A mortgage lien is a legal claim on a mortgaged property, with different types including tax and non-consensual liens. The bank holds a lien on the property for a first mortgage, which can be foreclosed if the borrower defaults. Liens must be paid off to release the property.
A mortgage lien is a legal claim or lien on a property that is mortgaged. There are several types of privileges; a second, third or subsequent mortgage is one type of lien. A tax lien can be assessed on property due to unpaid federal taxes or a lien from a creditor due to unpaid debts. In a mortgage loan, the house serves as collateral for unpaid debts; when the house is sold, the creditor who has established the encumbrance on the house receives a reduction in the profits from the sale of the house equal to the amount of the pledge.
A mortgage lien sounds slightly confusing, but it really isn’t. In fact, a first mortgage is a type of mortgage lien. When the borrower takes out the mortgage loan on the home, the bank holds a lien on the property. If the borrower defaults on the mortgage, the bank can foreclose on the home and reclaim the property, thus recovering the money for the loan. If borrowers make regular payments on the home, however, they will eventually pay off the mortgage and own the home outright, at which time the bank relinquishes any claim to the home and removes the lien on the property.
However, there are other reasons to consider a mortgage lien on a property. Unpaid taxes are a common cause, which can also be referred to as a tax lien. Unpaid legal fees are another reason a lien may be assessed against the homeowner. These are known as non-consensual privileges. Consensual liens, by contrast, such as those taken out by the homeowner against the home in the form of a second or third mortgage, are initiated by the owner.
Each type of lien is filed with the county in which the property is located. Once the lien is paid for, a petition to release the lien is then filed with the county and the paperwork is updated. It is important for the homeowner to ensure this is done in a timely manner to avoid difficulties if the home is sold at a later date. The only way to pay off a lien is to pay the obligee; as mentioned above, this can occur when the house is sold when the profits are made, or the debt can simply be paid off by the borrower as with any other debt.
Protect your devices with Threat Protection by NordVPN
