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A lien is a lender’s interest in a property to secure debt repayment. Mortgages are the most common form of property tax liens. If a borrower defaults, the lender can enforce the lien and take control of the property. The amount collected is limited to the outstanding debt, and court fees may be added. If the property value is not enough to cover the lien, the lender can write off the balance or pursue collection through a lawsuit. Multiple ownership privileges can exist on a single property, with older claims honored first.
A lien is an interest or credit charged on a property by a lender to secure the repayment of a debt. In the worst case, the lender can actually take control of the property. The most common forms of property tax liens are mortgages. Should a borrower default on a debt, the lien on the property can be enforced. In some cases, the lien can be enforced immediately, but in other cases, the lender may have to wait until ownership of the property changes hands.
In the case of a mortgage lien, the lender holds title to the property until the loan is paid off. This happens only after the terms of the loans have been paid in full. At that point, title to the property will be transferred to the borrower. If the terms of the loan have not been met, the lender can use the lien of ownership to recover as much money as possible through the foreclosure process.
In some cases, it is possible to enforce or impose a lien on property in cases where payment for services or products is not made, known as an auto mechanic’s lien. In such a case, the claimant must prove that the money is owed, often by filing the claim with a competent court with relevant jurisdiction. If the defendant is held liable and unable or unwilling to pay, the claim could be paid with money from a property transfer transaction as a pledge of ownership that must be cleared before ownership can change hands. The sale of the property can also take place without the consent of the owner.
The amount that can be collected through any property lien is generally limited to the amount of money owed that is still outstanding. In some cases, court fees or other collection costs may be added, if applicable. Thus, the lien of ownership may actually end up costing you a certain amount of money on top of what you already owe.
If the value of the home or other property isn’t enough to cover the real estate lien, the lender has a couple of options. He can simply write off the remainder of the balance, or he can decide to continue pursuing the collection through a lawsuit or other means. If the lender cancels the remainder of the debt, the borrower may still be liable for tax on the amount forgiven as if it were income.
In some cases, it may be possible to have more than one ownership privilege on a single property at the same time. If this is the case, the oldest claim is typically honored first, and then subsequent claims are honored in order of oldest to newest. A lien holder can subordinate his claim to another lien holder, if both agree. Such an action would change the priority level of the two applicants, in the event of non-compliance.
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