Lien Definition: All Things You Must Know About Lien

If you buy a home using a mortgage, you may know the lien definition well. It is because you have a lien on your home until your mortgage is paid off. With a lien, there is a tool for those who owned the money to ensure their money will get back. Know more about lien before deciding to take a mortgage for purchasing your property.

Lien Meaning

In Merriam-Webster, a lien is a security for the debt payment or the satisfaction of other obligations arising out of an agreement or transaction involving the property. In, the lien itself will refer to a legal claim for the property used as collateral to repay the debt. The liens can be attached to a home or personal property like furniture or a car.

When someone cannot pay the debt or mortgage, the lien holder can foreclose the property used as the lien. It is part of the mortgage process that the lenders have a title search completed. This title search uncovers the liens of the property. The lenders will not approve any mortgage when the property still has another outstanding lien.

Even when the homeowners have a plan to sell the property, they must pay off the outstanding debt first to make sure there is no lien attached to the home. When someone buys a property with a lien on it, that is too risky.

How Does Lien on House Work?

In general, the lien holder has a right over the property mentioned as the lien in the agreement. In this case, it is the lien holder’s right to force the sale of the property to close the debt when the property’s owner cannot pay the debt.

For instance, you owe $10,000 to a lien holder with the home as the lien. They can sell your home easily and take their $10,000 back when you cannot pay them on time. That is why, before you decide to take a mortgage or debt, you must consider the lien.

If a property with multiple liens is sold, every lien holder has a right to proceed. Usually, the first lien holder recorded in the agreement will get the property. However, there may be different ways for other lien types like tax liens.

Is a Mortgage Considered a Lien?

A mortgage is a lien from the outset. You signed the agreement of the mortgage closing by paying back the money borrowed. Then, your mortgage will create a lien using your property with the amount of money you owe. So, the mortgage is the money you borrow, while the lien will be the property for the guarantee of the mortgage.

Moreover, is a mortgage a general lien? A mortgage can be considered a general lien when there is no specific property applied to guarantee the mortgage. Meanwhile, when there is a specific to one property like a building or house, it is not a general lien.

Voluntary Vs Involuntary Liens

After knowing about “is a mortgage a lien”, it is time to know about the types of liens. There are two kinds of terms used in the lien that are voluntary and involuntary. If it is a voluntary lien, the owner of the property will give consent for a claim on their property as the security in exchange for repayment. This type of lien allows the lenders to sell it when the homeowner cannot pay the debts.

Another type is called an involuntary lien. In this lien, the claim of the property is done by the lenders without the consent of the homeowners. In many cases, involuntary liens happen because the homeowners lack action to pay the debts. In addition, the lenders will make a claim on the property to warn the homeowners to pay the debt.

After that, in involuntary liens, there are some examples for it such as:

  • Mechanics Lien

In the mechanic lien, one of the common examples is when a contractor or subcontractor renovating a home has completed their work, but the homeowners cannot pay them. In this case, the contractor can file a lien called mechanic’s lien on the property. The claim itself will end after the homeowners pay the debt to the contractor.

  • Judgment Lien

A judgment lien is when there is a court judgment against you. For instance, when you borrow money from someone and you refuse to pay, then they can sue you. In this kind of lien, the lien will be on the real property or the personal property you have. This lien can attach to the property even after the lien is filed.

  • Income and Property Tax Lien

If you don’t pay property taxes or income taxes, the government can put a lien on your property. This lien then is called an income and property tax lien. The property itself will be calculated from how much taxes you cannot pay.

General Lien Vs Specific Lien Definition

What do you know about general and specific lien definition? The general lien will use all personal and real property as the guarantee for the debt. Usually, there is no specific property in the agreement of the debt.

On the contrary, when there is a specific property mentioned in the debt agreement, it will be a specific lien. Both general and specific lien will have properties worked as a guarantee when the homeowners cannot pay the debt.

If You Have a Lien on a House

If you have a lien in your house, it means that you have agreed that the house will act as the collateral for your debt or mortgage. Besides, it also means you have failed to pay the mortgage or debt, so the creditor will foreclose the home to satisfy that debt.

How to Find Out If a Property Has a Mortgage Lien?

How do you find out the first lien mortgage or other liens on the property? The answer is you should start by checking it on the website of your assessor or county clerk. Usually, on the government web, there is data for lien.

