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What Is a Lien and Who Can Put One on Your Home?

When you owe someone money, they may place a lien on your home to secure payment. A lien is a lawful claim against your personal property, and it can be placed on your house by a creditor if you owe them money.

It’s important to know who can put a lien on your house and what you can do to remove a lien because it can affect your ability to sell or borrow against your home. This article will discuss what a lien is, who can put a lien on your property, and how to remove a lien.

What Is a Lien, and Who Can Put One on Your Home? 

A lien is a lawful claim against your piece of property. For example, if you owe someone money, they may place a lien on your property to secure payment.

There are different types of liens, but one of the most common types of liens is a mortgage lien. A mortgage lien is placed on your property when you take out a home loan. Thus, the lender has a legal claim to your property until you pay off the loan.

Many creditors can put a lien on your house if you owe them money, including:

  • The IRS for unpaid taxes: The IRS can place a federal tax lien on your property if you owe back taxes. This type of lien is called a Notice of Federal Tax Lien, and it’s filed with your local county recorder’s office.
  • A hospital for unpaid medical bills: The hospital may place a lien on your property if you have overdue medical bills. A common way to remove this type of lien is to file for bankruptcy.
  • Your homeowners’ association: If you owe money to your homeowners’ association, they may place a lien on your property.
  • A credit card company for unpaid bills: The credit card company may place a lien on your property if you have outstanding credit card bills. You can check your credit report to ensure you have no missed payments.
  • A bank for an unpaid mortgage or home equity loan: If you have an overdue mortgage payment or home equity loan, the bank may place a lien on your property.

Other Types of Liens

In addition to the most common type of lien, there are also:

  • Property tax liens: The government places a property tax lien on your property if you owe property taxes.
  • Child support liens: A child support lien is placed on your property by the government if you owe child support.
  • Contractor’s liens: A contractor’s lien (also known as construction liens) is placed on your property if you hired a contractor to work on your property and haven’t paid them.
  • Mechanic’s liens: A mechanic’s lien is placed on your property if you hired a mechanic to work on your car and haven’t paid them.
  • Federal tax liens: A federal tax lien is placed on your property if you owe the government money in taxes.
  • Judgment lien: A judgment lien is placed on your property if you owe someone money and get a court order to have a lien placed on your property.

What Are the Different Types of Liens, and What Do They Mean for You? 

Various types of liens fall under two main categories: voluntary and involuntary. The type of lien will determine how you can have it removed.

Voluntary Liens

A voluntary lien is a lien that you agree to. For example, you agree to a voluntary lien if you take out a mortgage.

The most standard kind of voluntary lien is a mortgage lien. A creditor will place a mortgage lien on your property when you take out a home loan. Even when you technically have possession of the property, the lender has a legal claim to it until you pay off the loan in full. A sale of the property will not remove the lien. Because of this, property can be foreclosed on if you don’t make your mortgage payments.

Property that voluntary liens apply to include:

  • Homes: A mortgage is the most common type of lien on a home.
  • Cars: A car loan is the most common type of lien on a vehicle.
  • Bank accounts: A bank may put a lien on your account if you owe them money.
  • Boats: A boat loan is the most common type of lien on a vessel.

Involuntary Liens

An involuntary lien is a lien that someone places on your property without your consent. The most common type of involuntary lien is a mechanic’s lien.

A mechanic’s lien is placed on the property owner if you hire a mechanic to work on your car and you haven’t paid them. If you don’t pay the mechanic, they can place a lien on your property.

Another type of involuntary lien is a property tax lien. The government will place a property tax lien on your property if you owe property taxes.

It’s essential to make sure you can afford to pay back any money you borrow because if you can’t, a creditor may place an involuntary lien on your property.

How Do You Terminate a Lien From Your Home? 

Removing a lien from your property will vary depending on the type of lien.

Voluntary liens, like mortgage liens, can be removed by paying off the debt in full. Once you pay off the outstanding debt, the creditor will release the lien on your property.

Like property tax liens and mechanic’s liens, voluntary liens can be more challenging to remove. You may have to negotiate with the creditor or go to court to have the lien removed.

If you are having difficulty removing a lien from your property, it would be a good idea to contact an attorney. An attorney can help you remove the lien or negotiate with the creditor to have the lien removed.

What Happens if You Don’t Pay the Lienholder What You Owe Them?

If you don’t pay the lienholder what you owe them, they have the legal right to take action against you. The legal action they can take will depend on the type of lien.

For example, if you don’t pay a property tax lien, the government may foreclose on your property. This means they will take ownership of your property and sell it to cover the amount you owe in property taxes.

If you don’t pay a mechanic’s lien, the mechanic may sue you. If they win the case, they may be able to take possession of your property. They would then sell it to cover the amount you owe them.

It’s essential to make sure you can afford to pay back any money you borrow. If you can’t, the creditor may take legal action against you. The easiest way to avoid this is to make sure you only borrow the money you can afford to repay.

Key Takeaway: What Is a Lien and Who Can Put One on Your Home?

A property lien is a lawful claim against your property. A creditor can place it on your home if you owe money. Because of this, it’s important to know who can put a lien on your house and what you can do to remove one. It can affect your ability to sell or borrow against your home. Even if you have a clear title to your property, someone can still place a lien on it if you owe money to them.

There are two types of liens: voluntary and involuntary. Each type has its process for being placed on your property and removed.

If someone places a lien on your home, it will appear on your public record. This would make it difficult to sell or borrow against your property. However, you can remove a lien from your house by paying the debt you owe, having a lien release from the creditor, or filing for bankruptcy.

Finally, if you’re considering putting a lien on someone’s property, the best way to come prepared is to consult with an attorney for legal advice to understand the process and the risks involved.

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2022

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