The legal term "lien" refers to the right to keep possession of a property that belongs to some other person, until that person has paid off a debt that they owe. A lender may accept the lien and so sell information technology in specific circumstances, such as those in which the borrower is unable to make their scheduled loan payment. Additionally, if the debtor sells or refinances the property with a lien attached, the creditor retains the right to be paid out of the transaction's proceeds.

At that place are essentially iii different types of lien:

  • Consensual: This type of lien occurs when the debtor consents to the lien such as in a loan or an advocacy of a line of credit. Consensual liens can be further broken down into purchase coin security interest liens, in which a creditor lends money to the debtor for the specific purpose of buying the property in order to secure the debt. The most common instance of this type of lien is a mortgage on a home. The other main blazon of consensual loan is the non purchase money security interest lien. This is when the debtor puts up property that they already own in order to secure the debt. An example of this would be a second mortgage on a home endemic by the debtor;
  • Statutory: Statutory liens are obtained past the functioning of state or federal laws. This means that the lien is authorized by some statute for delinquent payments, such as tax liens. Under a statutory lien, the debtor does non consent to the lien. However, the creditor has the legal right to recover the debt regardless of whether they have the debtor'south consent to do then;
  • Judgment: This is a blazon of lien in which a creditor is allowed to obtain the title to the debtor's property if the debtor has failed to make necessary payments, similar to the other types of liens. Judgment, or judicial liens are typically obtained in connection to the final judgment issued in a lawsuit between a debtor and a creditor. Once the judicial lien has been certified by the court, the debtor is required to forfeit their property. The property is then by and large subjected to a judicial sale, and the gain will become towards the debt owed to the creditor.

A common misconception is that a credit card company can put a lien on holding in society to collect what they are owed. This is untrue, and doing so is actually illegal.

What Happens When There Is a Lien On My Property? How Do I Find Out If My Property Has a Lien?

About liens ascend from a contract between the creditor and debtor. In full general, earlier a lien can be placed on a property, the creditor must go to courtroom and present evidence of the unpaid debt. A judgment is and so received, and if it is granted, the creditor may go along with filing a lien on the property. This is washed past registering the judgment with the state records office, and must exist done in the county in which the debtor's holding is located.

Once the lien has been filed, it will specify the amount owed and grants the creditor the right to be paid out if and when the holding is sold. As previously mentioned, under certain circumstances, the creditor may take possession of the property if the debt is non paid off within a specified timeframe. If the debt is non paid, the creditor may decide to forestall on the property.

In order to determine whether there is a lien placed on your holding, y'all should perform a uncomplicated title search. A clear title is required earlier you can sell or refinance most property, such equally home. Every bit such, it is of import to remove a lien once a debt has been fully satisfied so you may later on sell the property.

There are limits on property liens. Most states have a homestead exemption constabulary in lodge to protect your domicile and adjoining land from being claimed by creditors, fifty-fifty if you practice not have enough avails to satisfy their claim. Additionally, in a Chapter Vii Bankruptcy situation, the debtor is able to utilize a lien avoidance in gild to remove some or all of their debt.

How Do You lot Remove a Lien from Your Holding?

Removing a lien from your belongings tin be a circuitous and drawn out procedure. All the same, you practice have a few options:

  • Satisfy Your Debt: This is the most straightforward option. Once you have paid off the rest of your debt, in total, yous can file a Release of Lien class. This acts as evidence that the debt has been paid and will finer remove the lien from your holding. Each jurisdiction has its own specific requirements regarding the process, then be certain to check with your jurisdiction to ensure you follow the proper protocol;
  • Obtain a Courtroom Order Removing the Lien: This is an option if the lien was obtained through fraud, compulsion, bad faith, or any other illegal ways. In such cases, you can ask the judge to remove the lien. However, this can be hard to bear witness then it is important to accept clear proof of improper behavior;
  • File for Chapter Seven Defalcation: You tin can file for defalcation in order to remove the lien, as previously discussed. This option is simply available to certain liens, such as judicial liens, and may sometimes but be enforceable for a limited amount of fourth dimension;
  • Privately Negotiate With the Creditor: If both parties concur, it could be possible to work out a settlement. This can be achieved through arbitration, mediation, or informal negotiations;
  • Wait For the Statute of Limitations to Run Out: Your country will take its ain law that sets a limitation on how long a lien is valid, as well every bit how long a creditor has to file a suit once the debtor defaults. In one case this amount of time has passed, the lien can be removed and viewed as unenforceable.

Tin can You Have a Lien on Other Types of Property?

In one case again, there are many different means in which a creditor may place a lien on your belongings. For instance, when a person takes out an auto loan a lien is created which gives the lender the right to possession of the vehicle until the loan is repaid in full. Additionally, since the auto loan is secured by the vehicle itself, about lenders will crave the borrower to also take out total insurance coverage on the vehicle. Although the data that appears on car titles varies from state to land, in full general a vehicle's title will reveal all electric current and past liens and lienholders.

As noted above, a lienholder may garnish an individual'due south wages in society to have a debt paid off. For example, if a person takes out a vehicle loan for $20,000, but stops making payments after only making $2,000 in payments, the lender can likely seize the vehicle. Next, if the lender and so sells the vehicle in a commercially reasonable sale for $10,000, they can then go later on the original borrower for the debt. They can do and then past obtaining a judgment for the remaining amount owed on the debt and garnish that person's wages or even garnish that person'south banking company accounts.

In the instance of garnishing the banking company account, the bank would freeze all of the borrower'south funds, and send the business relationship funds to the creditor to satisfy the debt owed. Afterward the debt is paid, the business relationship would then be unfrozen, the lien on the account would be removed and the private could then admission their account equally normal.

Do I Need a Lawyer for a Lien on My Property?

Consulting with a skilled and knowledgeable foreclosure attorney would be in your best interests if yous have a lien on your property, and wish to remove it. An experienced foreclosure attorney tin help you understand your state's specific laws regarding holding liens, besides as your land'south statute of limitations.

They can review the lien itself, as well as its terms, and determine the best grade of action because your specific circumstances. Finally, an attorney can represent you in court as needed, and ensure all necessary filings are completed.