HB1273
To Provide That A Lien Created By The Entry Of Certificate Of Indebtedness Issued By The Secretary Of The Department Of Finance And Administration Is Not Superior To A Purchase Money Mortgage.
AI-Generated Summary
This bill proposes to amend existing Arkansas law regarding the remedies available to the Secretary of the Department of Finance and Administration. Specifically, it addresses the superiority of liens created by the entry of a certificate of indebtedness issued by the Secretary. The bill seeks to establish that a lien created by such a certificate is not superior to a purchase money mortgage. This change would modify the existing provision that states these liens are superior to other liens attaching to the property after the certificate's entry, with the exception of purchase money mortgages. The intention is to clarify and potentially adjust the priority of these state-issued liens in relation to purchase money mortgages. The bill also mentions that this lien is in addition to any other existing state liens for taxes, interest, penalties, and costs. It also reaffirms the lien's superiority over claims of unsecured creditors. This amendment aims to provide a specific exception to the general superiority of the state's lien in favor of purchase money mortgages.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be individuals or entities who obtain purchase money mortgages for property in Arkansas. If this bill is enacted, their mortgages would hold a superior position to liens created by a certificate of indebtedness issued by the Secretary of the Department of Finance and Administration, in cases where the mortgage is taken out after the certificate of indebtedness is entered. This would likely provide greater security and reduce the risk for lenders who issue purchase money mortgages, potentially making it easier for buyers to secure financing for real estate purchases.
Who Might Suffer?
The entity most directly and negatively impacted by this bill, if enacted, would be the State of Arkansas, represented by the Department of Finance and Administration, in its capacity to secure outstanding debts through liens. Currently, liens created by certificates of indebtedness are generally superior to other liens (except for prior existing ones and now proposed to be inferior to purchase money mortgages). By making these state-issued liens subordinate to purchase money mortgages, the state's ability to recover outstanding debts or taxes secured by these certificates could be diminished if the property is encumbered by a purchase money mortgage that has priority. This could potentially lead to a reduced recovery rate for the state in certain debt collection scenarios.