What Is a Home Lien?

A home lien is a claim or ownership against property used as collateral to repay the mortgage loan. The lender can seize the apartment subject to the lien if the mortgage obligation is not fulfilled.

If you borrowed a home loan, then you have a lien on your property. This is a claim that offers the bank (which financed your mortgage) a legal right to your property if you default on your settlements. 

Understanding Home Liens

A home lien is an official claim on the physical property by the lending institution. When the mortgage lender, the federal government, or someone with a legal interest in the property holds a lien on the apartment. Then county public register and other government agents record this home lien. Also, when the home lien is placed on your assets, it becomes more challenging to sell the house, apply for a new mortgage, or refinance it.

Hence, when the house owner meets the outstanding monetary obligations, the claim will be lifted, making it easier for the homeowners to sell or refinance their house. The person buying a home should pay special attention to the property and carefully check the mortgage records. The lien will delay the purchase process, and any existing lien will make it difficult for prospective borrowers to qualify for refinancing. 

Public records often remain outdated even if you pay all the financial liabilities that created a home lien. If banks or financing institutions check home lien in the public domain, they are more likely to postpone the purchase process until they are satisfied with the property’s financial status. 

Types of Home Liens

There are different types of home liens, and certain mortgages are related to particular assets, such as specific addresses. 

Housing liens can also be voluntary or involuntary (also called consensual or non-consensual). The bank receives a home lien when the borrower advances a mortgage, making it a voluntary lien. In the case of non-voluntary liens, the lender can seek legal assistance from the state or government agency if the borrower defaults on home loans and other financial debts. Moreover, contractors, government agencies, and other lenders would then settle these types of home liens.

Tax lien

This type of lien is placed by a government agency for any unpaid business taxes, property taxes, or income taxes. To illustrate, the Internal Revenue Service (IRS) can put a lien on your property when you have unpaid federal taxes. First, the agency will send a written notice of your financial obligations. If you fail to respond or take reasonable steps to repay the debt, the IRS may seize your home or other assets. The only way to release this lien is to repay your outstanding loan debts. 

General Judgment Lien

This type of home lien is granted to a lender after a court rules in the lender’s favor. When the bankrupt fails to meet its payment obligations, the creditor can take legal actions against the debtor. 

If the court decides to favor the creditor, you must submit your security deposit through the competent county or referral agency. This entitles the applicant to possess real estate or personal property if the borrower doesn’t agree to repay their debts. Property can include businesses, personal property, real estate, automobiles, or other assets that satisfy the court order. 

Mechanic’s Lien

When the customer fails or refuses to pay for completed work or materials, construction companies and contractors can file mechanic’s liens, also known as a construction or property lien. 

This legal document enables legal parties to get compensation in payment problems due to a breach of contract. Most contractors and other companies send payment requests and letters of intent to the debtor before submitting the mechanic’s lien. 

They might proceed with legal action if the buyer still refuses to settle their debts. To do this, you must submit documents to the appropriate county or local authority. It contains detailed information about the property, the type of work performed, and the amount owed. The lienholder might choose to enforce the contract if the borrower still makes no agreements.

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