However, when your county has no records online about the liens, you can just visit the government office and ask about this. Finding out the lien on the property is important, especially for property investors. Knowing which property with a lien can help them to avoid it. Otherwise, they can take advantage of it by getting a lower-price property. Indeed, buying a property with a lien is not recommended.

Lien Vs Loan

Lien and loan are two similar sounds with different meanings. A loan is when someone applies to borrow money and receives the money from a person or institution. Here, they must pay the loan to the lenders in a certain period depending on the agreement between the two parties.

Meanwhile, a lien is when someone or an institution claims the real property or personal property to satisfy the debt. Here, the property chosen for lien usually has been mentioned in the first agreement of a mortgage or debt. It happens when the debt or mortgage will not be satisfied on time.

Can You Refinance with a Lien on Your House?

Can you refinance if there is a lien on your house? Refinancing a property with a lien is still possible even though somehow it will cause another problem. The possibility of refinancing a lien depends on the lien type. In voluntary liens, it is easier to refinance. Why? It is because someone can negotiate with the lenders.

Unfortunately, for an involuntary lien, it will be harder to refinance it. Someone can refinance the property with a lien after they solve the debt or mortgage first. For instance, it is when someone gets a tax or income tax lien. Of course, they must solve the income or property tax first before they can refinance the property on lien.

Removing the Amount Existing Liens

How to remove a lien on the property? You may hear this question somewhere else. To remove the lien, the first thing you must do is convince the lien holder to remove the lien on your property. Of course, you must pay the debt.

  • Pay off the lien

Paying off the lien is the best way to get your property back and remove the lien on it. Here, you must make sure that you confirm to the lien holder if a lien has been removed. You can ask for the agreement or other documents stating the lien removal.

  • Negotiate the lien

Then, what should someone do when they cannot pay off the lien? Another way that you can do this is by negotiating with the lien holder. You can negotiate for a payment plan or partial payment first. As the exchange, the lien holder needs to remove the lien on the property. This way can be a success when you have great negotiating skills.

  • Dispute the lien

Disputing the lien becomes the next way to remove a lien on your property. In this case, you can go to the court and ask for a lien removal when the lien is not valid. Of course, you must bring the evidence for your claims.

Lien Mortgage: Pros and Cons

Talking more about the first lien mortgage or other liens, you may find advantages and disadvantages of it. These two sides can be seen from two different parties involved in the debt and lien agreement. For the lenders or the ones who give the money to someone, the lien will be a good thing for them. With the lien, there is a guarantee for them that their money can get back later.

However, for the side of someone who borrows money, it is a disadvantage especially when they cannot pay the mortgage or debt, and their property gets claimed. A lien on a property indeed will make its value decrease in the market. Besides, a property cannot be sold when there is a lien on it.

FAQs Lien Definition

  • Lien definition real estate

Not only found in the home, but the lien also can be found in real estate. The lien on the real estate usually will involve a bigger value of mortgage or debt. This happens in the real estate business. It can be a lien from the government or from the contractors to the land owners or developers who build the real estate.

  • Lien definition in law

In law, a lien is a legal and common thing among the creditor and people who apply for debt or mortgage. According to, a lien is a security interest or a legal right in someone’s property by a creditor. The lien will stay until the obligation towards the creditor is done or is satisfied. If the creditor is not satisfied, they can take possession or claim the property.

  • Lien definition in banking

In banking, the lien is usually used when someone takes some debt or mortgage in a bank. So, they must have a property which is later used for a lien. In Wikipedia, a lien is a legal right of a bank to exercise the lien over the property involved.

  • Lien mortgage refinance

The refinance of a property with a lien is somehow difficult. It is still possible when the lien is a voluntary one. However, for the involuntary lien, there is no other way to refinance. Someone must fulfill the obligation to get the property and refinance. The lien that involves the government is usually included in the involuntary lien. Thus, this lien will be hard to refinance because someone must pay the mortgage or debt to the government first.

  • Lien example

Knowing about lien definition will not be enough. You must know some examples of lien too. One of the common examples is between the bank and its customer. Usually, people apply for a mortgage or debt to the bank with a house certificate as the guarantee. In this case, the bank claims the property after someone cannot pay the payment of the debt or mortgage.

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