There are thousands of businesses operating in Florida today. At some point, any of these entities may have a lien placed upon them. As a business owner, it’s important to know how having a lien can impact you and your business. The first place to begin is by asking: What types of liens can be placed on my business?
What is a Business Lien?
A business lien is a legal claim that can be attached to a business’s property or asset. The lienholder is a party that is owed a debt. When a lien attaches to property, it gives the lienholder a security interest in the business asset. Consequently, the lienholder has the right to impede the transfer of title or take action to pursue payment on the debt owed to them. If another party has a lien on your business asset, they may have the legal authority to sell your property to satisfy a debt owed to them.
For example, if you purchased your home using a lender, you will pay the lender a monthly mortgage payment to repay that debt. In the meantime, the lender has a lien on your property. If you don’t make your payments as agreed, the lender has the right to foreclose upon and sell your home to recover any remaining debt owed. The lien protects the lender’s interest while you are making payments. Once you have repaid your mortgage loan, the lender can release the lien, and you will have complete ownership of your property.
Are There Different Types of Liens?
There are different types of liens that may impact you and your business. Some liens are voluntary, such as those for a mortgage or automobile loan. In business, this may involve assets such as real estate, equipment, furniture, or company vehicles. When a lien is voluntary, if the borrower defaults, the lienholder can seize the property to recover their interests. Voluntary liens can be created when a borrower needs funds to purchase an asset. They can also be created when an owner uses their property as collateral for a loan.
Business owners may also encounter liens that are related to their operations. A mechanic’s lien is a type of lien that can attach to property when a party has performed work for the business or provided supplies. These types of liens usually come up when a contractor performs work on a business’s property or when there is a construction project. Once a mechanic’s lien attaches, the lienholder will have the right to enforce their rights as a lienholder.
Tax liens are imposed on property when business owners fail to pay their taxes. Local, state, or federal authorities can place these liens on a property.
A business can also be subject to lawsuit-related liens. These judgment liens attach when another party obtains a court ruling that states you owe them a specific amount. Judgment liens can arise in a variety of cases. For instance, a business creditor may obtain a lien after suing you for breach of contract. Owners may also be involved in a personal injury matter or other dispute that results in this type of lien.
Liens and their processes may vary, but the result will be the same—Another party will have actionable rights against your business. The best way to protect your Florida business from incurring a lien is by working with an experienced business attorney. You and your lawyer can discuss your business operations and goals and determine the most suitable ways to protect your interest. If you are already in a position where you are concerned about someone filing a lien, you and your counsel can review the situation and discuss possible strategies and solutions.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.