What is the definition of a home lien?
A home lien represents a lender’s legal entitlement to a property if the borrower cannot fulfil their debt obligations.
In the case of most mortgages, lenders establish a lien on the property once the borrower accepts and signs the offer letter.
This gives the lender a right to the house if the homeowner cannot repay the loan and defaults. In other words, the property serves as collateral for a secured loan.
Can I sell a property with a home lien?
Liens impose restrictions on a property owner’s actions with their asset, as creditors hold a claim on the property to recover their debts.
A homeowner attempting to sell a property before a lien is released can create complications, especially if the lien is involuntary.
However, once the homeowner fulfils their outstanding financial obligations, the lien will be lifted, enabling the owner to sell or refinance the home more easily.
How do I remove a home lien?
The most straightforward way to eliminate a lien is by settling the outstanding debt by paying it in full or reaching an agreement on a payment plan. Liens are claims on assets that arise in the event of default, and once all financial obligations have been met, the liens can be removed.
What are the types of home liens?
Here are the specific categories of home liens:
- Mechanic’s Lien: When a property owner doesn’t pay for completed construction work or supplies, contractors or construction companies can file a mechanic’s lien, also known as a property or construction lien.
- General Judgment Lien: This home lien is granted to a creditor after a court ruling in their favour. If a debtor fails to fulfil their financial obligations, the creditor may take legal action to sue the debtor for any remaining unpaid balance.
- Tax Lien: Government agencies can place a tax lien on your property for unpaid income, business, or property taxes.
