A claim or a right that is granted to a creditor, to take or keep possession of collateral property until a debt is paid or an owed duty is performed.
Types of lien include, but are not limited to: mortgage liens, non-mortgage liens, consensual liens, statutory liens (mechanic’s liens and tax liens), and judgements.
Most often, liens have to do with financial debt of some form. For example, when taking out a mortgage on a piece of real estate property, the lender puts a mortgage lien on said property, thus has the right to sell it if the debtor is default on the mortgage loan obligations.
Non-mortgage liens are also sometimes placed on real property. These are different, in that the asset continues to belong to the debtor, who may sell or lease the property, but the lien holder’s approval may be necessary for any transaction, and sale or lease proceeds garnered by the owner (debtor) would go towards the outstanding debt (for example money owed to a contractor, for work performed at that property). When the debt is paid off, a lien release is issued by the creditor, thereby clearing the property title and the debtor.
A consensual lien is a lien to which a borrower voluntarily consents, as part of a loan agreement. For example, mortgage liens. Consensual liens break down further, into:
– Purchase-Money Security Liens – the lender issues credit specifically for the purchase of the property that secures the loan (on which the lien is placed) For example: taking out a first mortgage to purchase a property.
– Non-Purchase-Money Security Liens – the debtor puts up property he/she already owns, as collateral to secure the loan. For example: a second mortgage.
A statutory lien allows creditors to obtain security interest (place liens) by state or federal law (action against debtor in court)
– Mechanic’s Liens – when a contractor or mechanics does work on a property, but is not paid what is owed, the injured party can obtain, by way of court of law, the right to place a lien on the property. This way, if the property is sold, part of the proceeds go towards repaying that debt. Alternatively, the lien holder may block sale of the property until the debt is paid (all parties with interest in the property are supposed to consent to a transfer of property)
– Tax Liens – placed against a piece of property by local, state or federal government, for delinquent taxes (property, income, estate)
|Power of attorney|
|Real Estate Agent|
|Statute of Limitations|