An affidavit of lien can be used to file a lien on a property or to swear that a property is free from liens. Creditors use liens to secure debts and protect themselves. Liens can be obtained in various ways, and buyers may require a no bond affidavit to protect against liens.
An affidavit of lien can refer to the form used to file a lien on a piece of property or, in some cases, a sworn affidavit from an owner that the property is free from liens and claims. Creditors often use lien affidavits to protect themselves and secure a debt, while a document that is sometimes called an unlicensed affidavit may be required to complete a type of property sale. Because liens can significantly damage the value of a property to a prospective buyer and can place significant burdens on the owner, the use of written documentation is essential for both securing and documenting liens.
Creditors often grant liens on various types of property in order to secure a debt. If their debtor defaults on what is owed, the creditor can reclaim his share of the property. Depending on the laws in a given jurisdiction, the lien holder may be able to compel an owner to sell the property and then recover the debt from the proceeds. In other cases, the lender may not be able to require the owner to sell immediately, but would be able to collect the debt once the property has been sold.
A creditor can obtain a lien in several ways. For example, if a debtor defaults on an unsecured debt, such as a credit card, the credit card company or a debt acquirer can sue the debtor in court. Once the creditor wins a judgment, the creditor can exercise a lien on the debtor’s property. In cases where the debt is for home construction or renovation, the process can be even easier, although again, different areas may have different laws. The contracting company, together with its subcontractors and suppliers, can request payment by filing an affidavit of lien with a local court. Once that happens, it may be up to the homeowner to challenge the legitimacy of the lien. Such liens are often known as a construction lien or mechanics lien.
When people sell their home or other valuable property, their buyer can require that the owners sign a no bond affidavit. This document states that the homeowner is unaware of any lien on the property. This provides buyers with protection against buying properties that are worth less than they appear to be because a lender holds an interest in them. It can also prevent the buyer from being held liable for paying for entitlements on a property before the buyer becomes its new owner.
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