Involuntary Liens fall under the law of Estates and Property. In the United States jurisdiction, Involuntary Liens fall under state law and the nature and character of the liens depends of the state. However, involuntary liens directly contrast the voluntary liens. Involuntary Liens refer to the charge that is imposed on the property of an owner without his express consent. In other words, Involuntary Liens accrue as a consequence of the law. The liens have the effect of imposing encumbrances and charges on the property in question to the detriment of the owner. The involuntary lien is special in the sense that it does not often accommodate the interest of the owner of the charged and encumbered property.
In the United States of America, there are two main categories of involuntary liens. These are the Tax Liens and the Mechanic’s Lien. It should be appreciated that these liens could in the same vein assume the classification of general or specific liens, and statutory of equitable liens. The paper shall discuss the Tax and Mechanic’s Liens and give some of the circumstances under which they are applicable. It should be noted that Liens originate from the court of law and that the court must first satisfy itself that it has competent jurisdiction to issue the applicant with the lien. Given the involuntary nature of the lien, it often accrues without the knowledge of the property owner. However, for an involuntary lien to be issued, the applicant must demonstrate that he has pursued all alternative options in the process of receiving the debt owned. In addition, for the involuntary liens premised on the equitable law, it must be satisfied that the applicant has approached the court with clean hands. In the long run, the lien imposes an obligation on the property owner to pay the debt owed or risk loss of the property charged and encumbered. In the same vein, the lien has the impact of stopping the property owner from transacting any business concerning the property. To this extent, the lien is often seen as an inconvenience to the property owner occasioned by his own refusal and or inability to pay the debt owed.
This section shall discuss the various tax involuntary liens. The tax liens fall under three categories that mirror the structure and federal system of the government. These are the local, state and federal tax liens. These involuntary liens are issued by the respective governments in connection to overdue tax. However, their use varies in accordance with the state in question. It should be noted that tax is a quid pro quo. In that context, tax is a compulsory contribution that is imposed on citizens and businesses but accrues no direct returns. Under the law, it is mandatory for taxation to be paid and the timelines are given for the respective states. The general provision is that failure to pay taxes accrues penalties which could as well end in prison sentence. In the same breadth, states impose taxes on property. Owners of property are expected to pay property taxes. These taxes could come in the form of rental taxes, land rates, conveyance taxes, among others. The failure to pay these taxes amounts to an illegality that must be cured by the law. In the process of curing this illegality, different governments at different levels impose various penalties.
In the local context, the local involuntary tax lien can be imposed by a competent court of law. This lien would be imposed on the property owner who has reneged on the local taxation requirement by the local government. The spirit of a local tax lien often is to facilitate the payment of the tax that is often overdue. The circumstances that dictate the issuance of this tax lien depends on the law of the local government. However, in most cases it would be imposed for debts that are over three months from the expiry of the tax due date.
Other than the local tax lien, another involuntary tax lien is the state tax lien. This lien accrues at the state level and is guided by state law. It will be imposed on a property owner who fails to pay the necessary state taxes. The lien is different for different jurisdictions depending on the state. However, like the local tax lien, it looks at elements of default in payment of tax and the time limits having been exceeded. In many cases, the lien would be imposed on a property owner who defaults and surpasses three months after the due date without making any presentation to the tax authorities at the state level.
Finally, the last tax lien is the federal tax lien. This applies to defaulters on tax at the federal government. This has a national application that is uniform for the United States of America. Again, this lien is issued in a court of law of competent jurisdiction, in this case, a federal court. The lien is issued in circumstances of default of payment and intends to coerce the property owner into payment of federal tax. The federal tax lien is often more punitive and would apply for cases of larger magnitudes. Like all other tax liens, the applicant must satisfy to the court that he has pursued the tax payment using other methods and has failed in the process. The federal tax lien is premised on the fact that property owners would want to make use of their property and an encumbrance to the detriment of the property user’s enjoyment of the property would often not be welcome.
Another category of the involuntary liens is the mechanic’s lien which is also referred to as the contractor’s lien. This lien arises in respect to the costs incurred or charged for labor, materials and time in the construction, repair or any works to a property. The lien would arise in cases where the owner of the property declines to settle the costs due and accrued. Given the lien is involuntary in nature, it arises only in cases where the property owner has declines to settle the due and the owed mechanic has proved that the costs were incurred in respect of the property. In other words, this lien is given to the mechanic as a form of payment for the accrued and due costs. The type of lien also varies according to the issuing jurisdiction. However, it imposes an encumbrance on property that is only cured by the payment of the cost in question. This form of lien arises in cases of disagreements or reneging on the contract of performance. It is an equitable remedy to protect the mechanic in this context from the exploitation of the property owner.
References
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MacMillan, C., & Stone, R. (2012). Elements of Law of Contract. University of London International Programmes, 1-245.
Miller, R. L., & Jentz, G. A. (2009). Fundamentals of Business Law: Excerpted Cases. New York: Cengage Learning.
Peter, E. (2009). The Modern Law of Contract: Eighth Edition (8 ed.). London: Routledge.
