A Texas vendor's lien is:
Audio Lesson
Duration: 2:20
Question & Answer
Review the question and all answer choices
A lien held by a contractor
A contractor's lien is a mechanic's lien, which arises from work performed on the property, not from a sale transaction. These are governed by different statutes and have different priority rules.
A seller's lien for unpaid purchase price
A government tax lien
Government tax liens are statutory liens imposed by government authorities for unpaid taxes, not arising from private sale agreements between buyer and seller.
A lien for HOA fees
HOA fee liens are specific to homeowner associations and arise from violations of covenants or unpaid association dues, unrelated to the purchase price between buyer and seller.
Why is this correct?
A vendor's lien specifically refers to a seller's (vendor's) right to place a lien on property for the unpaid purchase price when the buyer fails to complete payment as agreed in the sales contract.
Deep Analysis
AI-powered in-depth explanation of this concept
Understanding vendor's liens is crucial in real estate transactions because they protect sellers when buyers default on payment. This concept matters particularly in Texas where real estate transactions involve significant financial commitments. The question tests your knowledge of specific lien types that can attach to property. A vendor's lien arises from a sale transaction itself, not from construction or taxes. To answer correctly, recognize that 'vendor' is another term for seller in a real estate context. The question challenges students who may confuse different lien types or the specific terminology used in Texas law. Understanding vendor's liens connects to broader knowledge of property rights, security interests, and the priority of liens in real estate transactions.
Knowledge Background
Essential context and foundational knowledge
A vendor's lien is a possessory lien that arises by operation of law when real property is sold but the purchase price is not paid in full. In Texas, this lien gives the seller the right to retain possession of the property until payment is received. Unlike other liens, vendor's liens don't require recording to be effective, though recording establishes priority against other claimants. This lien exists to protect sellers in situations where buyers default, ensuring they have some security for the unpaid portion of the purchase price.
Think of a vendor's lien like a layaway plan at a store. If you don't pay for the item, the store keeps the item and has a claim to it until you pay in full.
When you see 'vendor' on the exam, immediately think 'seller' and 'layaway' to remember it's about unpaid purchase price.
When you see 'vendor' on the exam, immediately associate it with 'seller' and 'purchase price' to quickly identify it as a lien for unpaid sale proceeds rather than construction, taxes, or HOA fees.
Real World Application
How this concept applies in actual real estate practice
Imagine you represent a seller who accepted a contract with 20% down payment and 80% financing. The buyer obtains financing but fails to make the first payment. The lender forecloses, but the sale doesn't cover the full purchase price. Without a vendor's lien, the seller would lose their remaining equity. By properly documenting the vendor's lien during the transaction, the seller can claim their unpaid portion from the foreclosure proceeds, ensuring they receive the full contract price.
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