What is a Lien?
A lien is any legal claim on real property that acts as a security for the payment of a debt or other obligation. If the debt is not repaid as promised, the lender or the lien holder can foreclose its claim on the property and force a public sale to pay the debt. The most common form of a lien on property is a mortgage. While all mortgages are liens, not all liens are mortgages. Other types of liens are commonly encountered and part of the work of the real property attorney is to check for outstanding liens at the time a real estate transaction closes. These include such things as judgment liens resulting from a court judgment against the owners, mechanic’s liens resulting from recent improvements to the property, liens for unpaid taxes, and liens for unpaid municipal utilities such as water and sewer. Often, if a seller is divorced, the divorce decree will provide the ex-spouse with a lien on the couple’s property to be paid at the time of sale.
A lien is a “payment due” against the property making it the security for the payment of a debt, judgment, mortgage or property taxes. Liens are a type of encumbrance. There can be liens placed upon the property by someone who has performed services on the property but has not been paid in full for the services rendered. This is called a mechanics lien. Any liens would show up as a cloud on the title.
Many times the owner of property may owe money to various creditors. The lien allows the creditors a means of preventing the property from being either sold or obligated until the debt is satisfied. Among the many types of liens are tax liens (for non-payment of taxes) and mechanics liens. Mechanics liens for labor and materials furnished in construction on land are filed in the Clerk of Court’s office. Judgments are also filed in the clerk’s office. All liens are encumbrances against property.
