can stop by the office to review them and obtain copies. Copy requests may come at a charge.
Additionally, individuals searching for UCC liens in Nebraska can use the online tool provided on the Secretary of State's website to obtain information.
Free Lien Search in Nebraska
Lien searches in Nebraska are usually free, other than the charges incurred for copy requests. Besides paying a physical visit to the Register of Deeds office, individuals may access the Nebraska deeds website or a property search tool to conduct free searches for property liens. These sites allow the requester to search via name or property. The search provides the following information:
- The legal description of the property subject to the lien
- Name and address of the debtor or lienee
- Name and address of the claimant or lienholder
- Type of lien
- Document or file number
- Filing date and time
- The total owed amount (including costs, penalty, and interest)
- A scanned image of the filed instrument (i.e., the notice of lien)
- Book and page number
How Creditors Collect Payment Through a Lien
With a lien, a creditor can secure the payment of a debt by seizing and selling a debtor's collateral property. In other words, the creditor will use proceeds from the property's sale to settle the debt.
However, creditors will receive payment by priority when several liens exist on a property. The parameters for evaluating which creditor gets paid first are the type of lien and the time of its filing. Usually, the tax liens come first, followed by the mortgage liens, then other liens.
How Do I Get a Lien Removed in Nebraska?
A property owner may explore the following options to remove a lien in Nebraska:
Pay the creditor: This approach is by far the easiest way to rid oneself of liens regardless of the type. Once the lienee pays the debt in full or as agreed with the creditor, the creditor will file a lien release with the Register of Deeds.
The Nebraska Construction Lien Act (specifically, Section 52-142) allows anyone interested in the liened property to apply for the release for a mechanics or construction lien. However, the individual or company must deposit 115% of the lien amount with the district court in the same locality as the property.
Contest the lien: Another way for a debtor to remove a lien in Nebraska is to challenge it in court. Upon finding that a lien is invalid, the court can remove it.
Allow the statutes of limitations to expire: This method primarily applies to non-consensual liens. Rather than paying off a debt to remove a lien, a debtor can choose to wait out the lien's statute of limitations (the duration which the law gives creditors to enforce liens). However, this is not usually recommended because creditors can extend this period and redouble efforts to collect the debt.
How Long Does a Lien Stay on Your Property in Nebraska?
In Nebraska, the type of lien determines how long it stays on a property. For instance, a judgment lien remains valid for five years, and even if there is the transfer of ownership of property within that period, the creditor can still enforce the lien. However, once the statute of limitations expires, the lienholder will relinquish all rights to secure payment with the property.
On the other hand, a mechanics lien stays effective for two years from the recording date. Meanwhile, the state mandates that an agricultural lien remains on a property between 30 and 365 days before it becomes invalid.