What is a property lien? In this article learn what a property lien is, and why they are important to understand.
What is a property lien? A property lien is a debt obligation in which the debtor has executed the right to monetary recovery by means of an instrument or judgment to use the property as collateral to secure the interest related to the real estate, property, and/or land. The lien can be considered a type of encumbrance which could produce a cloud on the title if not satisfied before conveyance. The interest is usually monetary (such as a loan or mortgage) and executed in the form of a judgment, mechanic, HOA, or tax lien. Liens are either voluntary (mortgage, lines of credit) or involuntary (tax liens, judgment liens, etc.) and are executed or “perfected” by recordation.
Liens can be enforced through foreclosure proceedings or addressed during a title transfer or conveyance. If the lien amounts are paid before the lien is enforced or during a transfer or sale of the property, it is deemed “released or satisfied.”
In most states, a judgment cannot be recorded with the county unless the case is processed in or transferred to, a superior or a higher court (not Justice or City Courts). A general lien is a lien that is placed on and follows an individual. These liens are typically tax liens filed by the federal government, i.e., Internal Revenue Service. A municipal lien is served 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. (Please note that federal and state tax liens may remain attached to the subject property even after a foreclosure, although the principal balances can sometimes be negotiated).