The Different Types of Property Liens Used In Real Estate

A comprehensive property lien and title search can produce many different types of property liens (encumbrances) that can be levied against a person or entity and their real estate by a debtor. According to property lien records, these can either be consensual or non-consensual, depending on the circumstances surrounding them.  Each of these specific types of liens has different purposes and conditions. What are the main types of liens placed on the property in the United States?

Tax lien

A tax lien can be issued by state and federal governments which can be levied against property/real estate. Once recorded, the lien is then considered “perfected”. This typically occurs when the property owner is not keeping current on his or her property tax payments or is delinquent on income taxes and a default occurs. State and/or federal governments may place tax liens on an individual (AKA general lien) and subsequently on real estate, land or property for unpaid income taxes. This is the same situation with local governments placing tax liens for unpaid property taxes or local income taxes. The lien essentially ensures that the tax authority gets first to claim to the property over other creditors (I.E. mortgage company or lender) vying for the business or property. The lien remains in place until the tax lien is satisfied or paid in full, otherwise released by expiration within the statute of limitations.

Mortgage Lien

A mortgage lien is a form of security instrument that a mortgage lender holds in support of a loan obligation issued for the acquisition, purchase or line of credit for land, real estate, and property. Also known as a type of “conditional ownership” of your real estate or property claimed by your mortgage lender.  Once repayment or financial obligation of the loan has been met for the mortgage contract, the lien is then released or satisfied and the property is then subsequently “free and clear” of the mortgage. Most people conflate mortgages with the actual loan made to purchase the land or property but strictly speaking, a mortgage is not a loan but rather an interest in the real property, held by the mortgage lender as security protection in should the borrower default or fail to pay back the loan.

Mechanic lien

A mechanic’s lien can be filed and recorded for the guarantee of repayment for improvements to a property or home by suppliers, builders, contractors, and construction-related companies. This can be either Voluntary or Involuntary. Most companies performing the work or supplying the fixtures and/or material will require a voluntary lien to be established when financing is involved. If the financial obligation by the property owner is not met, then an Involuntary lien may be placed against the property by the performing company securing the company’s interest.

HOA lien

An HOA lien or “assessment lien” is filed when a property owner is past due on HOA fees or assessments. An HOA lien is attached to a homeowner’s real estate or property for the benefit and interest of the homeowners’ association (“HOA”) associated with the subdivision the property is located. Once an HOA member becomes delinquent on their HOA assessments. An HOA or assessment lien ultimately provides the HOA an opportunity to sell the homeowner’s property to satisfy the outstanding debt and repay assessments owed to the Homeowners Association.

Judgment lien

A judgment lien is in a sense a non-consensual or “Involuntary lien” that after recordation will attach the owner’s property, involuntarily or without your agreement). The judgment lien is issued when a lawsuit or “court ruled judgment” is filed against an individual or entity and is perfected when recorded against the subject property or real estate. This type of lien ultimately allows the creditor to take possession of the debtor’s property if the debtor fails to perform or fulfill his or her contractual obligations.

Equitable Lien

An equitable lien is a lien when a debtor can demand repayment of a debt through a type of monetary fund or property belonging to the person in debt. Equitable liens are very commonly applied against land, property and real estate (AKA mortgage lien). This type of lien can be filed and recorded against a person’s property if it fulfills any of the four-set obligations and/or circumstances.

1)      When a party or entity makes improvements on a piece of land believing they will be repaid for their work.

2)      When one of two or more of the property owners make improvements such as addressed in section one.

3)      When a life tenant makes permanent improvements to the property and/or its fixtures that were begun earlier by the will holder

4)     When a property is transferred to a third party for repayment of debt obligations, annuities, legacies, or portions.

Equitable property liens are a piece of legal compensation, as opposed to a security interest. This lien can be placed against any type of property owner until their debt is paid.

Common-Law Lien

Common-law property liens are a limited type of lien that can be placed against certain types of property, especially real estate. There are two types of common-law lien: these would be special liens and general liens. An important point to note is that according to property lien records, a special lien is more common. With special property liens, it is in most cases necessary for the property and the services performed to be closely related. This can only be applied in relation to services performed/rendered, not to previous debts. A general lien is a lien against individual, entity and potentially the entirety of a person’s property in exchange for repayment of debts.

Statutory Liens

A statutory lien allows a debtor to retain the property belonging to the lienee (the person against whom the lien is set) as insurance for debt repayment. Basically, the debtor is allowed to retain possession of the property if a debt needs to be paid. This lien can use real estate and property items as collateral. A property lien search indicates that some do not consider this to be, strictly speaking, a lien because it falls under different criteria.

Contractual Lien

Much like a statutory lien, a contractual lien is one set up in a contract between two parties. This type of lien is one set up between two parties dictating that one party can possess the property of another party until the debt is paid. Again, like a statutory lien, property and real estate can both fall under the lien if it is so desired.

Maritime Lien

While not regarding real estate, this is a very interesting and important type of lien. A maritime lien is a lien placed against a seafaring vessel in exchange for payment of a debt. It can also be set against a vessel by someone who was injured by that vessel in some way, either physically or monetarily.  This lien is much different than other types of property liens because it has priority over all other types of claims against the vessel and it can be transferred to wherever the vessel goes.

Municipal lien (Utility Lien)

A municipal lien is given by a municipality (or municipal authority) against a property owner(s). This is filed when the property owner is to benefit from a public improvement plan by the municipal authority.

Property lien records show that there are many different types of property liens that can be placed on a person’s property and real estate in exchange for repayment of debts. Each type of lien is important and useful for its own reasons. Discovering which type of lien is levied against you or can be implemented for you is a key aspect of any situation regarding debt and repayment.

Utility Lien

Some utility providers are subsidiaries of your local government and can place a utility lien on your property if the utility bill is not paid.

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