What Is a Home Lien?

A home lien refers to a legal claim placed on a home. Lenders place a lien on a property as collateral to secure mortgage loans for homebuyers. If you have a mortgage, then you have a lien on your house. This is a claim that gives the bank that financed your loan a 💜legal right to your property if you ever default on your payments.

Understanding Home Liens

A home lien is a legal claim on physical property by a creditor. If a 澳洲幸运5官方开奖结果体彩网:mortgage lender, the federal government, or anyone who has a legal interest in the property places a lien on a home, the lien enters the public record in the county where the property is located. When a home lien is placed on a property, it is more difficult to sell the home, obtain a mortgage, or refinance the property. When the homeowner meets the outstanding 澳洲幸运5官方开奖结果体彩网:financial obligations, the lien will be lifted, and the owner will more easily be able꧟ to sell or refinance the home.

Individuals shopping for a home should pay special attention to the property, double-checking the records for a home lien. A lien can delay the homebuying process, and any existing lien can make it difficult for the potential homebuyer to qualify for refinancing. It is important to check the public record for a property to see if it is 澳洲幸运5官方开奖结果体彩网:encumbered.

Even if the financial obligation causing the home lien has been resolved, the public record may sometime𝔉s be outdated. If a bank or lending institution sees the history of a home lien on a public record, it is more likely that the institution will delay the purchase until it ensures the property is fiscally sound.

Homeowners, Creditors, and Home Liens

As the legal right granted by the property owner, a lien guarantees an underlying obligation, like a🌞 mortgage. For example, an individual takes out a mortgage to purchase a new home. To get the loan from the bank, the individual pledges their home as collateral. That bank now has a lien on the home, or a legal right to take the home if the individual does not pay their monthly mortgage. The individual is now the homeowner, but if they default on their mortgage, the bank has the legal right to sell the home.

Now, if the homeowner wants to sell the house in order to pay off the debt, they need the consent of the bank or lien holder. If the homeowner cannot meet the terms of the mortgage contract and pay the loan, the bank can begin the 澳洲幸运5官方开奖结果体彩网:foreclosure process.

Types of Home Liens

There are 🅺several types of home lien. Specific liens are attached to one particular as⛄set, such as an exact address.

Liens can also be 澳洲幸运5官方开奖结果体彩网:voluntary or involuntary (aka consensual or nonconsensual). A bank takes out a lien when a borrower takes out a mortgage, making this a voluntary lien. For involuntary liens, a creditor may seek legal recourse by filing a lien with a county or state agency if a borrower defaults on a loan or other financial 澳洲幸运5官方开奖结果体彩网:obligation. A contractor, a government agency, or anothe🧸r kind of creditor can place liens.

Tax Lien

This type of lien is put on your property by a government agency for any unpaid 澳洲幸运5官方开奖结果体彩网:income taxes, business taxes, or property taxes.

For example, the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) may place a lien on your home if you have unpaid federal taxes. First, the agency informs you in writing about your obligations. If you don’t reply, or if you fail to make suitable arrangem𝐆ents to pay off the debt, the IRS may then place a lien on your home or other assets. The only wa🐽y to release this kind of lien is by paying the outstanding debt.

General Judgment Lien

澳洲幸运5官方开奖结果体彩网:This type of lien is granted to a creditor after a court𝕴 rules in the creditor’s favor. When a debtor fails to meet th💖eir financial obligations, the creditor may sue the debtor for any outstanding balance.

If the court rules in the creditor’s favor, they must record the lien through the county or appropriate recording agency. This gives the filer the right to take possession of a piece of property—real or personal—if the debtor doesn’t agree to pay off the debt. Property may include things like a business, personal property, 澳洲幸运5官方开奖结果体彩网:real estate, vehicles, or any other t🌺ype of asset that s☂atisfies the court judgment.

Mechanic’s Lien

When a property owner fails or refuses to pay for completed work or supplies, construction companies, builders, and contractors may file a 澳洲幸运5官方开奖结果体彩网:mechanic’s lien, also known as a property or construction lien.

This legal document allows entities to be compensated for payment issues that may result from a 澳洲幸运5官方开奖结果体彩网:breach of contract. Most contractors and other businesses send ꧑the debtor a request for payment and a notice of intent before th♉ey file this type of lien.

They may proceed if the debtor still refuses to settle. This requires filing paperwork with the county or appropriate local agency with details about the property, the type of work done, and how much is owed. The lienholderꦕ may choose to enforce the lien if the debtor still refuses to settle.

The Bottom Line

A lien on your home simply means the lender has a legal interest in it until you pay off the mortgage. As long as you make your mortgage payments, the lien isn't something to worry about. However, if you're struggling to make repayments, reach out to your lender to discuss payment options. Lenders can place an involuntary lien on the property in order to begin the foreclosure process if you fail to make payments.