what does a lien on your home mean?

Question

I got a new job at a bank and I always hear the word "lien". What exactly does it mean in laymans terms?

Answer 1

A lien is a claim against property for a debt. At the bank, they are probably referring to either mortgages against real property, or a contract pledging a car as security for a loan. These are probably the two most common forms of liens, but there are others.

You probably don't want to know much about the other kinds, but they include such involuntary liens as for taxes and judgements, and "inchoate" liens (liens that haven't actually become liens, they just MIGHT become liens) such as Mechanic's liens.

Answer 2

That means that somebody has an interest in that home. Let's say that you buy a house and Bank A is financing you with a mortgage. Typically, when a bank finances you, they put a lien of your home. That means that they are entitled to take ownership of your home if you do not mak ehte payments as promised. There can be more than one lien on a property (also cars, yachts, anyhting that has a larger retail value). If Bank A finances your first mortgage, and you have a smaller loan (Line of Credit secured by your house) with Lender B. Lender B will have then a second position or second lien on the house. That means if you do not make your payment, Bank A comes in, resells your house and collects the money that it was owed. The money that is left over (if there is any) will go to the second position. If they get satisfied, then you might get the rest... You see that the second position is a little riskier, therefore, those loan are tyipcally a little more expensive.
Hope this helps.

Answer 3

A lien is a legal record (usually recorded at your county courthouse) showing money is owed on the property that has the lien. The lien holder is either the lender (mortgage company/bank) or, if the property is owner-financed, the seller of the property.

Also, if the recorded owner of the property has a judgment in a court case go against them, a secondary lien (if the first is not paid in full yet) can be filed. This means that the current owner would have to pay off both the primary and secondary liens when selling the property so that the property has a "clear title" upon transfer of ownership.

Answer 4

Everyone is making this super complicated.

A lien is simply the total amount of existing loans on a property. For instance, someone may ask what are the existing liens?

If a property has a 1st mortgage of $500,000 and a 2nd mortgage of $100,000, the response would be $600,000 existing liens.

That's the most basic defintion.

A lien can also be a tax lien against the property such as a judgement or a mechanics lien. But all you need to know is my example above.

Learn more about credit, finance, and mortgage at:

http://www.thetruthaboutmortgage.com

Answer 5

It means the owner of the home owes money and if not paid, the lien holder has an "ownership" right to the house - partial ownership.

If you sell the house, the lien is paid after the mortgage company. Depending on the lien, they may even be able to force a sale to get paid but that is rare and only cold-hearted greedy SOB's do that.

A mortgage, a loan with the house as collateral, a tax lien for taxes owed, a construction lien for unpaid work performed etc...


Mike

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Answer 6

A lien is a claim to the property which must be paid before any refinance or sale can take place. A mortgage is a type of lien. It can be anything from a lost lawsuit to unpaid taxes or child support. Anything that you can be sued for can be applied as a lien against the property if you lose.

Here is some additional info. Hope this helps.

Answer 7

A "lien" is simply legal claim on property, that can be enforced against the property (by a forced sale), even though the property has been transferred to someone who did nothing to create a lien.

There are many kinds of liens; most of which are created by state statutes. There are "possessory liens," which are maintained by keeping something in the claimant's possession -- such as the garage dealer keeping a car until the repair bill is paid; a warehouseman's lien on storage contents until the bill is paid; a mortgage lien -- a written loan agreement recorded in the public records; a tax lien on property until a tax is paid; a "mechanics lien," in favor of someone who has improved or repaired some property; "judgment lines" in favor of people who hold a judgment against someone who own property; etc., etc. All liens can be enforced by "foreclosure;" a court ordered sale to raise the funds to pay them off (any excess is supposed to be held for the original owner).

Answer 8

There are really great answers to this already posted, but don't forget that any bank lien is subordinate to any kind of TAX lien. It's called real estate, from the Spanish word for "royal," meaning that if you don't pay your property taxes, the government can foreclose.

Answer 9

A lien is a secured interest in a property.

Generally it is when you owe someone else money for your home, like your mortgage.

Sometimes the government will file a lien against your property for unpaid taxes. Or another person you owe money to gets a judge to let them lien against your house.

What it does is guarantee to the people you owe money that you cannot sell your house and walk away without paying your debt. The title company/government will not let your property sell unless the lienholder (company you owe money) are paid or sign a release.

Answer 10

A lien is a legal claim against your property as security for the payment of debt. It gives the contractor the right to prevent the sale of your property to satisfy the debt, or possibly acquire it if you do not pay. The lien will be removed when the terms of the contract are satisfied. But, if your contract has the provisions you state, you have a strong position. YOU should be the aggressor.