Blog Post

What is a Lien?

markbrenner • January 1, 2015

A lien is a legal right to take possession of property belonging to another person until a debt owed by that person is paid, forgiven or discharged. The word comes from an older word meaning “to bind,” which explains how the concept works in today’s world: it “binds” or ties up a debtor’s property until a debt is paid.

A lien is typically a public record. It is generally filed with a county records office (for real property) or with a state agency, such as the secretary of state (for cars, boats, office equipment, and the like). The most common example of a lien is a mortgage or what the bank records with the DMV when it lends you the money to buy a car.
There are generally 3 types of liens: statutory liens, consensual liens, and judgment liens. Statutory liens are liens that are placed on one’s property by law, such as the tax lien on real property that is paid to the county. Consensual liens are those that you allow to be placed on the property like a mortgage or a loan to by a car. Judgment liens, as the name implies, result after a successful creditor obtains a judgment against the debtor.
It is important to realize that when a creditor has a lien, it has 2 rights: the right to be paid (the debt) and the right to bind the property (lien).

In bankruptcy if the debt is removed, the lien is not automatically removed. Under certain conditions, in order to “un bind” the property, the lien must be removed in a separate procedure called a “Motion to Remove Lien.” Please see Removing Liens in Bankruptcy.

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