Legal claim

LIEN

A lien is a right that one has to retain or secure someone’s property until a debt is paid. When an individual takes out a car loan, for example, the lending bank is usually a lien holder. The bank releases the lien on the car when the loan is paid in full.

A “lien” is a legal right or interest that a lender has in a borrower’s property, granted until a debt is satisfied. It serves as a security interest for the lender, providing a form of collateral to secure a loan or other financial obligation. The presence of a lien on a property can impact its ownership and transfer.

Here are a few common types of liens:

1. Mortgage Lien: When you take out a mortgage to purchase a home, the lender typically places a mortgage lien on the property. This lien gives the lender the right to take possession of the property if the borrower fails to repay the loan according to the agreed terms.
2. Mechanic’s Lien: Contractors, subcontractors, or suppliers who have provided labor or materials for construction or improvement of real property may file a mechanic’s lien to secure payment for their services. If the property owner doesn’t satisfy the debt, the lienholder may have the right to force a sale of the property to recover the owed amount.
3. Tax Lien: A tax lien is imposed by a government authority, such as the Internal Revenue Service (IRS) in the United States, when a taxpayer has unpaid taxes. The government has a claim on the taxpayer’s property until the tax debt is settled.
4. Judgment Lien: If a court issues a judgment against an individual for a debt owed, the judgment creditor may file a judgment lien against the debtor’s property. This creates a security interest in the property, and the creditor may have the right to force a sale to satisfy the judgment.
5. Consensual Lien: Some liens arise by mutual agreement between parties. For example, when you take out a car loan or a personal loan with your property as collateral, the lender may place a consensual lien on the property until the loan is repaid.
6. Homeowners Association (HOA) Lien: Homeowners associations may place liens on properties for unpaid fees, dues, or special assessments. These liens can affect the ability to sell the property until the outstanding amounts are paid.

Liens are typically recorded with the relevant government authority, such as the county clerk’s office, to provide public notice of the creditor’s interest in the property. The specifics of liens can vary based on jurisdiction and the type of lien involved. It’s important for property owners to be aware of any existing liens and to address them appropriately when buying, selling, or refinancing real estate.