Lien
A lien is a legal claim against a property that must be paid when the property is sold, serving as security for a debt or obligation.
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Exam Tip
Property tax liens are ALWAYS first priority. Recording date determines other priorities.
What is a Lien?
A lien is a legal right or interest that a creditor has in another's property, lasting until the debt or obligation is satisfied. Liens attach to the property, not the owner.
Types of Liens
| Type | How Created | Priority |
|---|---|---|
| Property Tax Lien | Unpaid property taxes | Highest priority |
| Mortgage Lien | Home loan | Based on recording date |
| Mechanic's Lien | Unpaid contractor work | Varies by state |
| Judgment Lien | Court judgment | Based on recording date |
| HOA Lien | Unpaid association dues | Varies by state |
Voluntary vs. Involuntary Liens
| Type | Created By | Examples |
|---|---|---|
| Voluntary | Owner's choice | Mortgages, home equity loans |
| Involuntary | Without consent | Tax liens, judgment liens, mechanic's liens |
Lien Priority
Generally, liens are paid in this order:
- Property tax liens (always first)
- First mortgage
- Second mortgage/HELOC
- Other liens by recording date
Releasing a Lien
A lien is released when:
- Debt is paid in full
- Creditor files a lien release
- Property is sold and lien paid at closing
- Statute of limitations expires
Study This Term In
Related Terms
Title
Title is the legal right to own, use, and dispose of real property, representing the bundle of rights that come with property ownership.
Mortgage
A mortgage is a loan used to purchase real estate, where the property serves as collateral, typically repaid over 15-30 years with interest.
Encumbrance
An encumbrance is any claim, lien, or liability attached to real property that may diminish its value or affect the owner's ability to transfer clear title.
Foreclosure
Foreclosure is the legal process by which a lender takes ownership of a property when the borrower fails to make mortgage payments, typically after several months of default.
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