What is a lien?

By definition,?a legal claim against an asset which must be paid when the property is sold or refinanced is a lien. It is important to know how they can affect your buying and selling property. When you refinance or sell?all liens are addressed.?Some liens are more complex.

General Lien: These would be court ordered judgments, probate actions, and IRS taxes.

Judgment Lien: This is the result of an action by a party or government agency through court to collect payment on a claim.

Involuntary Lien: State property taxes are an involuntary lien.

Specific Lien: Special assessments for roads etc. This can also include liens for unpaid contractors who sue to collect for a specific service.

Voluntary Lien: A mortgage is an voluntary lien, also called an equitable lien. Both parties agree in writing that the property is to be used to secure the debt.

There are 3 basic categories for all liens:

1) Consensual: these are liens that you agree to by contract. A mortgage is a consensual lien. You consent to the lien in exchange for the loan. Any lien you consent to by contract is a consensual lien.

2) Statutory: these are laws that take use of state and local regulations to collect a debt unpaid. It is non-consensual and therefore takes use of our laws to enforce collection. Mechanics liens and?tax liens are statutory liens.

3) Judicial: this is a lien imposed by a court for reasons other than collection of statutory liens. For example, auto accident lawsuits. If a negligent driver is uninsured a judge may award the plaintiff a lien against the defendants property. This is a judicial lien and can be the toughest to remove.

While a consensual lien is bound by contract for repayment, judicial and statutory liens can cause garnishment of wages, seizure of bank accounts, or a forced sale of your home due to non payment if the lien holder enforced it.

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