A lien on property is a type of security interest placed on a piece of property, real or personal, in order to secure a debt or obligation. While the underlying legal theories are different, in a practical sense, a lien is similar to a mortgage, in that the property that is the subject of the lien is taken and 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 is offered the property in exchange for future payments. The most common type of contractual lien is a mortgage on a house. Contractual liens are typically voluntary liens because the borrower chooses to attach a lien to property as compensation.
A different type of lien is judicial liens. Unlike contractual liens, these liens are involuntary. Judicial liens are created when a judge gives a party right to another party’s property as a result of a final judgment. This final judgment gives the 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
No. Filing for bankruptcy will only accelerate the lien collection process. Lien-holders are the first creditors paid when a person files for bankruptcy. It is not uncommon for businesses with twelve or more creditors to find themselves forced into bankruptcy if the business has too many liens.
As you can see, there are 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.
Last Modified: 02-20-2018 09:22 PM PSTLaw Library Disclaimer
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