Determining how much I'll receive on a property I hold a first lien on.


#1

We graded a house pad and the owner built a home on it. He ran out of money before completion of the project. We have recorded promissory notes with payment schedules that were not honored. I have had liens on the property and when it came time to get a draw on the construction loan I would remove lien. We did this several times. I have $25K in lawyer?s fees and a balance of $60K still owed to me. I have a lien and a deed of trust all recorded with the county the property is in. The property is valued at $1million and he owes $1.5 million on various loans (construction and property). What?s the chances of me getting paid in full?


#2

Totally depends on the position of your lien vs. the others. If yours was recorded first it is nearly certain you’ll recover everything - if you were recorded last I’d say you’ll very likely get nothing.

Add up the loans recorded before yours and you’ll get a pretty good idea of where you stand.


#3

I was the first one to put a lien on the property, because I did the grading. The owner was getting draws from the bank upon completion of phases of construction. I was paid about 1/2 of what he owed me before he defauted on the loan. It’s been 2 1/2 years of waiting and paying lawyers to fight for what I should have never let get this far out of hand. I guess what troubles me is the property has a $1.5 million loan balance and I would bet it will sell for around the $1 million mark. Do you think I will get a % of my money or
would I get paid out first from the proceeds?


#4

Again… depends on the priority order of the loans and liens. You say you have the first lien - but are you ahead of the loans too? In determining priority order loan vs. lien makes no difference. So if that $1.5M loan was recorded before your lien, you will likely get nothing.