A lien allows someone to have an interest or have a share in another’s property.  The lien creates a legal right for the creditor to obtain the property if the person fails to repay their debt. It is meant to provide security to the person taking out a loan to cover their debt and obligations. Generally, liens are public and inform creditors about any existing debts.

It is usually a formal document signed by either the creditor who is owed the money or the debtor who agrees to make the payment that is due. The loaner wants to ensure payments are made on the loan and therefore liens create that extra leverage against the debtor. By filing the right paperwork the lender becomes a lien holder on your property. The debt becomes secured and now the lender has a better chance of getting paid back.

What is a Valid Lien?

There are three essential factors in determining if there is a valid lien. The party who acquired the property should first have absolute ownership or have a right in it.

Second, the party that is claiming the lien must have an actual possession and be in agreement with the party against whom the claim is being sought. Third, the lien should be based upon an express or implied agreement and cannot be made to contradict the original purpose of the contract.

What are the Different Types of Liens?

There are two types of liens particular and general. When a person claims to retain property on a specific property this is considered a particular lien. In this circumstance, liens arise in the following ways:

  • Through an Express contract; 
  • By an implied contract and; 
  • By legal obligations among the parties.

The general liens arise in the following situations:

  • By agreement of the parties; 
  • By the general usage of trade and;  
  • By particular usage of trade.  

What are Some Common Uses for Liens?

Liens can be used to secure various properties such as a house or a car. Home liens are used when someone is interested in purchasing a home and borrows a loan to make that payment . The home lender can use the home to serve as a safety and if the person fails to pay the monthly payments on the house, the lender can foreclose on the property. Certain requirements must be met to receive a loan that pays for the home.

Auto liens are similar to house liens. If you purchase a vehicle, the auto lender can repossess the car if certain conditions of the lien agreement are not met. Furthermore, If a construction company completes a project for you on your property, you are obligated to pay them. If you fail to do so, they can file a construction lien with the county’s recorder office. Federal government and local government can collect unpaid taxes through the liens too. They are able to attach the tax liens to your assets and can access your bank accounts to collect any outstanding tax balances.

Lastly, if someone wins a lawsuit against you, they may be able to collect it through judgement  liens. They might have the right to file a lien against property you own. These judgement liens ensure that you are able to pay the obligatory damages fees if not collected from your out of pocket. Lien state laws vary and some may be harsher than others. Some states set strict deadlines for submission on claims and others are more lenient. Therefore it is useful to look up lien laws in your local area to understand your rights when dealing with the various liens.

What is the Process of Removing a Lien?

Usually, only the lien holder can remove the lien. However there a few exceptions:

  • Paying of the debt can get the lien removed and this can be towards the home or the car you own; 
  • Negotiating to settle with the creditor is another way to remove the lien;  
  • You can get it the lien corrected and in some rare cases, the lien may be lost or forgotten and;  
  • Some liens expire after several years and you may have a valid reason to get it  removed. Therefore if there is a disagreement you can bring a legal action and involve the court to ensure that your rights are not violated. 

What is the Impact of a Lien?

Liens can be alarming for some especially if there is a financial difficulty in paying off your debts. It is important to seek help earlier on to resolve and communicate with your creditors for possible options. Usually, the lender or the holder of the lien is confined to the mere right of retainer.

However, some lenders may also have a right to sell. Courts can make judgments for legal or equity purposes regarding the liens. The legal liens are enforced in the courts and the equity ones are enforced in a court of equity.

When Do I Need to Contact a Lawyer for a Lien Issue?

If you have signed an agreement for any lien or a formal document agreeing to pay your creditors, issues can arise if the debt is not paid. Therefore, it is important to consider your options and communicate with creditors and if there is disagreement you can get the court involved with the assistance of a lawyer. A foreclosure lawyer in your area will be able to assist you with your claim and can represent you in court as needed.