This post assumes familiarity with my last two posts (Part 1 and Part 2) of this multi-part series.  Thus, while you can certainly read this post without reading those previous ones, you’ll get more out of it if you read those posts first.

V.  Some Other Issues Associated With Liens

A.  Is The Lien Perfected?

Suppose the debtor and all the debt’s assets are in Los Angeles County at the time the creditor records a lien in Orange County against the debtor’s principal residence in Los Angeles.  Is the creditor’s claim secured?  No.  The lien must be recorded in the county where the asset is.  Therefore, if the lien is recorded in the wrong county, the creditor’s is not a perfected security interest.  See, e.g., Cal. Civ. Code § 1169 (“Instruments entitled to be recorded must be recorded by the County Recorder of the county in which the real property affected thereby is situated.”).

B.  Is The Lien To Be Stripped Really A Junior Lien?

Sometimes a debtor will buy a house with what is called an 80/20 loan because the debtor can’t come up with the 20% down payment.  If the 20% loan is recorded first, then the junior is the 80% loan, which has a much bigger value.  Given the relatively small size of the 20% loan, the junior lien may not be wholly unsecured.
Continue Reading Lien Avoidance in Individual Cases – Part 3: Other Issues Associated with Liens