A property lien is a legal claim or right against a property, typically used as security for a debt or obligation. If the property owner does not pay the debt or fulfill the terms of the contract, the lienholder may have the right to take action, including foreclosure or sale of the property, to satisfy the debt. Here’s an overview of the legal issues surrounding property liens:

Types of Property Liens

• Mortgage Lien: The most common type, where a lender has a claim against the property until the mortgage is paid off.
• Tax Lien: Imposed by a government entity when a property owner fails to pay property taxes or other government-imposed fees.
• Mechanic’s Lien: A claim filed by contractors, subcontractors, or suppliers who have not been paid for work performed or materials provided.
• Judgment Lien: A lien placed on a property following a court judgment in favor of a creditor when a property owner owes money resulting from a lawsuit.
• Consensual vs. Non-Consensual Liens: Consensual liens are created with the agreement of the property owner (e.g., mortgages), while non-consensual liens are imposed without the owner’s consent (e.g., tax or judgment liens).

Lien Priority

Liens are ranked based on priority, meaning that when a property is sold, the proceeds go first to satisfying the highest-priority liens. Common priority order:

• First Mortgage Lien: Typically takes precedence over other types of liens.
• Subsequent Mortgages and Liens: These may be subordinated to the first lien but still have priority over others based on their recording dates.
• Tax Liens: In many jurisdictions, tax liens take priority over other liens, even over mortgage liens.
• Mechanic’s Liens: These can vary in priority depending on the jurisdiction but are often placed in the order in which work or materials were provided.

Impact on Property Owners

• Sale or Transfer of Property: Liens must usually be satisfied before a property can be sold or transferred to another party.
• Foreclosure: If a lienholder (particularly a mortgage lender) is not paid, they may initiate foreclosure proceedings to sell the property and recoup the debt.
• Credit Impact: Liens, especially unpaid ones, can affect a property owner’s credit score and financial standing.

Lien Removal

Liens can be removed by:

• Paying off the Debt: Once the underlying debt is paid, the lien is typically released.
• Challenging the Lien: Property owners can challenge a lien if it’s invalid, improperly filed, or otherwise erroneous.
• Lien Waiver: In some cases, such as with mechanic’s liens, a lienholder may agree to waive the lien after payment.

Legal Defenses Against Liens

• Expiration: Some liens expire after a set period, depending on the jurisdiction.
• Incorrect Filing: A lienholder may have improperly filed the lien, providing grounds for its removal.
• Disputes Over Debt: The property owner may dispute the amount owed or the validity of the debt in question.

Enforcing a Lien

Lienholders have the right to take legal action to enforce the lien, including:

• Foreclosure: The lienholder can initiate a foreclosure action to sell the property and satisfy the debt.
• Court Action: In some cases, a lienholder can seek a court judgment or other legal remedies.

Conclusion

Property liens are powerful legal tools for creditors, but they come with certain risks and responsibilities. A lienholder must follow proper legal procedures to place and enforce liens, and property owners have various defenses and remedies available to address improper liens or challenges to their validity. It is highly recommended that you seek the advice and guidance of from an experienced real estate attorney for anything involving property liens.