Introduction to property lien & how it works

If someone owes you money but won’t pay, you may imagine sitting outside his house and crying loudly about the issue. Well, no need to be melodramatic and embarrassing as property lien would do the job quite professionally. The moment you file the right document with a reputable agency, the world would come to know about the property owner who owes you money.

Defining a “lien”

It’s simply a legal claim over another individual’s property, be it a personal asset or real estate. This is mostly put into effect on properties when they’re used as deposit/collateral for loans and mortgages. When certain amount of money or service is owed to a creditor, he has legal rights to place lien that ensure investments reclaim; this is the simplest part or definition. What’s more challenging are the different types of liens under various scenarios; each with their own rules and regulations. For convenience, we can classify them in two distinct groups namely; consensual or voluntary, involuntary and non-consensual liens.

How does a;

• -Consensual lien work?

They’re imposed consequently to a previous contract that’s drawn between creditor and debtor; this is what’s commonly used in mortgages and loans. To make it effective, debtor should’ve agreed upon the time loan was disbursed. Equitable lien means creditor has no right to file a property claim as his own. The debtor instead sells the real estate and arranges immediate payment to creditor allowing him to keep the leftover amount once entire sum is being dispensed and lien has been lifted.

On the contrary, non-equitable lien vest rights on the creditor allowing him to question and do whatever he wishes to. It means the more worthy a property, it’s to creditor’s benefit whereas for insignificant real estate, creditor’s at a disadvantage and won’t be able to recover the lost funds from debtors.

• -Non-consensual lien work?

These are mostly associated with government’s purview. If a citizen refrains from paying taxes, non-consensual lien may be vested upon their assets and real estate. This type of lien is lifted if taxes and penalties are paid on time and if this isn’t so, government has the right to claim the piece of property as its own.

Time or period of lien payment

Lien is a public record that any interested party can research on anytime they want. As far as real estate is a concern, it should be paid off before selling a house. Other types of liens are vested over car, boat or any other valuable assets that are payable thus avoid apprehension.

Judgement liens

If you’re successful at suing someone and recoup the money from court’s decision, it can be turned into a property lien by filing a copy at municipal’s office. Rules and penalties may differ per place like in California, you’ve to file judgement lien at office of assessor-office in the same county where property is located. However when dealing with Jordan Property, it’s a different thing so you should know the rule beforehand.

Effects of real estate lien

If liens are filed against a particular property, title usually remains ambiguous while it has to be clear in an ideal situation. A property seller thus use fraction of sales proceeds to pay off liens and clear the title.