Full question:
I have a land contract on a house that burned down. The vendee took the insurance company to court when they refused to pay. The court awarded a small sum to the vendee. Not enough to rebuild. Vendee now has a bill with his attorney who is sure to claim an attorney's lien on the proceeds. My question: which lien takes precedent on the proceeds, my vendor's lien or the attorney's lien?
- Category: Real Property
- Subcategory: Liens
- Date:
- State: Michigan
Answer:
In Michigan, the priority of liens is determined by the "race-notice" rule. This means that the first recorded lien generally has priority over later recorded liens. However, if a lienholder is aware of another unrecorded lien when they record their own, they may lose that priority (Furnari v. Wells Fargo Bank, No. 264864, unpublished).
There are different types of liens an attorney can claim, including:
- Retaining lien: The right to keep possession of documents until fees are paid.
- Charging lien: The right to claim a portion of the proceeds from a case where fees are owed.
- Security interest: Arises from a contract but is not typically applicable in litigation.
- Judgment lien: Requires a lawsuit against the client for fees.
- Equitable lien: Protects an attorney when a non-client benefits from their work.
The attorney's charging lien is most relevant here, as it allows them to claim part of the proceeds from the litigation. However, the vendor's lien may still hold priority depending on the circumstances of the liens and any prior knowledge of the attorney regarding the vendor's lien.
For more specific guidance, consider consulting a legal professional.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.