How to File a Lien in Tennessee

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The method for filing a lien in Tennessee varies, depending on the type of lien, which also determines where to file it. Tennessee lien forms are available online or at the appropriate agency's office, and the fees will vary.

What Is a Property Lien?

A lien is an interest in property that belongs to someone other than the property owner. Liens secure a repayment obligation; if a property owner owes money and gives a lien to secure repayment and then defaults, the person or entity who is owed the money (the creditor) can take the liened property and sell it to satisfy the obligation. The creditor is then a secured creditor.

Perfection of Liens

Liens are granted either by agreement or by operation of law; however, the secured party must usually take additional steps to make the lien enforceable against other parties. This process is called lien perfection.

If the lien is not perfected, then other creditors can take liens on the same property and get ahead of the original secured creditor because they didn't have notice of the original lien.

Perfection may mean filing something with the court, the county clerk, the county Register of Deeds or the Secretary of State.

Types of Property Liens in Tennessee

Different types of property may be made subject to different types of liens. In Tennessee, the main types of liens include:

  • Deeds of trust. While most states use mortgages to secure home loans, some states use deeds of trust instead, including Tennessee.
  • Motor vehicle liens. Financing the purchase of a vehicle almost always results in a lien on the vehicle that remains until the car loan is paid in full.
  • Mechanic's liens. Mechanics' liens occur when construction work is performed on private property and the property owner doesn't pay for the work.
  • Garagekeeper's liens. A garagekeeper's lien is a type of mechanic's lien that applies to vehicle mechanics who are not paid for repairs and still have possession of the vehicle.
  • Judgment liens. If a creditor obtains a money judgment against an individual who owns real estate, the judgment can be recorded as a lien against the real estate.
  • UCC liens. In a commercial lending transaction, a business may borrow money and give the lender a lien on certain assets (or all assets). The lender takes a lien on the assets under the Uniform Commercial Code, or UCC.

Recording a Deed of Trust

Liens on real estate in Tennessee are recorded as deeds of trust rather than mortgages. A deed of trust is a written instrument by which a property owner gives a creditor a lien on a specific piece of real estate. To perfect a deed of trust, the creditor must simply record it with the Register of Deeds for the county where the property is located.

The creditor must make sure the deed of trust meets all the legal requirements for validity under Tennessee law, and then the creditor must pay a fee to the Register of Deeds to have it recorded. Once recorded, the world is on notice that the creditor has a lien on that property.

Recording a Lien on a Vehicle

Liens on motor vehicles are perfected by placing the lienholder's name on the vehicle's title. Historically, all motor vehicle liens were handled by the Tennessee Department of Revenue; however, the laws were changed, and as of July 1, 2019, vehicle lien notations are handled by the county clerk unless it is a second lien, in which case, the Department of Revenue will still process it.

To record a lien on a vehicle, the creditor must provide the county clerk a completed Application for Noting of Lien, which is available on the Department of Revenue website. The application must include a copy of the agreement granting the lien and the original vehicle title, plus the applicable fees, which total $22.00 plus any additional fees that the county may charge.

If the lien is a second lien that is, if someone else already has a lien on the vehicle and another creditor is taking a second lien behind the first the same rules apply, except the title need not be attached to the application.

Mechanic's and Materialman's Liens

A mechanic's lien, sometimes called a materialman's or construction lien, is a type of lien that arises by operation of the law in favor of contractors, subcontractors or material suppliers when the property owner has not paid for work or materials. The law surrounding mechanics' liens is complicated; in short, however, as long as a contractor, subcontractor or material supplier worked directly with the property owner on a residential project, that entity can get a mechanics' lien on the property for non-payment. If the property is a commercial property, the direct relationship may not be necessary.

Perfecting a Construction Lien

Although the lien technically arises automatically, the contractor must still take steps to perfect the lien. General contractors do not have to give notice to the property owner of the lien, although it's considered a good practice.

Subcontractors and materials suppliers, however, must provide notice to the property owner or the general contractor, depending on the circumstances, within 90 days after the last day of performing the work or providing the materials. The notice of lien must include:

  • The lienholder's name and the address to which the owner or general contractor may send communications.
  • A general description of the work or materials provided.
  • The amount owed as of the notice date.
  • A statement of the last date work was performed or materials were provided.
  • A description of the property against which the lien is claimed.

The lien may only include the unpaid balance and no extra items like attorneys' fees, interest or late charges.

Duration of a Construction Lien

The lien remains on the property for only one year. If the lien is not paid within one year and the lienholder fails to file a lawsuit to enforce the lien within one year, the lien is gone. If the lienholder files a lawsuit within one year, the lien will last until the lawsuit is completed.

Garagekeeper's Liens for Unpaid Vehicle Repairs

A Garagekeeper's lien is a type of mechanic's lien that applies to motor vehicles. If an auto mechanic performs work on a vehicle and does not receive payment, the mechanic will have a lien on the vehicle for the labor expended and parts supplied, as well as storage fees. A garagekeeper's lien allows the mechanic to sell the vehicle to satisfy the obligation.

A vehicle owner has 30 days after the work is completed to pay the bill. If the bill is not paid, the mechanic can sell the vehicle. To perfect such a lien, certain steps must occur, including:

  • The mechanic must submit a Vehicle Information Request Form to the Department of Revenue with an itemized list of charges on business letterhead. The state must then provide owner and lienholder information about the vehicle to the mechanic.
  • Once the vehicle information is received, the mechanic must provide notice to the vehicle owner and anyone listed as a lienholder
  • The notice must be in writing and sent by registered mail, or it may be delivered in person. If delivered in person, a notarized affidavit of service is required.
  • The notice must include a description of the vehicle and an itemization of charges. It must also notify the recipients that they have 10 days from the date of delivery of the notice to pay the charges and recover the vehicle. If no response is received, the vehicle may be auctioned off.

Sale of a Vehicle With a Garagekeeper's Lien

The sale of the vehicle may be advertised in the local newspaper at least 15 days prior to the auction; if not placed in the newspaper, a notice must be posted in at least six "conspicuous" places at least 10 days prior to the auction.

To enforce the lien, the mechanic will need to keep all forms, certified mail receipts, itemized charges and copies of the ads or notices of sale.

Creating a Judgment Lien

A judgment lien is a lien on real estate that occurs by operation of law when a creditor obtains a money judgment against a property owner. Once the court enters the judgment, the creditor must obtain a certified copy of the judgment and record it in the county where the property is located. Once recorded, the lien is attached to the property until the judgment is satisfied.

Perfecting a UCC Lien

When a business gives up assets as collateral for a business loan, the lender perfects its lien by filing a UCC-1 Financing Statement, often simply called a UCC. To have a valid lien under the Uniform Commercial Code, the lender must have the borrower execute a security agreement describing the collateral and agreeing to provide the lien. The lender must then file the UCC with the Secretary of State. The UCC is good for five years; before the end of five years after filing, the creditor should file a continuation statement. When the loan is paid, a termination statement will release the lien.

Tips

  • A lien may be recorded either at the office of the Secretary of State, the county Register of Deeds or the Department of Revenue.