Removing a Lien from Property
What Is a Lien?
A lien is a type of security interest placed on a piece of property (real or personal) in order to secure a debt or some other obligation. While the underlying legal theories are different, in a practical sense, a lien is similar to a mortgage, in that the property which is the subject of the lien is taken and/or sold by the creditor to satisfy the debt of the property owner.
Liens are created either by contract or court order. In contracts, the borrower can offer the property in exchange for future payments. The most common type of liens are mortgages on houses. Contractual liens are typically voluntary liens; the borrower chooses to attach a lien to property as compensation.
In contrast, judicial liens are involuntary liens. These liens are created when a judge gives a party right to another party’s property as a result of a final judgment. Judicial liens give winning parties a right to a disputed property, but the sheriff’s office must collect the property before the winning party can obtain possession over the property.
Can I Discharge a Lien Through Bankruptcy?
No. On the contrary, filing for bankruptcy will only accelerate the lien collection process. Lien-holders are the first creditors paid when a person files for bankruptcy. Businesses with twelve or more creditors may find themselves forced into bankruptcy if the business has too many liens.
How Do I Remove a Lien?
The surest way to remove a lien from a piece of property is to satisfy the debt that gave rise to it in the first place. A court will also remove a lien that was obtained through fraud, duress, or other unlawful means.
A lien can also be removed if the property that is the subject of the lien is sold or destroyed. However, the lien may follow the property to subsequent buyers, if they had reason to be aware of it. Fraudulently selling a piece of property to remove a lien will probably not succeed.
A person cannot have a lien over his or her own property, so selling or giving the property to the lien-holder will remove it. Furthermore, a lien can be removed if the lien-holder fails to assert his or her rights under the lien for a continuous period of time.
Note that a lien is not removed if the lien-holder demands a sum in excess of the amount actually owed. As long as this demand is made in good faith (the lien-holder reasonably believes that he or she is entitled to the demanded sum), a lien will remain in place. However, a lien might be removed as punishment to the lien-holder if such a demand is made in bad faith, and involves fraud or threats.
Do I Need a Lawyer To Remove a Property Lien?
As you can see, there may be several options for removing a lien from property. A real estate attorney will be able to explain the various options available to you under the laws in your state. Most property liens are not enforceable immediately to give the debtor some time to consider his or her options.
Consult a Lawyer - Present Your Case Now!
Last Modified: 02-06-2014 11:50 AM PST
Did you find this article informative?